Healthcare Cost Savings: Surprises & Predictions | E. 100

After 25 years and $1 billion of hospital cost savings, Lisa Miller is joined by Rich Dormer, Bryan Covert, and Pandu Mitre to celebrate this landmark episode of THLE.  

 

Episode Introduction 

Together, the team discuss the cost savings surprises of 2023 and look forward to 2024. Insights include the two-tiered approach to cost savings goals that all hospital leaders might want to consider, and why difficult vendor negotiations will continue in 2024. The team also review the potential impact of AI on cost reduction, why finding hidden costs always comes back to line-item data, and why every hospital needs a spend data strategy in 2024. 

 

Show Topics

 

• Building strong teams in a post-Covid era

• Vendor negotiations became more difficult in 2023

• ‘’It always goes back to the line-item analytics’’

• A two-tiered approach to cost savings goals

• The hidden cost savings in AI 

• Vendors will continue to say ‘’no’’ in 2024

• Two keys to an efficient supply chain

• More buying power doesn’t always equate to ‘’best pricing’’ 

 

 

02:26 Building strong teams in a post-Covid era 

Rich said healthcare systems are hiring people with a broader skillset that need an accelerated learning curve. 

‘’…one of the biggest things that we saw this year, or I saw specifically was a lot of organizations were building those sourcing and supply chain teams. Where in the past they've been really lean and relying on GPO or other types of resources. But with COVID and the need to really do a lot of contracting, a lot of complicated agreements, most organizations recognize that they really needed to build their teams. But the issue that a lot of them have is that there's really only a limited pool of seasoned players on the market essentially. Therefore, when they look to hire, they're hiring a lot of people that are either early in their careers or they come from a different industry which when we look at healthcare it's really unique and complex. So bringing someone from the manufacturer industry coming in and looking to do a sourcing or some sort of negotiation in healthcare, it's very different. So with these large obviously needed cost savings goals for organizations, these newer teams that are being put together need to really accelerate their learning curve. So we've seen a lot of conversations around the support that they need. Right? And probably the biggest one that we keep hearing is that access to data, really that line-item invoice level data is critical to be able to do these large initiatives that a lot of them are working on now and they struggle to get that information. Because the biggest piece is to really do analytics around it and they're doing it off of projected data or vendor supplied information which is not always accurate. So those are the biggest pieces for a lot of these teams coming in and really trying to meet these aggressive goals that are needed for these organizations to maintain their profitability and not only with analytics and data but also negotiations.’’

 

12:06 Vendor negotiations became more difficult in 2023

Bryan said utilization and market data are just two element