Most purchasing managers have a firm handle on what they spend for supplies, as well as ways to save a few pennies per unit on items like syringes.
That's not the case, however, when it comes to purchasing services. Everything from having the hospital lawn mowed to hiring an IT consultant to help install new cardiology software is an opportunity to get dollar-for-dollar savings that can affect a hospital’s bottom line.
“Reducing Costs and Generating Revenue in 2010 and Beyond,” to take place at 9 a.m. CDT Thursday, is designed tol help CFOs and purchasing managers understand the significant portion of their budget spent on services, as well as offering strategies to lower their services spend.
“Supplies are different in that they are things. You can order them through a catalog and there is a list price associated with them,” said session presenter Nik Fincher, vice president of purchased services sales and capital at VHA, Inc., of Irving, Texas “Services are not things – there is no catalog, and knowing how to price them is a big issue.”
Paying more attention to what is spent on services may be a more effective way to reduce overall expenditures than focusing on supplies, Fincher said. While GPOs and hospitals have done good work over the years is cutting supply prices, he said, there is only so far those prices can be reduced.
“With services it’s about not spending a dollar instead of saving 20 cents on a dollar for a supply,” said Fincher. “So a dollar not spent is a dollar saved.”
In the presentation, Fincher will walk executives through such topics as how to define services, the magnitude of services spend and the difficulty in getting a handle on reducing service spend. He will conclude with examples of how other hospitals have reduced their service expenditures.
“We also want to give people an idea of the magnitude,” Fincher said. “From a VHA standpoint, we estimate services spend is either equal to, or within 5 percent of, supply spend. It’s a huge number.”