As we see it, we as an industry are slowly edging back to our core pre-pandemic supply chain responsibilities which are to manage, control, and reduce our supply chain expenses. We do this while also keeping an eye on our backorders, delivery schedules, and stockouts. To help you with this transition, here are three ways to increase your supply chain expense savings without help from your GPOs:
How to Increase Your Supply Chain Expense Savings
1. Trust but Verify Your GPO and Local Contract Savings Projections. We have documented that 26% to 46% more savings is available to healthcare organizations that validate their GPO and local contract savings before, during, and after the contracts have been signed. This is because your original projected savings is understated because of changes in volumes, techniques, or procedures. For example, a major category that has increased in a big way but then decreased after Covid is Reference Lab. We have many lab directors who are projecting seven-digit cost reductions to their CFOs for their FY22 budgets. Most importantly they are not just assuming that the major savings will happen, they are also running validation reports to make sure that they achieve every dollar for their CFOs who are counting on that budgeted cost reduction being in place.
2. Partake in Group Buys on Your Common Medical Devices. For example, you can save, on average, 8% to 20% on cardiac rhythm devices through group buys with your manufacturer. This savings is logical because your cardiac rhythm device purchases are predictable, measurable, and manageable. To be safe, have an agreement with your surgeons that they will use the pacemakers bought on group buys, before you commit to one, in the quantities you will be purchasing for them. Most CFOs are ok to sign off on these group buys to gain the instant savings, unless it has already been budgeted.
3. Re-Specify the Top 25 Products, Services, or Technologies You Are Buying Today. It’s been our experience that your customers don’t need everything they think they need in the products, services, or technologies they have specified for purchase. That’s why starting by re-specifying the top 25 products, services, or technologies you are buying (in dollars spent) annually can almost guarantee 26% savings for your hospital, system, or IDN. For instance, can all of the medically indicated features you are buying on your pacemakers be purchased at a lower cost in your vendor’s product line (most likely yes)? Do you need all the ports you are specifying on your PICCs to meet your customers’ requirements? Do you need two sterile gloves (when the physician only uses one) in all of the OB birth kits you are buying?
Saving money on your supply chain expenses, beyond price and standardization, is more about developing strategies, tactics, and techniques like we just talked about vs. leveraging the buying power of your hospital, system, or IDN. These advanced strategies, tactics, and techniques should go hand in hand with your group purchasing organization’s focus on maintaining price parity with the commodities you buy. To do less is to leave a lot of money on the table – untouched!
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