By Michael Williams, Managing Director
Purchased Services account for nearly half of a health system’s non-labor spend, making them one of the most significant cost drivers in healthcare. Yet, unlike medical supplies and pharmaceuticals—where purchasing is structured, transparent, and rigorously tracked—Purchased Services remain one of the most opaque and difficult-to-manage expense categories.
The Challenge: A Major Blind Spot
The challenge lies in the way these services are acquired and invoiced. If purchase orders are used, they are typically “blanket” orders, limiting details necessary to truly understand how the services are being used. In addition, even if there are details on the invoice, this detail does not make it into the ERP system. This lack of visibility creates a major blind spot, leaving health systems unable to verify whether they are paying the correct rates, receiving contracted services, or being overcharged.
The consequences are significant. Without the ability to efficiently validate and analyze this spend, hospitals face unchecked pricing discrepancies, overpayments, and financial waste—issues that, when left unaddressed, can quietly drain millions from operating budgets. Worse still, this dark data problem limits the ability of health systems to proactively renegotiate vendor agreements, enforce compliance, and drive financial accountability across their organization.
The Answer: Illuminating Details in Purchased Services Invoices
To take control, health systems must shed light on dark data by applying the same level of scrutiny to Purchased Services invoices as they do with PO-based supplies purchasing. Extracting line-item details ensures every charge aligns with contracted rates, allowing hospitals to validate vendor pricing, enforce contract terms, and catch discrepancies in real-time.
Real-time invoice visibility enables organizations to monitor vendor pricing, benchmark costs, analyze utilization opportunities and proactively renegotiate contracts based on their actual invoice details. A structured line-item review process identifies overcharges and financial waste—shining light on spend that previously was not visible.
The days of Purchased Services operating in the shadows are over. By harnessing invoice visibility and automation, healthcare organizations can illuminate their Purchased Services spend, unlocking better cost control, financial integrity, and stronger vendor accountability.
