Hospitals & health systems — Wylie Performance Partners

INDUSTRIES · HOSPITALS & HEALTH SYSTEMS

We have read the analysis of 765 hospitals.
We would like to look at yours.

Your reported figures show what you spend by category. On their own that is not very interesting. Set against hospitals of similar size, a few categories usually stand out as worth a conversation — and most do not.

FINDING ONE

The largest category is the least comparable.

Medical supply is the biggest line in this sector — a median 8.5% of total expenses. It is also one of the most variable: 45% of hospitals run it well above the peer median.

That variation is not evidence of anything. A trauma center consumes differently from a community hospital. Case mix, service lines, acuity and surgical volume all move the number, and none of them are visible from outside. Which is exactly why we do not lead there.

Any advisor who opens by telling you your medical supply spend looks high has told you they do not understand your business. It is also the category your purchasing agreement covers best. We would expect to leave it alone.

CATEGORY	SHARE WITH FILED SPEND ABOVE 1.5× PEER MEDIAN
Property & sales tax		54%
Operating supply		46%
Medical supply		45%
Pharmacy		43%
Office supplies		39%
IT hardware & services		37%
Maintenance		32%
Insurance		29%

Method note. Share of organizations whose reported spend exceeds 1.5× the peer median. Peer groups of 50 or more, same reporting period. Above median is not overspending — it is a reason to ask why.

What makes this sector structurally different

You already have a supply chain function

Unlike most sectors we work, hospitals have professionals whose job this is. We are not replacing them. We work the categories they do not have capacity to reach.

Purchasing decisions may sit elsewhere

If you are part of a system, some categories are contracted at parent level and some at facility level. Establishing which is which is usually the first thing we do.

Clinical preference is real

Physician preference items are not a procurement problem to be solved. They are a clinical decision with a cost attached.

Contract labor changed the base

Agency staffing reshaped the cost structure after 2021. It is not an indirect category, but it is often the reason the rest went unexamined.

Where a conversation usually starts

Facilities

Environmental services, linen, waste, grounds, security, plant maintenance.

Clinical support

Biomedical equipment maintenance, sterilization, patient transport, imaging service.

Administrative

Merchant card, insurance brokerage, print, shredding, document management.

WHERE WE WOULD NOT START

Medical supply and pharmacy. Both are shaped by clinical need and purchasing arrangements more than by procurement, and they are the categories your team watches most closely. We would say so in the first conversation.

WHAT THE WIDER RESEARCH REPORTS

Purchasing structure here is unusually well documented.

Purchasing structure in this sector is unusually well documented, and the published figures are worth knowing before any category conversation.

Approximately 97% of US hospitals are affiliated with at least one group purchasing organization, and many belong to several.

GPO industry research, 2025

Roughly 56% of hospital product purchases are routed through the primary GPO agreement.

Survey conducted by Wharton for the hospital associations

Purchased services — the outsourced functions rather than the goods — are commonly put at 40% to 50% of non-labor spend.

Purchased-services sector analysis, 2025

GPO administrative fees, paid by suppliers rather than members, are commonly reported at 1.5% to 2.25% of purchasing volume under the 1987 federal safe harbour.

Published legal and industry commentary

Health system indirect spend and purchased services are projected to rise 4.73% in 2027.

Vizient spend management outlook

Indirect spend in healthcare is put at 60% to 80% of total company spend — the highest of the sectors in that study.

Efficio, 2026

These figures describe ranges observed across an industry, drawn from samples that may or may not resemble your organization. We publish the source and the sample size for each one because a range is useful for orientation even when it cannot be a conclusion. None of them describe you. What we can show you is your own reported figures, set against 765 hospitals.

CONTINUE

See how cost recovery works

The four stages, the categories, and the fee model.

Read →

Other sectors

How the pattern differs elsewhere, and why.

Read →

The research behind this

What we publish, and what we are building next.

Read →

A 45-minute working session.
Your numbers. Your operating model. No assumptions.

We will talk through which categories are worth examining and which your purchasing agreement already covers well. If medical supply is the answer, we will tell you it is not worth our time or yours.

No fee for the conversation, and no cost unless verified value is recovered.

Start a conversation See how cost recovery works