$1 Billion in Hospital Financial Improvements | E. 98

Lisa [00:00]:

What do you want if you've got this one shot? Do you wanna just grab 10% or do you wanna have the company that's gonna roll up their sleeves, get to the details and get them 22%? Like just because you get 10% of savings, sometimes everyone's high fiving, but what if that should have been 22 or 25? So the big thought that I've been coming to is you got one shot at this agreement. Let's do it right.

Introduction [00:25]:

Welcome to the Healthcare Leadership Experience Podcast, hosted by Lisa Miller and Jim Cagliostro. 

Lisa is the founder of VIE Healthcare Consulting and now Managing Director at SpendMend. Lisa and her team has generated over $1 billion in financial improvements for VIE's clients since 1999. 

Since 2007, Jim has been a registered nurse working in critical care, perioperative services and outpatient settings at nationally recognized medical facilities across three states. 

You'll hear conversations on relevant and trending topics in healthcare and much more. Now, here's your hosts, Lisa and Jim.

Lisa [01:05]:

Hello. This is Lisa Miller. And…

Jim [01:07]:

Jim Cagliostro.

Lisa [01:09]:

You are listening to the Healthcare Leadership Experience. And so today's a little bit unique. Jim and I have done, I think, maybe one podcast, maybe two, years ago together so we're back together. 

So Jim, thank you for, getting on the schedule and so we can have a conversation.

Jim [01:28]:

Thanks for letting me be a part of this whole process. It's really been a pleasure.

Lisa [01:31]:

Yeah. And just for our listeners, Jim has done a remarkable job interviewing healthcare leaders. With Jim's background as a nurse, he's been able to bring a very clinical view and perspective to the Healthcare Leadership Experience? And, it's, it's been awesome. So thank you, Jim. You've done a really spectacular job. Looking forward to this year and all the great interviews you're going to have. So nice job.

Jim [01:56]:

Thanks for your time.

Lisa [01:56]:

So today is a little bit of an ad hoc podcast. We are, I believe, at episode 98. Next week, Jim has a great podcast scheduled for 99 with a healthcare supply chain leader. And then we have our 100th episode. So, I'd encourage everybody to keep on listening. We've got some great interviews and discussions coming on board. 

So today's gonna be ad hoc. I don't really know what we'll all bring, but I think the theme of today is we've achieved over $1,000,000,000 in financial improvements and we are on our 25th year of service. So that's a lot of stuff that's happened. 

So, Jim, I'll kick it off to you for any questions. So, I don't really know what's gonna happen here.

Jim [02:46]:

So, I mean, the one thing I know that always comes to mind when I think about, you know, my time at… I've been at VIE/SpendMend for, about 6 years, almost 6 years. And even in those 6 years, I've seen a lot of change. But over the time, you know, as well as our listeners know, that there's so much change in health care. Any thoughts in terms of how have you been able to adapt to that change — or even moving forward, what are some keys in terms of adapting to the ever-changing healthcare industry?

Lisa [03:16]:

Yeah. That's a great question. Alright. Cool. I've seen changes in companies like ours who support hospitals. So I'll hold that for a moment. Because I think that's important. I've seen changes in how hospitals have had to kind of, like you said, adapt, right. They they've had to rely more on technology, more on analytics and then and hold that for a minute. And then of course, how we view change and how have you changed. So I think the best example I can talk about is purchased services.

Lisa [03:50]:

So in our earlier years, when I started the company, one of the views for me was hospitals are so busy. And they were busy 25 years ago and they're busy now, maybe more busier, you know, maybe more distractions or whatever that might be. But 25 years ago I knew I wanted to be different. So the difference was for me, we would go into an AP department, and we would copy invoices. So we literally would say, we don't need anything from your team, right? We we're not gonna be disruptive. We're gonna go in. We're gonna copy invoices. And then from those copying the invoices and copying the contracts, we're going to find cost savings. So you won't even see us.

Lisa [04:33]:

We're going to the backroom, get the data and wanna come back to you. And that worked great. I felt like that was a big differentiator because working with the CFOs and the COOs are like, really? And I'm like, yeah, just give me a day, give me two days or bring a couple of people in. And then within less than two, three weeks. We're gonna already have opportunities. So that was the, in my mind, the least amount of friction that we could get to working with the C suite and that for them too, they can get by and obviously they have to task their team with this. So the most they would have to do is tell somebody in the county they're gonna be on-site and they're gonna copy invoices of contracts. That was the worst-case scenario. So it was great. It was great.

Lisa [05:18]:

So what happened is kinda accidentally, because we copied all the invoices. We were 24-5 years ago started to look at purchased services because others in the space, other consulting firms would ask for a P.O. detail report and they would focus on that P.O. detailed report for their cost savings. So the purchased services would come up as just the header data and a total spend. So they would never even look at it. So we had an unfair advantage right from the beginning because we were already looking at invoices. So when people, you know, kind of say, “oh, well what, what's the difference between you and all the other companies?” I often say, well, let me tell you about our history. The history is I've been looking, and my team's been looking, at invoice data for 25 years. Like, and it just happened accidentally. A lot of things do just being on the front lines. I believe in frontline innovation, and you get those insights from the so I can share more.

Lisa [06:19]:

I don't know if you have a question so far. I can share more.

Jim [06:21]:

The one thing I'll just add to that is the detail. That's something that stood out to me, you know, very early on when I joined VIE. The detail and the amount. I mean, it it's hard work. It's tedious work. I know talking with others who have been with VIE before me, they shared about that. Going on-site and going through the paper invoices. Now a lot has gone digital. And so that makes the job a little bit easier in terms of collecting the data, but it's still tons of data. And I've just always been impressed with the amount of data and that line-item detail. And I know just like you shared, that’s what gives VIE the advantage, having that information.

Jim [06:57]:

I know we use the term dark data. Knowing that information that, unfortunately, a lot of hospital leaders, don't have... they don't know, that information. Even that they have, they don't have the time to go through it.

Lisa [07:08]:

Yeah. So I think, you know, a 100%, right? We are so detail focused. And so, you know, I kind of asked your initial question like how we see change or how I view that. It started with how do we support hospitals for success. And so my lens on it was always to make things easy to be easy to work with, right. Get the data. And, then over time, as people saw like what you said, our desire, our roll up your sleeves, we get to the details approach. We're not looking at ratios. In the past we've achieved 7% so we're gonna give you 7% savings. It's always about their data, their line items, their detail. When we show on opportunity report, it is down to the details. And so that's a great point.

Lisa [07:57]:

Like that's our differentiation. So fast forward, we would get the invoices. We had a team of people on the backend just entering line item details. And so our work was always so different. Like when our hospitals saw that work, like this is work that we've never seen before — and it's because everything, you know. Those details matter, right?

Jim [08:20]:

Yes.

Lisa [08:21]:

So, you know, one day I get a call from a client saying, “listen, you keep on finding savings, utilization opportunities, like over and over, things that reviews that we've done in the past. You come in and you get still find things that, you know, other firms or we've missed. And we'd like to do is start a monthly program where you're getting us that data on a monthly basis for these 7 categories.” I mean, we're a large health system. So in my head I thought, Okay. So I gotta hire X amount of more people in order to fulfill this job. And then I just had a different thought. The different thought is what if I could automate this? And so, you know, it's this, I love “what if” questions and that what if question really got me down the road of finding a different solution? And so The Ziffrin solution was taken off the shelf, OCR tool. I had search literally globally for like the right OCR solution, and reverse engineer it. And you know, we code invoices, we had to learn a system, we had to code invoices, we had to bring people in and take a totally different view on it. It was difficult. And I had people telling me you'll never be able to do it.

Lisa [09:39]:

You'll never get patent. And we got several patents, and it was such a great lesson to go through the process and to have people like Anthony who came on board and of course, Pandu, Rich and Brian who kind of been part of this process, but now to have patented technology to just have a different vision for our work and to keep pushing forward. Like, you know, to stay ahead for us so we can deliver a differentiated result. So one of the things I've been really thinking about a lot is like, why choose us? Right? And you know, there's other people, other companies and, you know, they're doing everything manually. Like, you know, we're automating it. Now we can get to savings in a much quicker expedited rapid way so the hospitals can get results. But, you know, I really, I've been thinking about why this matters. And so the one area where I think it matters the most is that hospitals do have so many things that are going on, so many more competing priorities. So they've got one shot at this contract renewal. They have one shot at looking at this cost savings.

Lisa [10:55]:

What do you want if you've got this one shot? Do you wanna just grab 10% or do you wanna have the company that's gonna roll up their sleeves, get to the details and get them 22%? Like just because you get 10% in savings. Sometimes everyone's high fiving, but what if that should have been 22 or 25? So the big thought that I've been coming to is you got one shot at this agreement. Let's do it right.

Jim [11:20]:

I love that. I mean, that that's something that you know, Lisa, it doesn't come naturally at these high-pressure situations. In my mind, that's You have been doing this for so long, and sitting with you and Rich and even listening in and contributing some, I'm impressed. These are difficult conversations to have. I know you've shared a lot of the vendors. They have trained negotiators. I mean, this is what they do — versus hospital leaders that have so much on their plate, and some of them are incredible negotiators, but there's so many other things that they're juggling. It does put them in a position that difficult, and that's why We love to come in.

Jim [11:54]:

And, again, I just enjoy hearing you and Rich and others kinda do their thing in terms of, okay, what is the best pricing? What's the best way to approach this contract? When do you look at renewals? I mean, all the details, I've been very impressed with kind of the process. It can be overwhelming.

Lisa [12:10]:

Yeah. So yeah, of course you would help us quite a bit on the clinical side and yeah, I know we give you some angst sometimes.

Jim [12:17]:

Just a little bit.

Lisa [12:18]:

Yeah. But we really look at every dollar, every line item, you know, this is a mission for me. I love saving hospitals money. Yeah, obviously I'm in business, you know, and we've been acquired by SpendMend and SpendMend's a business and the view is always, we're here to add so much value so that value and dollars can be translated into meaningful results for, you know, for the hospital's mission, they have a mission. So we, you know, we're supporting their mission. But for me, when I'm on a project, it's so personal to me. Like I'm advocating for the hospital, I'm advocating for the CFO, I'm advocating for the department leader. I want them to get the best out of this. So we are intense in terms of how we look at the data and how we analyze contracts and how we look at every view when we deliver this cost savings report, it's capturing everything. And again, I go back to this differentiation of for us is that every single project is not trying to get through it.

Lisa [13:22]:

We want to do it right. And that to me is a big differentiator and how we look at the market, let's do this right. You may not be doing this contract again for a few years. Let's get it right. Like with our backend technology and automation and our systems, we can get to everything we need to do quickly so that we can have the conversations and look, sometimes those conversations be with the vendors are difficult, but sometimes like I often say, let's take the emotion out of it and just have the data. Like, I'm really not trying to have any kind of like difficult negotiations. They are trained negotiators and hospitals need to understand that. But if we can let the data speak, take the emotion out and really compress the timeline. Remember the vendors are trying to expand the. We're trying to compress it.

Lisa [14:16]:

But if you let the data speak, hopefully the data gets to internal collaboration with clinicians and administrators and physicians. And then it gets to, you know, with those negotiations, the utilization, the benchmarking, the thinking around why this contract needs to look a certain way is done through the data and not done through emotion. And that's what I think is most important.

Jim [14:41]:

So I'll share this with you. That is a quote that I know you have shared. It's not just a quote. It's a principle that you live by, at least in terms of this work, where if you come with the right data, if you come with good data, it takes all the emotion out of it. And I'll just share. Personally, I've used that. When me and my wife are disagreeing on something. She's not a fan if I bring that up too much, but it's so true.

Jim [15:02]:

When we're emotional, we get heated or passionate or what whatever it might be. We sometimes forget to look at the data. Well, what's the best decision to turn back to the data. And I just wanna share two things that as you were talking about mission, in terms of the work that VIE does, it's clear It makes the lives of hospital leaders easier. It makes their jobs easier, or at least it sets them up for success. I shouldn't say easier. Maybe that's the wrong word. So that's the first thing in terms of helping hospital leaders positioning them to succeed. But then the second thing, and I know we've talked about this over the years, is the impact that it has on patients.

Jim [15:39]:

And obviously, my mind always goes to the clinical. But when we are helping hospitals to be financially successful, it really does impact the ability to provide better patient care. It provides more resources that can go towards staff and go towards patients, go towards the labor, when we're focused on the nonlabor SpendMend. So that's something I've always appreciated about VIE. 

I do wanna ask, you mentioned about joining SpendMend. If we can just talk a few minutes about that, what does that mean in terms of, you know, looking ahead as part of the growing suite of services offered by SpendMend. Where do you see that impacting by? Obviously, we're able to continue to do the great work that we do, but how does that shift things? Does it shift things at all in your mind?

Lisa [16:23]:

Yeah, no, that's a second great question. Thank you. So it significantly impacts the way we deliver value and savings to hospitals. Because now we're able to offer a program, right? So what VIE previously has been able to do is focus on purchased services and really quite a bit position preference items. We do quite a bit of that work too. And then even look at some of those block and tackle med surge items. So in, in our space, we've taken out that $1,000,000,000, right? So, however, now with SpendMend, we're able to add profit recovery, which is the core offering that SpendMend had started with, started with, which is really key because this is, you know, the number one provider of an AP audit recovery audit is SpendMend. So we're able to add that offering. And a lot of the data already comes from what that work is and that service line, that core service line. So we can get that data from those profit recovery audits, which makes onboarding us for purchased services, PPIs or med surge, just that much more faster. Right? Because we already have, we have a data. David Hewitt office says we have the same data set and now we're able to look at it in different ways.

Lisa [17:38]:

And I love that he says that. And then finally we have pharmacy — and pharmacy at SpendMend is truly on the cutting edge, right? So they've got, we've got pharmacists, farm Ds that support, you know, hospitals and the 3 40 B analysis, support them in their cost savings, cost optimization. Then we have Trula, that really is a very forward-thinking technology and service that allows them to protect an order in a way that, you know, that optimizes those costs on the front end. So, and then we have rebate insight of course, and that's really making sure goals are getting those rebates, which is really key. So you put everything together, one solution, one offering, under our one company. So we're not subbing out. We're not looking to pull other services into it — under one company. We can come in and deliver a complete cost savings initiative from end to end in a hospital can know that every single dollar is being looked at, right? And so what does that mean? So that means that we can own a dollar amount for cost savings. 

So a hospital can come to us and say, okay, we need you SpendMend to own $15,000,000 of our cost savings. We can go, we got it from the pharmacy to PPIs, to purchased services, proper recovery. Like we can do it all and not need anybody else outside. We've got the experts, the team, the technology, the templates, the strategies all under one house. So for me, that's tremendous. I Lisa, And I don't see it anywhere else where we're the only company that can do that.

Lisa [19:19]:

There's not one other company that can provide a comprehensive cost saving solution and can own a number and not have to sub out anything. We can do it internally. I think that's the big, big advantage of now being with SpendMend.

Jim [19:36]:

Man, one word comes to mind as you're describing that. Just the fact that SpendMend, you know, we can do it all, but streamline. Everything. One phone call that you can make. This whole idea of automation, I know that's been big for VIE from day one. But it's not just streamlined and automation and, okay, a hospital comes, and we have. Yes, there might be steps to go through, but it's all customized as well in terms of, what are the needs of the hospital. You mentioned the mission of a hospital. Maybe a small rural hospital is different than a big system. We can serve each of them and meet their unique needs, and it's all one phone call, one contact that to get that ball rolling and put everything under that umbrella of SpendMend.

Jim [20:14]:

And I love that. It's one contact that you make. Hey, we need help or hey, find some savings for us.

Lisa [20:21]:

Yeah, I've never thought of it that way. And if that's really, it's so interesting that you said streamlined, but it is streamlined, right? Like it's very similar to, you know, when I started VIE and just saying, look, I'll just go into AP. You don't worry about anything. It's kind of the, the next gen 25 years later of just pick up one phone call like we ever ready. So it's kind of this next major quantum leap evolution to like one call, we're here and we can get started. And we probably because of the AP audits that we're providing to a lot, most of the hospitals, we probably had a data already. We probably can just kind of just jump in and, and I'll give you everything because we have your data. 

And I think the other thing, you know, on that, Jim, as I work with CFOs and other healthcare leaders, you know, they do ask us if I'm on a purchased services or PPI initiatives, Lisa, you know, we're having some issues or, you know, we see an increase in pharmacy costs. And I’m like, that's great because we've got a pharmacy solution, you know? And I think I really kind of have enjoyed that as well is to be able to support these CFOs and financial leaders as they see increases. And so we're able to kind of jump in and then provide other value with the spend and service line.

Lisa [21:35]:

But that's a great question. So and one more question, I don't know what it's gonna be. So Jim, last question.

Jim [21:42]:

Now I gotta come up with, well, maybe it's more a statement and you can bounce off of it. But one thing and it's a conversation that you and I have had more than once, But I know I've shared with you, you know, we're faced with a certain challenge. And I said, Lisa, I haven't done this before. I really don't know how to proceed. I have the support from you and the members of the team to say, you know what, we haven't done this before, but this is what we do. We find a way. We find a solution for hospitals. So is that something I think I know the answer, but is that something a mindset that you've always had? Because in my mind, I automatically go to, well, I wanna know how to tackle this problem when I'm faced with a problem.

Jim [22:23]:

But a lot of times, it's we don't know how to tackle it, but we're gonna tackle it anyway and find a way. Have you always had that mindset? Is that something that's grown and developed through the work that you've had?

Lisa [22:32]:

Well, that's a great question. So, you know, you know, from a, from a business CEO founder perspective, you know, I believe that just founders in general have to find a way, right? Like, you know, prior to SpendMend, 23 years of running without a net, right? Like it was just all of us figuring things out and you gotta find a way, which is great. It's a great muscle to build when you have to do it generally speaking, right? But you know, to translate that into our work. When I started by our focus was maybe certainly, you know, had some areas where we'd like to focus on. It was the O R that was my background, the O R, but we're always willing to apply certain principles, right? So the principles are, you've got invoice data, you've got contract data. Okay. What can we look at that? How can we think about that how can we model? We have the data. What if we don't have benchmarking data? What can we look? What does that look like in the field? I mean, fast forward now, 23 or 5 years later, we virtually have done just about every single kind of contract.

Lisa [23:41]:

However, to your point, sometimes we do see some things that are unique. And I think that that confidence lies into, you know, those core strategies, those core principles we adhere to, and we can look to, and we can tell our client, look, this is something new or it's a next gen, right? So we, and we tell them like we're applying these modeling, we're applying these things that we've done in the past to something new. So we're very open and honest, but I think we're always looking at how we can make those connections. 

And I think the, you know, the other area of, like, we just gotta figure it out is with enough experience. You know, you can look at contracts and have critical thinking, right? And you can apply other benchmarking or other ways or things that we've seen in the marketplace and can connect those dots. 

I'll give you a story. So I would say the is like 15 years ago, I wanna say it's 15 years ago, we were looking at blood services and we had never negotiated —in fact I don't think anybody had negotiated really 15 years ago wasn't really widely looked at, to look at blood services. And so I said to the CFO, who said, we've never negotiated this agreement, but we see a lot of data and the data suggests in this area that, that you're not getting the best pricing and there's some other contractual terms. And so I feel like what we're asking for is we see in the marketplace, we, you know, it's pretty, I think it's, it's reliable and let's see, he's like, let's do it. So we went to negotiate and, we think it was some of the times this company had known everybody to ask them for a price change. You know, this is the first time. And basically, they were like, the is unheard of. You're asking for a pricing reduction.

Lisa [25:28]:

You don't know what you're talking about, you know? And then, you know, they went back to the like, they don't know what we're talking about and on and on and on. And it's just so happened that nothing, we weren't able to move the needle there. About 7 or 8 months later, it came back up and it came back up for other reasons and we were able to renegotiate the agreement. It turned out. And I can tell you that's happened a couple of times where it's been this brand-new area that no one's ever negotiated and it's like, what are you talking about? You can't negotiate that. That's not negotiable. And I'm like, well, we see the data, or we apply some critical thinking to the data or there's no utilization or limited, or we just, we have some templates and some models that are very, very successful and that can be applied across the board. As we look at, I would just say the new IT agreements or new technologies, we can apply things in the past that are similar and we're very forthright with our customers, to say, we don't have a direct hit and match.

Lisa [26:31]:

And that's very uncommon these days after 25 years, but we, but if we, but there are going to be new things, but there's principles and models and strategies that are very successful. 

So if you're, I don't mean this, we might live in the gray. And I think to answer your question, sometimes I have to ask people to live in the gray, right? And I know a couple of the projects you're working on and they're not black and white, you know.

Jim [26:57]:

You mentioned, well, just the tell you just fall back on those principles. You said templates, models. Like, we know this has been successful in the past. Let's continue through remembering and basing our work off of these models, off of these principles that have been proven over 25 years.

Lisa [27:14]:

Yeah. And I think it's funny, I've heard this a couple of times the last year, which is, I'm still shocked. Like we've had consultants that moved into supply chain roles in the hospital and, you know, we've had the opportunity to have conversations with them and they're like, oh yeah. What you do is you guys do is really amazing. Like you really get to the details. They're like, “oh, we used to just do.” Hey, you know what? It's 8% and if we're happy, we got 8% offer the number. I'm like, oh, I'm like shocked when I hear that. And we are so diligent in how we look at details, the utilization, how we look at all the financial terms? I mean, and you've seen it and I'll just highlight Brian, but it's, it's Brian, it's Rich, it's Pandu, it's, we've got others, Jason and Lauren.

Lisa [28:04]:

You know, when we even look at, let's say a food nutrition agreement or EBS agreement, the amount of details and the questions that we are, the templates we've used to analyze data? I just think that if somebody were to kind of open up the back door and see it? I mean, they see what we, the report we give them, which is a big wow, but the work on the back end, I think that's the differentiator. It is the amount of roll up the sleeves work that we do to get to those savings reports and so that we can get those cost savings. Like, again, I'm gonna go back to the thing that I've been thinking about most in 2024 as a differentiator is if your hospital had this one opportunity with this one agreement and with time so short and the competing priorities, what level of results do you want if you got this one shot? And I think that's it. Like let's get the most out of every single agreement. And if and if you're gonna open up these agreements, pick the company that's going to run after every dollar for you.

Jim [29:07]:

Thank you, Lisa. Yeah, that's all I have. I mean, I think you played on a lot of great things. You gave us a lot to chew on and I love hearing some of those stories and some of the history of VIE. Yeah.

Lisa [29:17]:

So Jim, this has been great. I love the conversation and, we need to have more of these, but I'm looking forward to your next week's podcast where you're going to be having a great discussion with the supply chain leader that's gonna have a lot of value to our audience? And then our 100th episode, which is really exciting. It's a great, great, great podcast coming up and I encourage everybody to hear that. So thank you for listening to The Healthcare Leadership Experience. Jim and I have been real fortunate to have the listeners and it you know, to support us and the feedback you give. And if you've got suggestions, we'd love to hear from you. Thank you.

Jim [29:53]:

Thank you, Lisa.

Host [29:55]:

Thanks for listening to The Healthcare Leadership Experience podcast. We hope you've enjoyed this episode. If you're interested in learning new strategies, best practices, and ideas to utilize in your career and healthcare organization, check out our website at thehealthcareleadershipexperience.com. 

And oh yeah, don't forget to rate and review us and be sure to join Lisa and Jim next time on The Healthcare Leadership Experience podcast. 

Thanks again for listening.