How Supply Price Inaccuracies Can Affect The Bottom Line
Due to the nature of how hospitals and health systems acquire supplies, product prices are constantly changing. Different hospitals in the same health system, and even different departments within the same hospital, may be paying different rates for the same items, and those prices are typically in flux.
With supply chains and individual departments within hospitals tasked with the goal of stripping out waste and inefficiency from their operations, inaccurate product prices can be a thorn in their sides. This article by Peter Nelson at Health Data Management looks deeper into how pricing inaccuracies can negatively affect a hospital’s operations:
“A simple human error such as failing to update a price change on a distributor website can create confusion and errors, and ultimately lead to delays in completing transactions. Price discrepancies are also expensive, costing healthcare providers alone in excess of $92 million annually to process these exceptions.
This price accuracy situation is in diametrical opposition to the supply chain’s opportunity to strip waste and inefficiency out of the system so the industry can remain focused on providing outstanding levels of patient care.
Price accuracy is one of the most labor-intensive and error-prone issues healthcare organizations face. Every player in the healthcare supply chain believes its pricing data represents the truth, but too often, these prices exist in silos. While pricing data from a manufacturer or distributor may reflect a product’s current price, it may not take into consideration a healthcare system’s negotiated contract or specific discounts available.
In fact, contract price misalignment is a root cause of many price discrepancy issues. For instance, the majority of hospitals purchase supplies from a distributor. Distributors, in turn, receive pricing information from manufacturers. If a healthcare organization negotiates a purchasing contract directly with a manufacturer, that pricing information typically takes 45 to 60 days to be updated and reflected in the distributor’s pricing.
Too many organizations have managed this complex pricing process with outdated manual approaches like fax and email—that’s a sure-fire recipe for miscommunication and delays in contract activations. This results in contracting staff spending hours trying to determine contract start dates and whether a specific organization is entitled to a certain price on a certain date.
Multiply that by hundreds of thousands of pages of pricing data, and it’s easy to see the scale of the inefficiencies at the heart of healthcare price accuracy.
While there’s no magic genie coming to the rescue to solve the price discrepancy issue, the power of technology is increasingly driving collaboration among a trusted community of manufacturers, distributors, group purchasing organizations and hospitals to enable these trading partners to spot price discrepancy issues early in the purchase order process.
Even better, an automated supply chain will know how pricing changes impact specific healthcare organizations based on its buying contracts and can alert those providers in advance of any price changes taking effect, so it can make purchase decisions accordingly.”
Read the entire article here: How improved supply price accuracy can save money
Without the right systems and processes for price accuracy in place, hospitals will continue to struggle with the downsides of inaccurate supply prices. Technology and automation may hold the key to better price transparency and accuracy for hospitals looking for a solution for this tricky problem. Best practices to eliminate this issue include implementing software like iRISupply, which can provide a source of truth for all information related to implants and supplies in the procedural areas of a hospital. This system can provide a bridge between materials management, billing and electronic medical record software to coordinate pricing information across disparate systems.