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2 ways to stretch your CHC’s funding to achieve larger initiatives

Created by Greg Brown & David Thorpe

Healthcare And Social Services Medical Services

Community Health Clinics (CHC) nationwide confront the challenge of improving patient experience in an environment of decreased funding. Two common pain points can be finding the means to not only improve access to care for uninsured patients, but also recruit, develop, and retain top talent. The resources to achieve such goals doesn’t necessarily have to be driven through funding; it can also be found through cost management efforts.

Over the past five years, some CHC facilities have doubled in size, fueled by Medicaid expansion under the Affordable Care Act. During this time, a main focus of many facilities was staff training, retention and providing community outreach to increase access to eligible patients. Now that the expansion process has slowed down, facilities should have an eye on finding cash flow efficiencies within their organization to continually provide patients’ access to quality care and retain top staff members.

When facilities are seeking efficiencies, it can be beneficial to review purchasing processes and centralized contracting procedures. This ensures that all processes are transparent and understood by all departments.

Creating streamlined purchasing processes

In many facilities, it’s not uncommon for multiple departments to make their own purchasing decisions, which reinforces departmental silos and increases the likelihood that staff members make off-list purchases (that aren’t subject to discounted list pricing or rebates). An additional concern is staff members, fearing a supply shortage, order more supplies than needed which eventually expire before use.

In order to create more transparency and streamline purchasing expenditures, an organization-wide system should be developed by which all facilities use the same electronic PO system or authorize specific people within each department to make purchases. Inventory should also be tracked to ensure each item purchased replaced one item used, to reduce unnecessary purchases and decrease spending.

Developing a centralized contracting procedure

Another way to find cost efficiencies is by developing a standardized organization-wide system for managing contracts. If an organization’s contracts are signed and maintained at the facility level, it’s likely that there are multiple contracts floating around – each with different terms, rates and expiration dates. This makes it challenging to consolidate your contracts (even with the same supplier) and go out to bid on new contracts in a consistent manner.

By implementing a centralized contract system, your organization gains greater control and transparency over managing future contracts and purchasing behaviors. To manage contracts more cohesively, select two or three people (preferably at the CFO, COO level) to oversee contract bidding and new contract signings for all locations and store contracts in a centralized location so they can be stored and reviewed. Also consider establishing a contract log in order to keep track of what contracts are auto-renewing or expiring soon so that the organization has enough time to create a new bid or negotiate a new contract with the incumbent.

By taking the time to develop best practices around purchasing and contracting processes, your organization can streamline expenses as duplicate purchases and contracts will be eliminated. This can save an organization an average of 10-30 percent of their purchasing costs, which can help provide the means to fund your facilities’ bigger-picture initiatives.

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