May 7

3 Mistakes to Avoid in Order to Maximize Your Benchmarking for Best Practices and Major Savings

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Benchmarking is a term that is used in all types of industries and is one of the most powerful tools you can have in your repertoire as you can use it on every level of your organization. You can use it to benchmark for best prices from your GPO, determine the appropriate levels of inventory for your storeroom and/or other departments, see whether you are moving the needle in your overall supply to operating margins, and of course, track your utilization/consumption levels.

We here at SVAH use benchmarking just about every day and all of our tools and strategies are packed full of benchmarks on many different levels. We often find that the following mistakes are made when benchmarking:

Benchmarking Mistakes to Avoid

1. No Benchmark is Created Equally – Too often when we start talking about specific benchmarking like consumption/utilization benchmarking by supply category we hear, “We have benchmarks,” or, “We do benchmarking too,” only to find out that they are benchmarking things like price or comparing new products to evidence (benchmarking in another form). These are two totally different benchmarks which is important to understand as I am not diminishing the value of the other benchmarks, but there are more benchmarks than you could ever imagine. In the case of clinical utilization/consumption benchmarking, we can see things like waste, overuse, quality issues, feature rich supplies, misapplications, etc. All of these can spell out major quality issues and/or cost savings. The key takeaway here is to keep an open mind with benchmarking!

2. A Benchmark is Not a Generic Term – Benchmarking is not simply comparing one, two, or twenty organizations to one another; it is a finely crafted art form that ensures that the comparisons are made as close to apples to apples as possible. Like cohorting, you cannot compare a 150-bed hospital to a 350-bed hospital in just about any category because the 350-bed hospital has two to five times more volume in just about every category of patient volume metric that will make benchmarking in any category impossible. It is very important that you get that product mix right or the benchmarks are meaningless.

Category management is important as you will want to make sure that you are comparing apples to apples, like pulse oximeters. We include new, disposable, reprocessed, and reusables when we compare these. Why? Because they all have the same functionality. Yes, some cost more than others but the name of the game here is to have the lowest pulse oximeter cost per patient day overall. That would mean that your organization has the right mix for longer life cycle cost extension overall of the pulse oximeter category. This has nothing to do with price but overall cost for this category and includes how you are consuming them.  This is an art and science, not just comparing product to product.

3. Stop Worrying About Looking Bad – When organizations are new to supply category related benchmarks, they tend to look at them with a knee jerk reaction said in many different ways like, “We don’t believe your benchmarks!” I get it, the supply chain organization is firing on all eight cylinders and receives awards from their GPO every year on compliance and standardization, so how can you have 50-100 categories that are showing viable savings opportunities? First, you have to keep in mind that hospitals and health systems have over 2,000 contract categories between supplies and purchased services. The supplies that we focus on are about 750 major categories (we don’t care about things like tongue depressors-no savings). So, if you have 50, 100, or 125 of these 750 that you need to focus your attention on, then that is actually par for the course. Most organizations have these big savings opportunities that pop up and you can address them a number of ways and get the savings from them. Ignoring them altogether or talking (lip service) them away does not stop them from hurting your bottom line.

One of the most important things I do when I present savings from benchmarks to hospitals and health systems is show them two or three areas that they are benchmarking well or at best practice. This allows them to buy into the benchmarks and methodology and then when I share with them areas where they could do better, they are more receptive to these areas. Be the one who uses your benchmarks to find the next generation of savings!

Benchmarks Give You 30,000 Feet Down to Ground Level View

One of our clients asked me about reducing costs on a particular category, and I immediately brought up their cohort benchmark comparable in order to ascertain where they stand as well as their year over year and monthly/quarterly trends. If they are a large system, it will likely be that a few of their hospitals have an issue, not all of them. Benchmarking allows me to pinpoint strategically for them as not to waste any time. It also validates where, how much, and what products are causing the issues and even goes so far as to tell them which departments need a little work.

As you can tell, I really enjoy working with benchmarks of all types and have learned that they hold a higher value to all the organizations we work with. It may take time to get your organization on board with benchmarking but once you do, they want to see them on just about everything that you report out to them. Plus, there are so many more benchmarks that organizations do not have in their repertoire that they need to in order to move their supply/value chain programs forward in a positive and strategic manner.


Below are some similar articles that you may find interesting.

3 Modern Things You Should Be Doing with Your Value Analysis Program

Is There Such Thing as Savings Automation?

4 Ways to Get Max Value from Your Value Analysis Workflow Software


Request Demo of SVAH’s Value Analysis and Utilization Tools


Tags

benchmarking, benchmarks, consumption management, healthcare, hospital, supply chain, supply utilization, value analysis


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