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

Stop Leakage and Multiply Savings With Actionable Insights From Your Enterprise Spending

By: Michael Koory, Regional VP of Sales – Mid America

All health systems have developed and implemented internal controls designed to protect against losing money in the Procure-to-Pay Process. These include departmental controls, system controls, and process controls.

Despite all of your investment and energy toward loss prevention and controls, Financial Leakage still occurs.  Because of these leaks, hospitals spend a great deal of time, money, and effort detecting and recovering these leaks. The entire recovery audit industry was created to be the chief detective and find lost dollars.

Financial Leakage is revenue lost inside enterprise Procure-to-Pay automation, internal handoffs, keypunch errors, multiple entity spending, missed discounts, payment terms, lost opportunities, and staff reductions.

The full impact of Financial Leakage is frequently missed and out of view.  Rarely is the full spectrum viewed across your health system, due to different departments using different aspects of your system controls. Usually AP cannot access the Purchasing information or the Returns module. This is where gaps can occur because of a lack of visibility where traditional approaches don’t work as well.

The problem with this purely detective and control approach is the lost visibility into root cause analysis and the understanding of the systemic issues causing the leaks.  The reality is most businesses do not have a timely, accurate, and holistic view into their enterprise spend data and preventative measures. This void causes the enterprise to engage in a “whack-a-mole” approach to finding the leaks and yet never solving them.

Our horizontal view across your spending ecosystem will reap significant cost recovery as well as contract compliance, benchmarking, and spend optimization opportunities.

Once organizations can see the full picture of their Procure-to-Pay system, the outlier issues become visible for action to be taken. A clear view provides insight and understanding while the hidden seam breaks and leaks are identified and can be sealed. The visibility of the whole is a force multiplier. A typical cost recovery firm will find savings missed and outside of your system because recovery by itself is no longer enough. Only an in-depth continuous analysis will reveal your internal operations and the visibility to the whole issue.


Keep an eye out in two weeks when we discuss where recovery meets visibility.

The Top 5 Causes of Dark Data

By: Michael Koory, Regional VP of Sales – Mid America

We introduced the concept and defined dark data as: Information embedded in the cost cycle is not readily visible, sometimes not accessible, and rarely timely. To refresh on the dark data concept, please visit the landing page

You also now know that Dark Data in your system hinders your ability to find and fix the control gaps causing financial leakage. You cannot fix, what you cannot see, and Dark Data obscures your vision.

Let’s shed a little light on the reasons why Dark Data exists by discussing the Top 5 Places Dark Data exists within your system.

1.    The integrity of Tools – In a recent study by Kaufman Hall 70 percent of finance executives in a recent survey reported that they don’t have the proper tools in place to effectively reduce costs in their health system.

2.    Disparate Systems and Process – The process of purchasing goods and services can be centralized or span across your network. How many steps are in your process? How many different software systems or methods are involved? The handoffs between departments and the lack of an enterprise-wide view are where control gaps exist, and they are not visible.

3.    Lack of Integration – A common enterprise-wide software system that did everything has been a desire of many hospital executives ever since the first EHR and ERP systems were developed. However, necessary integration is still a challenge for even the most integrated of health systems. There are just too many people involved in the process. The lack of integration means you cannot see the full impact of the process. It says limited visibility and limited ability to make changes or corrections.

4.    The integrity of Data – An additional insight from recent articles is the belief held by 56% of healthcare executives, that they don’t believe their data is accurate. This lack of useful information pulled from data hides control gaps and makes it difficult to make changes or improvements.

5.    Limited Reporting – Departmental differences between personnel and systems causes holes in the process. There is no easy way to know if the different methods are causing issues or losses. You probably must run multiple departmental reports and then manually merge the data to gain just a limited view. A lack of visibility allows Dark Data to hide the problems.

The cure for Dark Data is Visibility. A clear view of your enterprise spending coupled with a system to identify outliers gives you control. With visibility and power, you can make changes that close the control gaps and improve your financial fitness.

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