“Hospitals overpay for supplies and medical devices due to a lack of pricing transparency and inefficient supply chain processes,” according to Dan DeTorrice, President & Chief Information Officer, BroadJump, LLC. Healthcare finance and supply chain executives should ensure they are paying the right price for products currently used in the hospital before contemplating switching vendors or products, he suggests.

BroadJump, LLC is a solution provider at the marcus evans National Healthcare CFO Summit Fall 2016, taking place in Los Angeles, California, October 16-18.

Why do hospitals overpay for supplies and medical devices?

Hospitals routinely procure medical supplies, devices and drugs in order to care for their patients. When doing so, they often pay a price for these items without knowing the fair price to pay. This is due to a pervasive lack of information – or a lack of cost transparency – about the fair market value of medical and surgical supplies. This is one of hospitals’ biggest struggles today: not knowing fair market prices gives suppliers the upper hand over hospitals when negotiating the sale of these goods.

Consider this: in any quarter, the average acute care hospital buys 25,000 different products, which typically takes 1,500 contracts. Prices in certain categories can also drop over time, so hospitals must have the latest information on market prices for supplies to ensure their costs are staying in line.

Luckily for hospitals, new and emerging, on-demand applications help them quickly and easily understand the marketplace. It is a completely new way of managing complex supply expenses with fewer resources, ensuring they pay fair prices for the supplies they purchase.

How can hospitals improve their sourcing process with data analytics?

Automation is key. New-to-market technologies can help hospitals prioritize where to focus their efforts to get the biggest bang for their buck. When negotiating with suppliers, they need to have facts and figures that prove where their prices should be in the marketplace. With real-time information at their fingertips, contracting executives can ensure they are paying fair market prices.  

At BroadJump, we believe hospitals should first try to reduce the price of products they already purchase before looking to switch vendors or products. Our research has proven this is the easiest, fastest and most efficient way to save money.

What impact can this application have on labor productivity?

BroadJump’s proprietary application allows hospitals to do more with less, to manage increasingly complex supplier negotiations with fewer people. Our technology reduces sourcing time from months to minutes, which is critical to financial success in today’s environment.

What trends should hospitals prepare for?

With today’s technologies, hospitals can identify trends in different markets or categories. With BroadJump’s application, they can ascertain if peer hospitals are having success negotiating lower prices and then use that intelligence to inform their own supplier negotiations.

Closing thoughts?

Transparency is here. If you run a hospital, you are addressing this already on the consumer front, because patients demand it. With average hospital margins shrinking and financial pressures mounting, that same sort of discipline must also be applied to what hospitals pay their suppliers. In the future, every hospital in the country will have on-demand analytics to maximize efficiency in the supply expense area and they won’t remember how they managed their business without it. 

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