Hospitals are hectic, busy places, where it can be difficult to manage all aspects of operations thoroughly. This is particularly true of vendor relationships. In order to achieve optimal performance, vendors need to be held accountable for their results – for the sake of both their contractual obligations and the welfare of patients.
In the world of revenue cycle, vendors have a multitude of accounts and are required to keep incessantly bustling hospitals adequately serviced. But the number of accounts and the pace of business can make it exceedingly difficult for vendors to properly meet all the terms of their agreements. In the end, hospitals are generally the ones who lose, with higher vendor costs and lower than expected vendor performance. In fact, audits have found that up to 60% of accounts placed with outsourcers were inadequately serviced. This is simply unacceptable, as not only do patients deserve the best quality that vendors can deliver, but due to recent regulatory changes, hospitals now require better performance.
In 2017, TPC’s Revenue Cycle Council (RCC) recognized vendor management as a significant opportunity that they believe they could address together. Comprised of revenue cycle leaders from each Member hospital, the RCC reviewed and evaluated vendor management companies they believed could provide better oversight of their current vendor relationships. They selected a partner who had demonstrated success in bridging the gap between rising revenue cycle vendor costs and underwhelming vendor performance.
Through this new program, TPC partnered with a third-party company that has developed a comprehensive vendor management system (VMS). By receiving detailed data, the automated VMS reviews each individual account for each selected vendor. This process allows managers to verify that the vendor is fulfilling the terms of their contract and taking the appropriate credit for payments. It helps to increase vendor efficiency and cost effectiveness while also increasing hospital collections rates. In some cases, TPC’s partner also provides coaching to vendors to assist them in adjusting their processes in order to improve their overall performance. The VMS end goal is not to eliminate underperforming vendors, but to instead work with them to appropriately meet the standards agreed upon in their original contract.
The beauty of the automated VMS is its ability to audit 100% of a hospital’s revenue cycle business—far more than typical hospital resources can. Automating the review process not only frees up valuable man power to the hospital, but also drastically improves the quality and capability of vendor oversight. And besides the economic and efficiency upsides, there is also a relational one. By improving their service, vendors benefit through the betterment of both their reputation and relationship with hospitals. Ultimately, hospitals can experience considerable benefit by more closely managing their vendor relationships. As an example, one TPC Member, Hendrick Health System, reported they have realized over $2.5 million in performance improvement after just 8 months of using the VMS.
“By utilizing the vendor management software, we have been able to streamline our reconciliation processes, cut down on multiple agencies taking fees on accounts, and verify the accuracy of vendor invoicing. Our strategic partner reviews our contracts and assists our facility in holding vendors responsible for not only their invoicing practices, but also their performance, quality and productivity. This process has provided a unique level of transparency to the hospital, as well as the vendor,” explained Tave Kelly, Director of Business Services at Hendrick.
Making sure that vendors meet their contract parameters is an extremely difficult and time-consuming task for hospital administrators. But using a VMS enables managers to do so efficiently, helping vendors to meet their agreed upon standards, thereby improving the vendor-hospital relationship, the hospital’s overall efficiency, and most importantly—patient care.