Nightmare on expense street: The horrors of non-clinical expenses
Article | October 27, 2025
Reading time: 5 mins
The stories you are about to hear are true — only the names have been changed to protect the innocent.
Ask any health executive to list their non-clinical expenses, and you’ll likely be met with nervous laughter. That’s because indirect spend and purchased services — food, facilities, laundry, utilities and information technology, among other expenses — are like a dust-coated trunk full of odds and ends tucked away in the attic. They’re the costs that are essential to running a hospital but somehow tend to slip through the cracks.
And, often, they go unnoticed — as if they’d vanished into thin air.
(Cue The Twilight Zone theme.)
Non-clinical expenses can be the stuff of nightmares — but they don’t have to be … if you’re prepared. 👀
Here are five strategies to avoid your own horror story:
1. Don’t operate like the headless horseman. Designate a leader — preferably with a solid head on their shoulders — who will see the objective through and champion the process from start to finish. Health systems need someone to remove barriers and who wants to drive value, revenue and savings. For example, when a COO at a major health system took executive ownership, drove the meetings and challenged her team to remove barriers and coordinate with Vizient, the health system not only met their target, but tripled it nearly two years earlier than planned. (If only Ichabod Crane had been that efficient and effective.)
2. Don’t hide from the skeletons in your closet. Accept them — or at least report them. We’ve all been there — perhaps not literally — but we’ve certainly found ourselves rummaging through a closet, attic or basement, and found that proverbial skeleton hidden in plain sight. For one health system, that was a pharmacy savings opportunity that could have saved $20 million — if only the department head had been willing to confront it. Instead, out of fear for their own carcass, the department leader threw that skeleton back into the closet and deadbolted the door.
3. Don’t be a lone (were)wolf. There’s a reason werewolves run in packs: for survival, protection and community. Pack life is just more efficient. At one health system, they had five hospitals operating each of their radiology departments differently. At another health system, they refused to use the same vendor across all hospitals … practically howling about it just because they didn’t want to be a copycat. Both systems operated entirely in silos, leaving easy prey (err, “cost savings”) on the table. To achieve financial sustainability with non-clinical expenses, you can’t go it alone. Coordinate. Collaborate. And leverage the power of the pack.
4. Don’t be as single-minded as a zombie. Zombies only want one thing: brains. And they’ll ignore all else to get them. Consider all possibilities when it comes to savings, including reevaluating expenses tied to food services, physician lounges and parking. At one system, a CEO (literally) pounded their fist upon the table, eager for savings opportunities. But when it was pointed out that a coffee kiosk was costing the system more than they bargained for and removing it would lead to significant savings, they refused to let it go for fear of losing their own caffeine hit. Braaaaains! (Or, in this case, coffeeeee!)
5. Don’t explore a haunted house in the dark. You wouldn’t step into a haunted house without a flashlight — and you definitely shouldn’t step into a contract without one either. Just as you’d inspect each nook and cranny for signs of the, ahem, unexpected before buying an old mansion, you should scour every corner of a contract for equally terrifying danger. One health system learned too late that a surgeon’s hidden ownership in a vendor had been haunting their compliance record for months. And another system nearly lost out on savings because a sales rep told them they already had the best pricing in the country. Review your contracts, understand who stands to profit from a vendor opportunity and consider what negotiation options are available to you. Otherwise, you may end up with way more than you bargained for.
If you don’t want to be haunted by the ghosts of hidden expenses — or have your entire financial strategy unravel like a 4,000-year-old mummy — heed these warnings well. When health systems lack strong governance, tremble at the thought of change or fail to move in unison across their hospitals, progress decays and the cobwebs of inefficiency spread.
So, keep your flashlight close, your team closer and your wits about you. Because when it comes to healthcare’s non-labor expenses, it’s not actually the things that go bump in the night you should fear — it’s the costs that creep up when you’re not looking.