Publication by HealthCare Business News
Health systems have two options for increasing profitability — attack costs or chase revenue. For many, attacking costs is an easier path to financial stability because accountable care and declining reimbursements make chasing revenue extremely difficult. On the attacking costs side of the profitability equation, the cost of supplies and third-party services are the second-largest expense after labor. Many health systems are nowhere near close to tapping the full cost-savings potential, leaving millions on the table.
Squeezing more savings from your supply chain starts with effective contract management. It’s the front line of the battle. The reality is that most health systems stop after expending a great deal of effort negotiating and signing contracts. Due to the complexity of the health care supply chain — with thousands of contracts from different sources — contracts generally are not managed at all or are managed very little.
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