At a large health care system, there are many individual contracts and pricing agreements – both directly with vendors and through group purchasing organizations (GPOs). This can be complex, and it takes a team commitment to avoid overcharges by entering contracts quickly and accurately.
Making sure that a hospital or health system pays the correct price for every order and contract requires a standard procedure. The Audit Group recommends a three-step process each time a contract is entered:
However, this process is ineffective if contracts are not loaded in a timely manner. Avoid overcharges by loading contracts into the system as soon as they are signed.
In a recent Discovery Review, The Audit Group worked with a complex health system, which had a local contract with St. Jude Medical Inc. This contract included special pricing for Cardiac Rhythm Management products.
When the health system was invoiced by the vendor, its purchase order listed incorrect invoice pricing. The health care system paid $24,400 in overcharges because the contract was not properly loaded into its ERP system.
After an analysis, The Audit Group discovered that the correct contract prices were not loaded into either organizations’ system. The correct pricing terms, found in a recent contract, were presented to the vendor, resulting in a full recovery of the overcharges via a $24,400 credit for the health system.
Now, the health system has a process in place to avoid overcharges by loading contracts and updated pricing into the ERP system as soon as the terms are approved.
The complexities of large health system contracts can cause pricing terms to slip through the cracks. A Discovery Review with The Audit Group can help find and recover funds lost to overcharges. Developing a standard process for your Purchasing Department or Contract Manager means your organization will avoid overcharges by entering contracts efficiently and accurately. Contact us to learn more or get started.