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How is a hospital’s missed savings calculated?
How is a hospital’s missed savings calculated?
Patrick O'Hara avatar
Written by Patrick O'Hara
Updated over a week ago

I’ll go into a more detailed explanation of this below, but suffice it to say that the way that we calculate missed savings results in a value that is generally, if not completely accurate, an underestimation of the true value. This is because we don’t look at every price offered to every hospital but just a carefully selected group that has a high probability of having the best pricing. So, any missed savings numbers you see on your platform can be viewed as a minimum value. What proceeds after this is mainly just detail, but if you’re interested:

For every item your hospitals buy, we store that price in our database. We then compare that price to three other groups of prices, and if the price that your hospital paid was higher than any value in these three groups, we report a lost savings of your hospital’s price minus the lowest of the prices surveyed.

The first group of prices that we compare to is the other prices that this hospital was offered at the time of purchase by other vendors for that same item.

The second group of prices that we compare to is that of all of the prices that other hospitals in your group have been offered if they have searched for or ordered that item in +/- 3 days. We only compare the price if it has shown up in another hospital’s search results or order history in that period of time.

The final group of prices that we compare to is one comprised of the price from each distributor that is offered to the hospital that we determine has the best pricing from that distributor. So, we look at prices at all distributors across all hospitals for a representative group of 10 items, and we choose the hospital that appears to be on the best pricing tier for each distributor. We then check every price against the price that each of these hospitals would have paid for that item at the distributor for which we determined they have the best pricing.

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