What Makes a Best-in-Class Recovery Audit Firm in Healthcare?

Written By; David Hewitt, RVP of Sales – East

What are the basics for a Recovery Audit provider?

At minimum your Recovery Audit firm should be checking all the following boxes.

  • Working offsite/Remote access
  • Online claims delivery
  • Data files (AP, Vendor Master, PO, Receipt)
  • Data security
  • Healthcare experience
  • No initial investment to get started

What are the attributes of a Best-in-Class Recovery Audit firm?

It is not enough to settle for a firm that simply checks the boxes.  The following list outlines the attributes you should look for in a best-in-class Recovery Audit provider to ensure the best results and the highest levels of partnership.

  • Strong data security — ¬Provider should demonstrate strong security measures including encrypted data, SSAE16 Secured Data Centers, HIPAA Trained
  • Industry expertise and benchmarking — Healthcare is a unique industry, and your Recovery Audit provider should demonstrate deep expertise.  A few of the insights they should provide are as follows:

o    What are your healthcare peers doing to address issues like yours?
o    How do you compare to other healthcare systems?
o    Best practices to patch gaps leading to financial leakage
o    Proven industry methods for driving cost-saving efficiencies

  • Insights and visibility — Provider should offer meaningful root-cause analysis and recommendations. Some of the key insights should include:

o    A listing of which suppliers (and staff) are not complying with processes
o    A clear understanding of why and where dollars are falling out of the process
o    Strong recommendations for how to positively impact the problem
o    A focus on corrections and not collections

  • Cost-savings opportunities — As a result of the audit, you should gain a clear outline of where to save dollars in your annual spend that are not simply related to recovery.
  • An up-to-date scope.  Your best audit results will come from a scope that hovers around 90-days and provides real-time feed back.
  • RNI, INR Reconciliation — Your audit should support the RNI (receipt not invoiced) and INR (invoiced not received) reconciliation.  This is critical for healthcare.
  • Additional services — Ensure your provider has other solutions beyond Recovery Audit otherwise they will not be incentivized to help you fix your problems.
  • A healthy vendor database — Provider should have an up-to-date database of suppliers to help clean your vendor file and to aid in outreach to suppliers.
  • A strong partner ecosystem — Provider should be connected to other industry providers to help gain a wider view into how to fix your network’s larger issues.
  • A client portal — Claims should be delivered through an online portal with claim upload capabilities, drill down capabilities, in-depth reporting, communication, ease of use and 100% claim administration.
  • A full-time staff — Your auditors should be a team of full-time employees that are paid a salary or hourly wage to ensure they are consistently auditing all ranks of your vendor file and AP transactions history without competing incentives or prejudice.

For more information regarding the benefits of using a Recovery Audit to help boost your hospital’s bottom-line or to drive new insights and visibility into your cost-cycle, contact SpendMend today.

The Typical Process of a Recovery Audit

Written by: Kylee Savage, Marketing Manager

Every Recovery Audit firms offers a slightly different approach, but the general approach of most firms follows a similar pattern:

  • Discovery —Each firm goes through an investigative or discovery phase in which the Recovery Audit firm will learn about the client, their process, and their preferred recovery parameters.
  • Planning — Leveraging information from the “discovery” phase, the audit firm determines and presents a strategy for identifying and recovering payment errors. This phase outlines all tasks, timeframes, and schedules for future client review meetings.
  • Data Collection – The Recovery Audit firm provides client’s IT with templates for pulling the necessary data for the review.  This process is quite well established and should not require much time from client’s IT staff.
  • Auditing — Through automated and manual efforts, the Recovery Audit firms runs trend and anomaly analysis to identify potential errors.  It is at this point where industry familiarity plays a big part.
  • Recovery —The Recovery Audit firm works directly with suppliers (and client’s staff when needed) to validate and prepare claims for deduction against future payments.  When the supplier has a debit balance, auditors will secure a check from the supplier.
  • Recommendations —Audit firms offer recommendations from their findings to help the client patch the gaps that  caused the financial leakage.

For more information regarding the benefits of using a Recovery Audit firm to help boost your hospital’s bottom-line, or to drive new insights and visibility into your Cost Cycle, contact SpendMend today

AP Audit Alone, Is No Longer Enough

By: David Hewitt, Regional Vice President of Sales – Northeast

When I was told by marketing that I had to write a blog, my first instinct was “…you must think of an excuse, this wasn’t in my job description… I’m Way Too Busy!”

If you’re like me, when told you must do something, you’re on the defensive. The reality is the things that we purposefully try not to do, are the things we need the most.  A dentist appointment, annual physical, budget planning… When you think of your example, it most likely is an activity that is done infrequently and without major consequence.

An AP audit can be looked at in the same light.  The most common response I get from clients is “I don’t have time” or “I’m too busy”.  The reality is we are all too busy, which is the exact reason why an annual historical review is no longer effective.  WE can’t worry about incorrect transactions that happened a year ago, when we need to focus on the transactions that are being processed today.


Organizations across the care continuum are feeling the pressure on their bottom line. While cost control initiatives are commonplace today, organizations are seeking incremental improvement as opposed to transformative gains.

Healthcare expenditures account for nearly 18% of America’s Gross Domestic Product (GDP), with $1 trillion – estimated wasted spending each year in the healthcare due to factors such as inefficiencies, redundancies, fraud and abuse.

On average, SpendMend can identify approximately 0.04 – 0.07% in erroneous payments in a historical audit.  For most healthcare systems this equates to $800k-3M in cash recoveries.  Some are satisfied with this and continue to perpetual lookback process of the historical audit every 2-3 years.



While the concept of analytics is not new to healthcare, the scope has been rapidly changing over the past few years.  The focus has shifted to not only looking at your historical data and trends, but also bringing in our 20+ years in the industry experience, knowing the supplier’s taxonomy as well as their tendencies to apply and suppress credits.  The ability to uncover what we call, “dark data”, provides insight into the cause of erroneous payment.  This insight creates new opportunities to leverage data to improve efficiency and trim costs.

As health systems continue to be acquisitive in the market place, data is seen as the byproduct of the multiple IT systems and a barrier instead of an enabler due to the lack of easy, repeatable access to high reliability information.  Our ability to scrub, filter, and normalize the data, provides a new level of spend visibility for executive leadership. Transforming the data into insights and deploying those insights to drive business optimization and better decision making.

“Data is the most strategic asset an organization has, and yet most people treat it like a by-product of their EMR or financial system,” Ms. Foster says. “Health systems that invest in their data and embrace their data are on the path to long-term viability.”

Murphy, Brook. “The next step in data analytics: Getting from historical to actionable analytics.” Becker’s Health IT and CIO Report, Relay Health, 17 Sept. 2017.



Imagine a world, where you are looking at KPIs and metrics where the action occurred 12 – 24 months ago.  While they might be interesting facts, they are too far behind the next transaction to add real value.

Let’s take a real-life example… I love basketball and am just getting the chance to start coaching my kids.  When we watch a game and film each kid, the ability to have them watch themselves and identify what skills need to be fixed or worked on is critical to their progress and success at the next game.  If we hold those films/discussion and show them 12 months after the game occurred, the reality is the skills posed today are no longer the skills they needed to focus on 12 months ago.  New habits, changes in their environment and personal growth, make the recommendations null and void.

We must apply this same thinking to the AP audit process.  The closer we can get to the current day transaction, the more impactful we can be and make change together as a partnership, providing real time coaching to the process.

The findings will not be as large, and really transition from a “finding” to an “insight” – allowing us to adapt real time; changing from keeping score to changing the game.

Visibility Matters.  Why just recover Capital and leave all the insights hidden?

SpendMend’s commitment would not only answer the What (recoveries), but also provide a view into the So What (root cause, system configuration or circumvented control) and most importantly the Now What (how do we fix or mend going forward).  Goal being, move from something that is repeatable (recovery) to something that is sustainable (visibility).