Healthcare supply chain and value analysis professionals are continuously estimating projected and promised savings on their price, standardization and value analysis savings. Yet, an estimate or promise of savings in today’s healthcare economy isn’t good enough for the following strategic reasons:
- Savings Budgeted by Finance: It is our estimated that 57% and growing of all hospital, system and IDN’s finance departments are now including supply chain and value analysis projected or promised savings into their budgets’ assumptions/predictions. This emerging best practice can become very disconcerting for supply chain or value analysis executives if their savings projections or promises are wrong.
- Verify Vendor Promises: We have documented that vendor promised savings can be off by as much as 26% on most commodities and PPI items. With this track record you want to verify that vendor promised savings really happened as planned.
- Prove Savings are Real: As healthcare supply chain professionals, we owe it to our healthcare organization that if we project or promise a savings it happens. No longer can we hope that our project or promised savings were realized if we want to be taken seriously by our senior management.
- Verify Contract ROIs: Group purchasing organizations too promise savings and expected ROIs for your healthcare organizations on their contracts. Shouldn’t you know for sure how much your GPOs are really saving you?
The bottom line on projected, promised and even guaranteed savings is that they need to validated on a quarterly basis to ensure that your initial savings projections are being realized. If not, you need to have a mid-course correction. Like one of our clients was only saving one-tenth of his projected savings on new floor gloves after one year of a three-year contract only to find out, after a thorough investigation, that his new floor glove dispensers were very wasteful. Once this problem was corrected with new dispensers he then realized his projected savings. Can you guarantee that all your projected, promised and guaranteed savings are really happening? Or, are you happy not knowing the answer?
Hospital Value Analysis Analytics: The New Science of Savings
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