Supplies, devices, and equipment are purchased from a variety of different vendors. Hospitals typically negotiate contracts with vendors for volume discounts or other concessions. These contracted vendors (“on contract”) are preferred. However, in certain cases surgeons or other hospital personnel might purchase from vendors that the hospital does not have a contract with (“off contract”). To measure compliance and/or non-compliance, equipment purchased on or off contract respectively could be monitored as a total dollar amount. Alternatively, the dollar amount purchased on or off contract could be divided by the total value of all equipment purchased x 100% to obtain a percentage. Tracking purchasing compliance and/or off-contract purchases is important, as purchasing devices off contract is a significant driver of increased supply chain costs. Some estimates highlight that hospital off-contract purchases can range from 20%-30% of total purchases. HFMA has also previously estimated that supply costs will overtake labor costs in 2020 (shorturl.at/fwEVX), so tracking supply expenses is that much more important.
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