Magnit BrandVoice: U.S. Healthcare Organizations Are Overspending On Services Procurement…Here’s How To Fix It

Magnit BrandVoice: U.S. Healthcare Organizations Are Overspending On Services Procurement…Here’s How To Fix It

The American Hospital Association warned in an April report that the financial stability of U.S. hospitals and health systems is at risk. From 2019 to 2022, overall expenses for hospitals and health systems increased nearly 18%, driven in part by a staggering 258% increase in contract labor expenses. It’s no surprise that half of hospitals ended 2022 operating at a loss. Clearly, organizations need to rein in labor expenses wherever they can without compromising quality of care. Services procurement offers a significant opportunity to drive cost savings, but doing so is often easier said than done, as procurement is rarely a transparent process. Some statement of work (SOW) contracts are signed without being reviewed; others never go out to bid.

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The financial stability of U.S. hospitals and health systems is at risk, with expenses increasing by nearly 18% from 2019 to 2022, primarily driven by a staggering 258% surge in contract labor expenses. This has resulted in half of the hospitals operating at a loss. To curb costs without compromising care quality, organizations need to focus on services procurement, a potential avenue for significant savings. However, the lack of transparency in the procurement process, including unchecked SOW contracts and absence of competitive bidding, presents challenges that must be addressed to ensure financial stability in the healthcare sector.


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