Case Study: Vendor Pricing Credit

Client Snapshot
Region Southeast
Headquarters Tennessee
Employees 2000
Beds 253
Patient Revenue $1.3 Billion

Vendor Pricing Credit:
The prices negotiated and agreed upon between a company and its suppliers or vendors for the goods or services provided. Accurate vendor pricing is essential to ensure that a company is paying the correct amount for the products or services it receives.

problem

Premier Cost Recovery was contracted to conduct an AP recovery audit to recoup any overpayments and lost funds in the procurement to payment cycle, including vendor pricing credits, for a billion dollar regional healthcare system. An accounts payable recovery audit had not been completed for years and in light of the client’s change in GPO providers two years earlier, a supply chain consulting firm recommended Premier Cost Recovery for a full-scale AP recovery audit due to changes in the client’s supply chain structure. There was concern that negotiated vendor pricing was not applied during the transition from one GPO to another. The ultimate goals when analyzing vendor pricing credits within a full-scale AP recovery audit are to recover overpayments, improve financial accuracy, and strengthen relationships with vendors.

results

As part of the AP recovery audit, our auditors conducted a thorough vendor pricing review. We analyzed the data from each purchase order to determine if the prices listed on each purchase order matched the invoices and accurately reflected contracted vendor pricing rates. During our analysis, we identified multiple product purchases through six vendors where the pricing erroneously deviated from contracted rates during the client’s transition from one GPO to another. Working with each vendor directly, PCR recovered more than $220K combined for our client. In addition, Premier Cost Recovery’s coordination with each vendor resulted in systemic changes within the client’s processes to immediately update contracted rates and implement safeguards for long-term pricing consistency.

benefits of working with pcr

  1. Premier Cost Recovery helped the client recover more than $220K in vendor pricing credits.
  2. The process was managed professionally between PCR and each vendor to ensure the well-established vendor relationships remained intact.
  3. The client was able to remain hands-off during the process of researching, identifying, and recovering these lost funds

An AP recovery audit can help healthcare systems recover funds that may have been improperly paid to vendors, maintain better pricing transparency with suppliers, and improve the overall efficiency of their accounts payable processes. It’s a proactive approach to financial management and cost recovery.

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