Hospitals experience increasing cost pressures, and non-labor costs—also referred to as purchased services—now account for almost half of their non-salary budget for Non‑Labor Spend. These services include facility maintenance, IT, laundry, security, and specialist clinical vendors. Although these services are crucial, they also have an unseen risk: without strategic control, they can siphon out funds and drive down financial performance and patient care behind the scenes.
Valify has developed a technology‑sponsored platform to bring light to this hidden spending, providing hospitals with a clear, proactive solution to increased efficiency and cost savings.
The Hidden Weight of Purchased Services
Non‑labor spending—services with no SKU attached—is widely acknowledged as one of healthcare’s most unmanaged cost categories. Estimates show it can account for 40–50% of non‑labor operating budgets. Despite its size, it often lacks central oversight, standardized contracts, or performance tracking.
Outsourced services like biomedical maintenance, environmental cleaning, interpreter services, and waste disposal are mission‑critical yet often fall under the radar. Contracts may auto‑renew, outsourcing may proliferate without approval, and pricing may vary wildly across facilities—all without visibility.
That opacity leads to missed opportunities, unchecked cost inflation, and fragmented vendor relationships.
Data Collection: The First Step to Clarity
Our platform begins with collecting accounts payable (AP) data—no small feat when systems vary by hospital or department. It ingests, consolidates, and normalizes AP records, completing this within days. One system noted savings initiatives within just a week.
This foundation is critical: benchmarking and strategy are impossible without a clean, categorized dataset.
Benchmarking Within and Beyond the System
Once spending is organized, hospitals can benchmark internally and externally.
- Internal benchmarking uncovers disparities across facilities. For instance, services identified inconsistent biomedical vendor pricing across its six‑state footprint, enabling groupwide standardization.
- External benchmarking compares spend against national data. We draw on a massive database—$200B–$460B in non‑labor spend across thousands of facilities—offering directional benchmarks across 1,200+ categories.
This approach helps highlight where a hospital is paying more than its peers or where it could consolidate vendors.
Identifying High‑Value Opportunities
With visibility and benchmarks in place, we surface high‑impact opportunities through our Purchased Services Assessment (PSA) tool. It flags:
- Over‑spend compared to peer benchmarks
- Multiple vendors in the same category (redundancy)
- Off‑contract or “rogue” spend
This helps procurement teams target areas where standardization, renegotiation, or consolidation can quickly unlock cost savings of 10%–30% per category.
Turning Insights into Action
Insights alone don’t save money. Action does. We support implementation in two powerful ways:
a) Integration with GPO Contracts
Through its GPO partnership under HealthTrust, it connects hospitals to 250+ pre‑negotiated contracts covering $8–9 B in spend. This allows immediate implementation once high‑value categories are identified.
b) Advisory and RFP Support
Valify offers advisory services to translate insights into contracts and savings. This includes market comparison, vendor negotiation, RFP design, and peer best‑practice coaching.
Examples:
- A hospital network saved some amount on interpretation services by reducing eight suppliers to three and negotiating better rates.
- A print‑services consolidation across multiple sites led to millions in annual savings.
- A regional health system achieved savings on elevator maintenance.
Tracking and Sustaining Results
We include savings‑project tools that monitor realized savings against benchmarks in real time. If savings start to slip, alerts are generated, keeping teams accountable.
The platform also includes a contract dashboard that tracks upcoming expirations, co‑terminations, and off‑contract spending, enabling proactive renewals and better compliance.
Supply‑Chain Standardization and Vendor Visibility
Consolidating categories and contracts enables systemwide standards. This results in:
- Alignment of multi‑facility specifications
- Fewer but strategic vendor partnerships
- Streamlined onboarding and performance management
- Easier credential tracking and compliance visibility
This moves hospitals away from fragmented local vendor management toward enterprise‑grade control.
Ongoing Platform Enhancements
We continue to refine our platform, adding features like data import automation, in‑app communication tools (“Megaphone”), improved analytics via Power BI, and advisory boards for product improvement.
These iterations shorten data cycles (from 10 days to 3), improve insight delivery, and ensure hospitals get timely analysis.
Building Strategic Vendor Partnerships
By combining data insights, advisory support, and contract leverage, we enable hospitals to develop strategic vendor relationships. Under a unified contract, vendors serving multiple hospital sites are more accountable to service levels, performance goals, and quality standards.
This elevates vendor management from reactive chasing of invoices to proactively cultivating strategic partnerships.
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Supporting Organizational Change and Procurement Culture
While the technical infrastructure is critical, true savings are often unlocked when procurement culture shifts inside the organization. Our platform doesn’t just deliver data—it catalyzes behavioral change.
Many hospital departments are used to acting independently when hiring third-party vendors. They may build long-standing relationships with local service providers, negotiate their own terms, or simply renew contracts out of habit. This decentralization might feel efficient, but it creates duplication, service variation, and bloated costs over time.
We help bridge this gap by giving procurement and finance teams the tools to engage department leaders with facts, not assumptions.
Looking Ahead: The Strategic Value of Non-Labor Optimization
As hospital systems confront sustained cost pressure due to labor shortages, reimbursement reform, and inflation, non-labor optimization is a strategic driver, rather than a cost-reduction measure.
Investing in data-enabled, transparent platforms allows organizations to make systemic changes, rather than one-time reductions. It promotes internal accountability, incentivizes vendors for performance, and assists hospital leaders in developing a cost structure as disciplined as their clinical care.
In a healthcare environment that requires more with less, that type of procurement clarity isn’t just beneficial. It’s mandatory.
Conclusion
Our platform transforms non‑labor spending from a blind zone to a strategic engine for cost reduction. Through rapid data cleansing, extensive benchmarking, opportunity identification, and integrated implementation, hospitals gain tools and support where it counts most.
Rather than operating in siloes, hospitals can now see their full service‑spend landscape, compare themselves to peers, act on clear opportunities, and sustain savings long-term. our combination of technology, benchmarking intelligence, advisory services, and contract access equips procurement teams to drive measurable impact.
Valify offers a comprehensive, proven solution for teams working to optimize hospital spending—turning complex data into clear results and making non‑labor spending a source of strength, not strain.
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