Streamline Your Billing with Our it Consulting Invoice Template for Healthcare

It consulting invoice template for Healthcare

welcome to the healthcare leadership experience radio show with your host lisa miller lisa is an entrepreneur inventor advisor and founder of vi healthcare consulting the leading healthcare advisory and analytics firm helping hospitals accelerate their margin improvement goals lisa loves to think differently and collaborates with leaders and their teams to solve challenges and to create new innovative approaches that impact the clinical and business side of healthcare our show will bring you leaders and innovators within healthcare and across multiple industries be a part of the discussion that will give you a unique perspective deep insights and roadmaps to successfully help you navigate the clinical financial and operations of healthcare your show starts now hello you're listening to the healthcare leadership experience radio show on healthcare now radio and i'm your host lisa miller welcome to the show today's guest is rich stormer from vi healthcare he is a very seasoned experienced healthcare performance improvement consultant and ceo of phi healthcare welcome to the show rich thank you lisa i appreciate you having me on i'm excited to have this discussion today yeah it's a really interesting discussion because we've been working in this space for really over 20 years and have seen a lot of the evolution and you've been working in the space for 15 years really from the start you know we've seen a lot of what we'll call the good the bad and the average so today's discussion really you're going to go through a lot of great content is purchase services benchmarking the good the bad the average and you know a lot of hospitals are very challenged getting to the invoice line item details and really they're needing to be helped or supported with creating the spend map and really understanding what they're spending utilization so my question to you and our discussion really is is what can a good approach a complete benchmark analysis look like but before we get there how do you think price benchmarking is happening most organizations say what's really going on and then we can talk about what can be done in the future so let you start off the conversation rich great question and great topic i had some time to think about it and really when i'm thinking about it looks like we want to look a little historical first right so when we look at best benchmarking available organizations in the past for purchase services specifically the best route was an rfp that allowed our organizations to confirm if their current rates were competitive or if there was room for improvement you know it wasn't the most accurate many vendors in the space you know they could have different cost structures or perform their services differently you know and then a lot of times it was very time consuming but this was the best the industry had right so you know example is something where it was a little bit different like and it's still today with food and nutrition services some contracts could be cost per patient day versus another one pass-through cost plus a management fee so it was a challenge then challenge now to compare those but you know that rfp process there's a lot of gaps and a lot of things that are missed and are challenged and they still are today can i ask you a question about that yes so the rfps is kind of like this staple staple for healthcare outside of healthcare you know everyone he says okay we're gonna go out to rfp and there's a level of comfort and don't get me wrong like we use rfps quite a bit and we have a different approach we have this rapid and precise rfp that we work with our hospitals on but there is this false sense of security if you do an rfp and you have three or four vendors and they're putting pricing together there's a little bit of if you've got a winner that winner could be price and value and service and there's many components to it but you and i had an example where we were working with a health system and they had put an rfp for an or inventory system in place and so we did not do the rfp we were working with a different department it came to us later stage they had done this very extensive four-month rfp they used a different firm and they awarded the company and then we got the final review and there was this whole section of services that was missed the professional services the service and maintenance the way the service and maintenance agreements were charged it was completely missed and this was a company who specializes in rfps and they went through this process and it was and they missed a million dollars in savings that was astonishing but something we see quite often that even the organization couldn't believe it but we took that final review we took out another million dollars after the rfp and that's a great example you know we have examples multiple examples where even when we give a template to the vendors to input all their pricing in for an rfp regardless of what it is there's always differences there's always things that they're you know inputting incorrectly or they're not inputting in or they're just providing something that doesn't fit what we've asked for so you just need to understand how to match that up effectively right so the example you were talking about there's key points to an rfp and sometimes people just get so focused on those key points that they missed some of the ancillary fees but those ancillary fees in some cases could be a million dollars yeah eight million dollars in savings yeah exactly not even the spend so you've got a list of seven and we've just started on the first so i want you to continue with your list of how organizations are benchmarking now and purchase services right absolutely and just just a step before that just the reason why we're here today and obviously from a benchmarking standpoint is that over the last several years there's been more and more price transparency right so data files and line items so organizations are now able to provide feeds to these benchmarking services there's multiple and you can get it through your gpo you can get it through a host of other areas you know but it's really focused on med surg ppis now there's others for capital equipment but it's great for organizations to see where they line up but obviously the vendors know about these as well but that's a whole nother story but now organizations immediately have their line items for more than half of the non-labor spend right but the problem is you know the reason why we're talking today about this is the other half which is purchase services the expectation is that they have the same transparency but that's false right the biggest reasons why first many of the costs are embedded in the terms and conditions so there is no line items examples like fuel charges monthly minimums cancellation charge these are not in the traditional line items that can be looked at and would be through an invoice you would have to actually map them back and forth and then the most important one is that the invoice line item details when we're looking at purchase services majority of organizations there's a few that have a few exceptions you know maybe like freight or repairs or some others and some organizations have certain vendors that they do input line items for purchase services into their systems but the majority of the organizations are not able to run a report on specific purchase services to get to the line item details because they're not getting that information off the invoices it's all you know one price or one cost on the bottom line and not the details on the invoices it's the total invoice correct yeah right so the total invoice price is the only thing that you can run a report on so there's categorization to tell you you know what you're spending in what area and what category but to tell you what the costs are for that specific vendor if you want to say all right give me all my late charges or give me all my minimum stop fees for regulated medical waste you couldn't do it so because you can't run reports and because those reports can't be sent to a traditional benchmarking location and then come back and let you know you know opportunity there's different ways the industry is working on the standards within the industry i want to say standards but the way that the industry is is benchmarking this comes into what we were talking about the good of the bad and the average right so one of the ones that we see a lot is you know as a consolidation opportunity right this one is pretty common where let's say you have 10 vendors in a space and they say if you get to three it's probably about a 10 opportunity or if there's 10 in that space and you get to one it's 15 which to us it's when we look at that where are you coming up with this opportunity it's just an arbitrary number and then you know on the flip side of that if you only have one in the category there is no opportunity so it doesn't make any sense and then some systems need multiple in the category you know like we're working with a few few of our clients you know over the past year on language services and which is a very important piece of you know the patient experience of hospitals some organizations they want multiple because they feel like one services on-site representatives are far superior to other but the other ones that are over the phone is better the other one has better vri the video and then the other one american sign language you know so they want and they need for so how can you consolidate if the services are not wanting it the end users the leadership over those positions are going to say no no we need four what we talked about before the the rfp so this there's the technology now obviously in every aspect of our lives is far superior than it was 20 years ago so now the rfp have the technology platforms which are great so it speeds it along but the still some of the issues that have always been there are still present right are the services the same you still have that issue when you're trying to marry up costs you know making sure that the cost on one vendor to the cost and the other what is ultimately the bottom line is it going to save money or be more expensive and then really establishing that cost baseline and i think that a lot is missed because be it an rfp or just a cost analysis or benchmarking analysis establishing the cost baseline is critical because how are you going to figure out if you're going to save money or again or is it going to increase money what fees are currently there are they going to remain there that you're not going to be removed or are you going to have new fees there right and you can't do that without establishing the baseline right and again how do you establish a baseline if you can't run a report so a lot of the benchmarking services or the rfp platform services as for a sample of invoices now sample of invoices there's some challenges there so obviously it's better than having no invoices but you miss some trends you miss some fees there's things that really can tell a picture if you look at it from you know six months to 12 months to even longer than that right we had a client that used one of these services one of these rfp platform services for laundry and linen services and then you know about three weeks after the contract was executed he was spending two days a week folding sheets because they missed the whole section in the agreement so there's some definitely some some challenges and pitfalls with these rfp platforms and what was interesting about that example is that we had been working with that client for quite some time and they were very very happy we had done a quite a bit of work on the ppi side and the purchase services side but their gpo kept on pushing and pushing and offered this as a free trial and then lo and behold they do the free trial and it seems cool and the technology's cool and work through that process but like you said they missed a complete section and this supply chain executive really relied on a service and then he was left folding sheets for quite a bit of time until the contract was fixed so i think this whole topic of technology which is great like you said we've come such a long way but there's like this over utilization or expecting the technology to do everything is it's not possible particularly in purchase services so rich i'm looking forward to hearing you've got a lot more to share if you're just tuning in you're listening to the healthcare leadership experience radio show on healthcare now radio i'm your host lisa miller today i'm joined with rich dormer he is an expert in hospital cost savings he's a performance improvement consultant and ceo advi healthcare we're having a great conversation about purchase services the good the bad the average and the show is sponsored by by healthcare consulting the leading advisory and analytics firm helping hospitals accelerate their cost savings and margin improvement goals you can learn more about by healthcare at vihealthcare.com rich you've got a lot more to share so let's continue the discussion great you mentioned the gpos and number three on our list here is the gpo purchase services contracts we hear it all the time the gpos are covering it we have it under gpo but really when we dive into it and i feel a lot leaders in the industry understand this as well is that it's a little bit of a false sense of security with the gpo agreements because a lot of them are when you look at the real difficult purchase services that are under a gpo agreement a lot of times it's really the liability the payment terms and the admin fees are really reflected on the gpo terms but if there is a pricing it's a snapshot in time when that contract is put in place then whatever that gpo relationship pricing would be is then put into contract and then it's done over let's say five or seven years and then there's a price increases over the course of that time now if two years later the gpo negotiates a better deal you don't get that better deal that deal has already been done so you got that deal snapshot in time unless you now renegotiate at that point and then extend the agreement so we had an example with one hospital that had the same vendor multiple locations and they had i believe it was four different price schedules over the course of actually it was more than seven years in this this one category the reason why was because each time they did agreement they got that specific price and then its cpi increases even though their pricing once we got to renegotiate it was about a 25 reduction across the board for the organization aggregate 25 reduction because we were able to consolidate all the structures put it more competitively get it off the gpo paper and put a competitive agreement in place this allowed them to now reset but when we're walking into it the leader in the supply chain was saying well these are all under gpo we should be good but again once we consolidated everything and when i'm saying consolidate we're not even talking about different vendors we're talking about the same vendor we're just consolidating the contracts it was about a 25 reduction so that's one that we hear a lot you know one of the other areas number four we put on our list is benchmarking by contract alone and i think this is one of the ones that is getting more and more common just because of the challenges getting invoices the challenges of getting line out of details and data reports and people are just saying give me your contract on a benchmark which is a major red flag if anyone's doing this for you it's actually horrifying because there's so much that's not on the contract and we hear it often just send the contract and we'll benchmark and we're completely perplexed when we hear this is done and you'll give specific details again this it's the shortcut right it's because it takes so much work to roll up your sleeves get a 12 to 18 month line item spend map and it's a matter of just doing something but leaving a whole host of opportunities left unreviewed but go ahead rich and this is not a scientific number but i would say about 90 95 percent of the contracts the agreements that we get for our clients are incomplete so they're missing amendments there's fees on the invoices that under the contract whether services that are being performed or not or vice versa their services on the contract but not on the invoices they're not even being performed by the organization it's always a few steps to get the contracts and like you said when we look at it we'll go through it again just kind of later we'll go through the best standard how to really do it but you mentioned getting the invoices obviously invoices will tell you very clearly what contracts you need because we have contracts and we say all right this is and then we look at the invoices it's completely different right wait hold on there's something off here so benchmarking by contract alone again we had one client they gave us the contract we were waiting on the invoices so you know again we looked at the contract right away and we're looking at like ah this might probably not gonna be an opportunity you know it's maybe maybe like a ten thousand dollar opportunity you know it's about a two hundred fifty thousand dollar span we saw on the ap spend report and we're like oh it's about a ten maybe fifteen thousand dollar opportunity we see the invoices ends up being about a hundred and ninety thousand dollar cost reduction what happened was in the biggest i mean there's multiple issues with it but the biggest one was the cpi increases contract had like a cpi cap right but the vendor was charging significantly higher than that each year so if we didn't get the invoices we would have been putting this on you know okay well it's a smaller opportunity as soon as we got as soon as we saw the invoice and matched up with the contract we're like oh wow i mean when we brought it to the supply chain leader he really didn't believe us he's like how could it be a hundred and ninety thousand dollar opportunity on a 250 000 he thought he picked the wrong company to help them with purchase services i know that was a great one but it actually was it ended up being right yeah i mean i think we got just under 200 000. so again you know just things that you want to keep an eye on is you know benchmark now this one is i would say even worse the benchmarking by contract alone right so if you had to choose between benchmarking by contract alone and benchmarking by metrics i would definitely go with the contract alone so so we call it actually benchmarking by bad metrics right let's just call what it is right so bed size net patient revenues there's a whole handful of you know oh you have three hospitals in health system there for this you know or you have this many you if it's without seeing the contract and the invoices if anyone's telling you what the opportunity is then you should probably just walk away yeah what i find most alarming is we get questions well how are you benchmarking by ratios or how are you benchmarking in comparison so i always take a step back i'm like do you mean how do we benchmark purchase services by a category by bed size or net patient revenues and they're like well yeah how are you doing that we don't do that at all you wouldn't do that for your orthopedic or for any of your ppis and you're going to talk in a minute rich the specificity why you would never do that but we have now hospitals coming to us that promises were made by these benchmarking biometrics or ratios and they were told this to their cfo and the cfo is saying wait a minute what's going on here you we have opportunity and you're not getting it and it's just such a terrible way the thinking is is completely false i feel so bad that now the industry's been sold on ratio benchmarking and you're going to give some examples which which are fantastic yeah exactly and sometimes it gives a false sense of security but also it just misleads right and you know we know a lot of supply chain leadership's that they're handed an opportunity report and they just can't believe that there's someone would put those numbers down right so like a regular medical waste an example you're comparing organizations by these metrics but one organization it gets picked up at the loading dock the other one the actual vendor goes to the floors to pick it up which one's gonna be more expensive i mean it just makes sense right but you can't see that from a spend you can't see that from a bed size right you would need to actually get into the weeds to understand what the difference is and that's a big cost difference between someone just have them go to the dock to pick it up as opposed to go and now i have to go to every floor to pick it up right people analysis is another one right if organizations have a dialysis suite others don't if you have a dialysis suite you could have multiple patients there doing two on one so you have one tech two beds right as opposed to going 101 bedside what's going to be more expensive obviously the bedside language services i mentioned before so organization has committed to vri so let's say you know anywhere between 60 and 90 of their translation services are video they want to have a ipad in each location obviously that's going to be more expensive than just over the phone interpretation in those locations right and then another step on that we know organizations that have certified staff that are there full-time just for translation so how do you compare one that has let's say 10 certified staff first one that has none you wouldn't know that by the data you wouldn't know that by the bed size you wouldn't know that by the total spend or the net patient revenues we had another example our client they had over 100 beds that they had converted to office space now they left the 100 beds available from a cms standpoint right because you know obviously it's harder to get the beds back and reduce them because they felt at some point you know they might need them in the future to flex but now you're comparing them to somebody else even though these hundred beds are really don't exist so those are ones that are really red flags now the other ones that kind of give you a little bit of again a false sense security or a targeted benchmark and what a lot do is the sixth one which is benchmarking by a few key areas which makes sense sometimes it's that 2080 rule right example like food nutrition the majority of them are based on the food rebates management fee and the fringe rate but there's a missing a whole area of cost if you're not doing a full p l right those administrative buckets have a lot of costs in there you've got to look for including the gpo fees hemodialysis we've mentioned before it's a one-on-one it's two a month but if you don't have those hours you know there's other fees hours operation right there's a big difference between regular hours monday through friday nine to five and regular hours monday through saturday nine to six and then the last one is the tricky one which is you know there's a new vendor new space which automatically most time benchmarking no opportunity but there's ways of breaking down a new agreement a new service by their costs to be able to see what is driving it to be able to provide opportunities to reduce those costs so those are the ones that we look at those are the standards within the industry now and versus what we do which is lisa you mentioned before putting that baseline together that 12 to 18 months of invoices right creating that invoice analysis and then comparing it and understanding the contract so it's not like i said not the line item but there's all these other fees embedded into the terms and conditions and how does that compare to really look at and first get and establish that baseline once the baseline's established then it's putting the report together and then the questions and talking points to the frontline team right this is not a one-time event there's multiple steps within a complete benchmark analysis because again there's so many things that can be learned on the front lines that you know you need to and you have to have conversations with them to really understand what's going on and then once that's pulled in and that information then you develop the whole strategy not only from gaining internal leadership support but also the engagement of the vendors this is a holistic type approach to purchase services benchmarking that is the best standard now in the industry yes rich it's like doing the work on the front end which is a lot of work on the front end but the rewards on the back end are like 10x versus trying to have some kind of very tech trying to fit this purchase services in a box and then doing it quickly and then not reaping the rewards on the end it's actually a flipped approach but rich we could talk about this probably for another hour what i'd be really interested in doing is you have this great thought leadership that you've put together we're going to include this on the show notes thank you for being on the show if you want to learn more about vi's work and rich's work and purchase services and ppis please reach out to me or you can reach out to rich on linkedin richard dormer thank you for listening to the healthcare leadership experience radio show on healthcare now radio i'm lisa miller the host please join us every day at 5 5am 1pm and 9pm rich it's been great having you on the show you truly are an industry expert in purchase services thank you for being on the show and we look forward to having you again we've got a couple more shows with you joining us it's always content heavy very informative so thank you and you can listen to other great radio shows on healthcare radio now like virtual shift and payment matters and if you've got a topic you'd like us to talk about please reach out to me we look forward to having you on other shows thank you thank you for joining lisa miller for this episode of the healthcare leadership experience radio show sponsored by vi healthcare consulting if you enjoyed the show subscribe so you can automatically get notified when new shows premiere weekly don't forget to leave us a review so more healthcare leaders like you can discover us this show is on healthcare now radio apple podcast stitcher spotify pandora and other major podcast platforms to reach out to lisa personally you can join the conversation on linkedin where lisa continues to have discussions on the business of healthcare you can find links to lisa's other social platforms in the show notes or at vihealthcare.com the healthcare leadership experience radio show is the think differently communication for healthcare leaders and we are honored to have you tune in join us next week for another episode of the healthcare leadership experience