A New Approach to Overcome Healthcare’s Annual Budgeting Challenges

Inflation is putting more pressure on healthcare input costs. On top of that, supply chain disruption is not a matter of “if” but “when”. From product shortages to logistical challenges, up to 74% of CFOs consider supply chain disruption one of healthcare’s top threats, according to the 2023 BDO Healthcare CFO Outlook Survey.

It’s becoming progressively difficult to find significant cost savings opportunities, and “bottom-up” budgeting isn’t cutting it anymore. What can CFOs do to sturdy their organization against these headwinds during budget season?

To start, CFOs must address two key challenges:

Challenge 1: Negotiating favorable supplier pricing
Many suppliers are struggling to mitigate against margin pressure themselves, and giving health systems a better deal for margin improvement isn’t high on their priority list.
Challenge 2: Finding quick fixes to plug budget gaps
“Go-gets” are unidentified cost-saving measures that serve as placeholders within the budget until a plausible solution is found. Essentially, band-aid solutions. The approach may plug the gap in the current year’s budget, but it doesn’t provide a long-term, sustainable strategy for cost reduction. This leaves CFOs in a constant state of stress and uncertainty—not an ideal situation for anyone responsible for maintaining the financial wellbeing of a healthcare system.

So, what’s the alternative? It’s time to look beyond the traditional and consider partnering with a services provider like LogicSource.

Optimize Your Budgeting Process with an External Partner

While traditional strategies have shown success in the past, time-tested approaches aren’t guaranteed to hold up against today’s mounting challenges.

LogicSource focuses exclusively on the sourcing and procurement of non-clinical goods and services. These complex categories typically represent 20% of net patient revenue for most health systems. But how can better sourcing help you overcome an outdated budgeting strategy? The often overlooked solution is to optimize non-clinical expenditures across categories like Professional Services, IT, and Facilities.

By doing so, health systems can unlock deep cost-saving opportunities that CFOs desperately seek. Besides that, LogicSource can improve the annual budgeting process by:

  • Offering a fresh perspective on managing non-clinical expenses

    LogicSource’s innovative approach goes beyond the typical “one-size-fits-all” procurement strategy. Instead, we provide a tailored roadmap for delivering on “go-gets” for the current year’s budget while considering long-term cost-reduction strategies. These expenses are often overlooked and fall outside the efforts of your procurement team and your GPO. As a result, opportunities can be significant.

  • Developing a proactive, strategic plan

    Instead of scrambling for last-minute cost-saving measures, LogicSource services are designed to identify areas of potential savings, streamline procurement processes, and enhance operational efficiency year-round.

  • Going beyond plugging gaps in an organization’s budget

    An external partner like LogicSource can help build a sustainable, efficient, cost-effective supply chain strategy. CFOs can then equip their health systems with the tools to navigate financial challenges for the next fiscal year and years to come.

As a leading provider of procurement services and technology, LogicSource helps health systems generate deep cost savings that can be reinvested into strategic initiatives aligned with healthcare CFOs’ number one priority—to provide better access, care, and outcomes for their patients.

By combining decades of sourcing and procurement expertise, superior market intelligence, cross-portfolio spending leverage, and our OneMarket® Source-to-Pay technology, LogicSource executes custom solutions that rapidly accelerate time-to-value and achieve improved operating margins so today’s health systems don’t have to do it alone.

Read more about how LogicSource works with health systems to drive savings and margin improvements.