Leveraging AI to Better Manage Spend and Improve Quality of Care

Artificial intelligence is taking the world by storm and it has its sights on healthcare sourcing.

Beyond clinical use, the technology is arming the healthcare supply chain with the tools needed to optimize revenue, improve the overall quality of care for patients and environment for staff, and access further innovation.

AI is solving the supply chain’s greatest challenges when it comes to purchased services program management, which include 1) meeting ever-increasing savings targets, 2) working with fewer resources to meet savings goals, 3) managing existing supplier relationships and stakeholder-preferred suppliers and 4) turning around contracts quickly.

Where does artificial intelligence come into play for the supply chain? By way of spend classification and cost management analytics. It’s estimated that purchased services make up 24% of a hospital’s operating spend, compared to 18% used for supplies. By accessing AI-powered analytics within a cost management platform, the healthcare supply chain can simplify their entire purchased services sourcing process, and act swiftly to find new suppliers.

Let’s take a deeper look at how smart analytics can help the supply chain reallocate saved revenue back to the organization’s bottom line and improve the quality of its organization. It can help:

Identify the Most Competitive Suppliers for Purchased Services Contracts

Sourcing teams must juggle the management of incoming contract requests while also monitoring for expiring supplier contracts. Most hospitals have thousands of contracts to keep track of, maintain and/or re-evaluate. The sheer volume of supplier contracts makes it virtually impossible to evaluate them.

AI can simplify the benchmarking and analytics process to quickly discover the best suppliers for each service. Using machine learning algorithms that aggregate each user’s data and trends across healthcare providers, users can quickly discern spend benchmarks based on contract type and geography, comparing their facility’s sourcing spend to all the others in the database.

The management of expiring contracts also become more efficient thanks to AI-powered analytics. When a 360-view of supplier contracts are visible – from the contract start-and-end dates, to total spend for the duration of the contract, and off-contract spending – sourcing teams can quickly prioritize contract renewals by date, size or supplier market share.

These capabilities arm the supply chain with efficient and cost-effective ways to identify and compare the most competitive purchased services suppliers, regardless of their geographical location.

Simplify the RFP Review and Contract Negotiation Process

Continuing to look at different aspects of purchased services life cycle management, sourcing platforms can aid in supplier-vendor consolidation. Once the spend analysis is complete and competitive suppliers are identified, the supply chain can better see opportunities to consolidate suppliers for the purchased services. This lowers risk by enabling teams to assess and address any off-contract spend to maintain compliance.

The entire RFP process, from review to contract negotiations, can be managed through an automated workflow on one platform. By doing so, sourcing teams benefit from using analytics to create stronger, more concise RFPs to fit their exact needs, evaluate hundreds of suppliers quickly using keywords and filters, and negotiate contracts with real-time market data in mind. Equally as important, with smart platforms, categories can be redefined to fit a hospital’s unique terminology and thus customize their approach to classifications.

Improve Efficiency, Speed and Accuracy of Spend Analysis

Using AI, sourcing teams can streamline spend classifications fluidly, regardless of local and regional suppliers. With smart analytics and automated contracting workflows, the sourcing lifecycle timeline is reduced by as much as 40%. Analytics and benchmarking, when combined in one platform with RFP event capabilities, provides one complete solution for those that may have limited resources. Together, these tools support proactive savings initiatives.

The aggregated data delivered instantly to these cost management platforms enables the healthcare supply chain to visualize, monitor and improve spend to scale their purchased services savings strategy and vastly improve speed of business. With the right program in place, the supply chain can efficiently align stakeholders’ interests, build long-term supplier relationship, negotiate stronger contracts with more value, and reach aggressive savings targets.

Written by Mickey Meehan, VP of Products and Marketing, Medpricer