Data mining has become an increasingly important driver of decision-making for finance leaders.  While larger organizations have been investing in analytics for many years, others remain in the early stages.

Perhaps the most important success factor is to create a strategic plan that includes goals and objectives for the different areas of the organization.  Identifying stakeholders representing targeted areas early in the process and investing in initiatives that maximize internal value while building momentum helps leaders overcome internal resistance.

For companies that lack resources or expertise, partnering with industry consultants may be the best option.  Most process improvement providers serve a particular niche, often with software solutions (SAAS).

Reduced reimbursements within healthcare has providers targeting non-labor spend.  The Supply Chain process – with the emphasis on automating manual processes and improving visibility of transaction activity – has become a hot topic within healthcare organizations.  Back-office operations, historically taking a back seat to patient care needs – are now a priority.  In order to remain competitive, providers need to purchase more effectively and improve associated processes.

Investing in solutions that enhance data and using that data mining findings to make better buying decisions increases/improves profitability.  Physician preferred items (PPI), which represent the largest portion of non-labor spend is particularly important.  Supply chains efforts to negotiate lower prices on higher price specialty products are integral to reducing overall cost.  However, in order to deliver the desired results, Supply Chain needs internal support from physicians – and to monitor progress and position themselves to negotiate lower costs, they need better data.

Strategic planning and weighing the cost/benefits of the different options drives the decision-making process.  Consultants typically project internal value – using savings obtained at comparable operating entities.  However, possessing a thorough understanding of existing systemic and process strengths and weaknesses helps management evaluate needs and quantify internal value.  Additionally, it positions them to make the best choice for their organization.

Procure-to-Pay (P2P) reviews, driven by data mining, assess how well existing systems and processes are working and provides a “benchmark” – by verifying the accuracy of supplier transactions.  100% accuracy is essentially impossible, even for “best in class” companies – which continually invest to improve and maximize accuracy and consistently monitor results.

Findings position management with a roadmap to improve – via awareness of problem suppliers and process shortcomings.  Understanding the root cause of weaknesses – and the subsequent strengthening of internal controls – improves current year profitability and reduces go forward costs.

P2P reviews are a high value service offering with a low cost – and are timely for companies contemplating cost reduction initiatives.  Measuring how well your P2P processes are working and using those results to increase the accuracy of supplier transactions makes sense.

What are you waiting for?