Centralizing purchased services like continuing education provides savings

As published by December 2024 – The Journal of Healthcare Contracting

As health systems cut costs, purchased services categories can hold the key

As health systems face increasing financial pressure with inflation following the COVID-19 pandemic, rising operational costs, continued labor shortages, supply chain disruptions and stock market fluctuations have combined to undermine financial stability. Many health systems are struggling to offset shrinking margins.

Purchased services from health information management and education to information systems, environmental services and maintenance support can help these costs if they are managed correctly. But they are often decentralized, managed at the department level and lack central oversight. This causes them to be difficult to track and time-consuming to improve.

The AHA’s 2023 Cost of Caring report shows an 18% increase in purchased services between 2019 and 2022 as hospitals have been forced to incur additional costs as they renew and renegotiate their purchased services contracts. These are often locally negotiated vendors, contracts and invoices that pass through purchasing and accounting with little to no careful review.

Franciscan Health finds significant savings with HPC

Franciscan Health, an Indiana-based nonprofit Catholic health system, partnered with HPC International eight years ago to oversee and implement savings strategies within their education spend category. HPC is a contracted supplier with Franciscan Health’s GPO HealthTrust and its HPCEducationManager, powered by HPC’s proprietary S.M.A.R.T. Hub and a team of experts, helped Franciscan Health improve centralization, control and oversight of their continuing education and professional training and development expenses.

HPC provided program communications, training materials, expense tracking reports and program workflows, and Franciscan Health’s leadership team successfully launched HPC’s service in less than a month.

“We are pleased with the service provided by HPC’s team for the Franciscan Health Supply Chain department,” said Steve Ellis, vice president of supply chain for Franciscan Health. “The support from HPC is having an impact on our department, which is beneficial to all team members. The efficiency and effectiveness of HPC’s processes have resulted in substantial time savings for us.”

HPC has worked collaboratively with the Franciscan Health supply chain, accounting, human resources, physician, nursing and clinical education teams to streamline the purchasing process, consistently delivering annual cost savings of up to 20% back to the organization. Franciscan Health leverages HPC’s expertise to strategically manage more expenses and negotiate deeper discounts on educational spend for more team members across an expanded set of education-related spend categories.

“As participation has increased each year, the period it takes to recoup the service fee has decreased – and every dollar saved in purchased services drops to the bottom line to be reallocated,” Ellis said.

HPC has become an invaluable partner to Franciscan Health and the overall satisfaction with the service remains high. Healthcare requires constant planning, measurement, adaptation and innovation. HealthTrust offers HPCEducationManager and HPC S.M.A.R.T. Hub to all of its members. It’s a program that provides flexibility and ingenuity to supply chain teams while centrally managing educational expenses within the purchased services space.