High-performing hospitals have found that purchased services is a big bucket of expense ripe for improvement. In healthcare, purchased services are those provided by an outside party instead of the hospital’s in-house staff. While there are numerous areas that a hospital may choose to outsource, some of the more common include laundry and linen, IT, food, groundskeeping, facility maintenance, and so on. Collectively, these services can add up to 45% or more of a facility’s non-labor expense, rivaling the amount spent on medical/surgical supplies and capital equipment.
"Every category roadmap we build for our clients results in them improving their performance, while at the same time understanding the tradeoffs in service quality offered by vendors in their market"
Valify works with healthcare systems to mitigate much of the financial risk associated with contracting for these indirect services. As the first technology-enabled group purchasing organization (GPO) dedicated to healthcare purchased services, the company gives hospital operators full visibility to non-labor spend and actionable information for decision-making. With the right information, providers can compare their performance to peers and identify opportunities for improvement. Valify’s process is unique. Not only does it help to identify unnecessary expense – finding dollars that can be invested in mission-critical areas – it improves quality and service levels. “We uncover opportunities and rapidly materialize value by providing market insights to our clients and access to contracts with hundreds of suppliers that are negotiated on a foundation of over $8 billion of spend,” explains Les Popiolek, CEO of Valify.
The reward potential is huge; 10%- 30% savings across purchased service categories such as IT & telecom, financial services, HR services, facility support services and insurance, and clinical services including reference lab, dialysis and blood bank.
Visibility Yields Tangible Results
Valify’s technology platform and data-driven process helps clients evaluate and select the best vendors for their needs. Valify’s algorithm equips users with full visibility by segmenting spending into over 1300 categories of purchased services across seven different service lines. Starting with a Purchased Services Assessment (PSA), the company allows users to pre-emptively target areas that yield predictable savings and evaluate vendors across multiple categories. Valify is designed to deliver quick wins, including standardization opportunities, identifying rogue spending and comparing performance to benchmarks. Users can streamline their eRFP process with customizable templates and market-vendor insights to help support cost-reduction strategies. With the help of Valify’s Pinpoint Benchmarking tool, hospitals compare spend normalized to standard units of delivery to calculate potential savings and how to leverage this insight during contract negotiations with vendors.
The company deploys technology and expertise to deliver insights using unique price points and operational metrics based on geography, frequency of utilization, facility requirements and other market conditions. Users can view vendor proposals side-by-side, and standardized scoring methods are used across financial and non-financial questions to make comparisons simple and accelerate the process. With a database of 550,000 vendors, clients gain the confidence of achieving the lowest service rates in their market. “Every category roadmap we build for our clients results in them improving their performance, while at the same time understanding the trade-offs in service quality offered by vendors in their market,” states Popiolek.
Whether providing technical support, adding bandwidth, or managing projects, Valify’s team is experienced in every aspect of purchased services and offers solutions to support companies of all sizes. In one case, a client turned to Valify for help regarding an unanticipated 40% rate increase with its supplier. Valify identified suitable vendors in the client’s region and provided a relevant benchmark for rates other hospitals were paying for the same service. Now, equipped with Valify’sbenchmark data and analysis, the client successfully mitigated cost increases by restructuring its relationship with the incumbent vendor.
A New Paradigm for Competitive Advantage
The onset of the COVID-19 pandemic exposed vulnerabilities in the healthcare supply chain. As patient care involved a variety of resources such as specialized personnel, equipment and supplies, hospitals could not rely solely on their existing supply lines and capabilities. This resulted in ad hoc collaborations among providers, suppliers, GPOs, industry and governing agencies to devise innovative workarounds without sacrificing quality.
Since its inception in 2014, Valify has been known for the breadth and depth of its leading end-to-end cost management solutions, helping many hospitals proactively identify and harvest value in contracting for purchased services. The company has always emphasized client-centricity, rationality and applicability of the overall solution to be as important as maximizing value for all stakeholders across the portfolio of purchased services categories.
We uncover opportunities and rapidly materialize value by providing market insights to our clients and access to pre-negotiated contracts with hundreds of suppliers that are negotiated on a foundation of over $ 8 billion of spend
Over the years, Valify has expanded beyond healthcare purchased services to serve clients in retail, manufacturing, hospitality and entertainment. It sees an opportunity to leverage the experience and strategies of these new verticals to refine best practices for its hospital customer base. “With our desire to be a ubiquitous component of the supply chain, we will continually evolve and compete to offer the best features and functionality in multiple industries,” says Popiolek. Valify is also piloting solutions in international markets. Popiolek points out, “since hospital reimbursement models and costs of care are universal, we believe that exploring the European market is a next logical step of expansion for us.”
With many organizations recognizing the need for a diverse workforce, Valify has gone beyond technology by progressing from an expense-management solution provider to an advisory consultancy supporting Diversity, Equity & Inclusion initiatives. “Our clients have helped us shape a roadmap for the continuous development of new features in our platform. In turn, we have taken great steps to help them carve a path and achieve their organizational goals related to DE&I,” concludes Popiolek.