After years of research, investigations, and hands-on implementation of scores of hospital supply utilization management programs, we have identified four things you should know about supply utilization management:
1. It’s a strategy you can no longer afford to ignore: Price and standardization have been the primary supply chain cost containment strategies for decades. Now that these sources are waning, there is nowhere else to go for savings other than supply utilization management.
2. It’s a problem that’s more insidious than you might think: We estimate that one in four products, services, and technologies that you are buying now has a utilization misalignment. Meaning, it is costing you on average 26% more to employ these commodities than it does for your peers. Left untouched, they will cause real damage to your healthcare organization’s bottom line.
3. It’s eating away at your healthcare organization’s bottom line: For every dollar you save in price you could be losing $2, $3, or even $4 in utilization misalignments. For example, you might get a great price on I.V. catheters, but if your clinicians are using 2.3 per patient to get the job done, it’s costing you more than it should be on just this one product.
4. It’s easy to think, “It’s not my job to go after these new and better savings”: Price, standardization, value analysis, and utilization is what supply expense management is all about in this new era of healthcare reform. If you don’t take on this responsibility…who will?
The point of this list is to raise your awareness that attacking your supply utilization management isn’t just a nice thing to do, but it’s now mission critical to clear the decks of all supply chain expenses that are unwanted and unnecessary.
If you don’t take on this new responsibility, the damage to your healthcare organization’s bottom line could be in the millions of dollars each and every year. Worse yet, it will erode any price, standardization, and value analysis savings that you think you are achieving now. Don’t let this happen to you!
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