Seven Guidelines for Choosing a Vendor Performance Technology Partner

by | Feb 23, 2021

Having a virtual Vendor Management Office (VMO) gives healthcare organizations a centralized resource through which to drive optimal vendor performance across the enterprise—whether a national or regional health system, an academic health system, or a community hospital. Yet, many organizations believe creating and managing a VMO would be too labor intensive or disruptive, especially at a time when they’re working to overcome challenges brought about by the COVID-19 pandemic.

The good news is that creating a virtual VMO can be done relatively quickly by partnering with vendor performance technology experts adept at driving vendor ROI. Following are seven capabilities to look for when choosing such a partner.

Uses advanced technology. Research shows that more than half of all self-pay accounts are not compliant with best practices, SLAs, or regulatory requirements. Being able to identify issues like these requires advanced technology that most healthcare organizations don’t have access too. Look for a partner with the technology necessary to provide thorough insight and analytics into both the vendors’ and the hospital’s systems.

Provides complete transparency. Lacking full visibility into a vendor’s accounting system makes it impossible for hospitals to reconcile statements within their own systems. Look for a partner that can identify all unpaid invoices at a certain date and then match those invoices to documents within your own accounting system. Any invoices that don’t match are likely vendor errors. The best partners will be able to identify full details of these errors so they can be addressed with the vendor.

Identifies late discoveries. Without proactive monitoring of vendor invoicing, hospitals may miss process and file exchange issues that can reveal non-compliance. The longer errors go unnoticed, the more significant the impact on cashflow and the hospital’s bottom line. Choose a partner with the ability to monitor, analyze and report activities all the way down to the account level.

Determines misdirected invoices. It is not uncommon to have mix-ups in your accounting system that cause payment to go to the wrong vendor. When this happens, hospitals end up paying the same invoice twice. Sometimes the problem is on the vendor side as they send duplicate invoices. The best partner will be able to identify duplications and determine their cause no matter where the issue occurs.

Monitors discounts. Hospitals often choose vendors based on their volume discount terms. While this is understandable, it can be challenging to monitor whether those vendors are compliant with the agreed-upon amounts. Often, they are not. Look for a VMO partner with the ability to perform reconciliation of the entire process. When it’s time to process invoices, the best partners will be able to identify which payments have been made but not received by the vendor, as well as whether discounts have been processed. The partner should also be able to identify pricing claims or returns that weren’t credited.

Offers comprehensive, system-wide auditing. Although many hospitals do have some type of process for monitoring vendor performance, those processes typically use only a sub-set of accounts. This, however, reveals only a sub-set of non-compliance. To get a true picture of vendor performance, choose a partner with the ability to audit 100% of accounts. This provides more accurate and actionable insights, which are the cornerstone to effective process improvement.

Delivers a positive patient financial experience. When patients are exposed to aggressive collection tactics, they may put off needed care, which can have dire consequences.[1] It can also damage a hospital’s reputation, patient satisfaction scores, and value-based reimbursements. Choose a VMO partner that will hold collection vendors accountable for ensuring a positive patient encounter. The best partners are those that understand collection best practices and are able to identify issues within that process.

The time to act is now

Research shows that 64% of hospitals are either dissatisfied with, or unsure about, their vendors’ performance.[2] In these challenging times, healthcare organizations need a partner that can help drive vendor performance by building, operating, and optimizing a virtual VMO. The best partners are those that take an end-to-end approach by leveraging technology to power a suite of customizable applications with which to perform in-depth analysis of vendor performance across the entire reconciliation process.


[1] https://patientengagementhit.com/news/64-of-patients-avoid-care-due-to-of-high-patient-healthcare-costs

[2] https://healthfuse.com

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