June 2

4 Ways Supply Utilization Management Saves Healthcare Organizations Money

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The feedback we are receiving from our supply chain community is that they need to save money…now. However, they admit that their price savings has become meager at best even before the pandemic. To this end, we would like to remind all supply chain professionals that there is a new and better source of savings that they need to embrace called supply utilization management (SUM). To help you see the benefits of SUM, here are four ways supply utilization management saves healthcare organizations money.

1. Reduces your consumption cost: Our studies show that the price to consumption ratio of the products, services, and technologies that you buy is 1:25. Meaning, for every dollar you pay for a commodity its consumption cost is at minimum 25x more than its price. Therefore, by reducing your consumption cost you can save much more than you can by obtaining a better price.

2. Eliminates waste and inefficiencies: No one knows what happens to a product, service, or technology once it is in the hands of your customers. That’s why anything can happen, and usually does. For example, clinicians opening kits and trays to get a single component and throwing the rest away (i.e., foley catheter from a foley tray, tape in IV start kits, etc).

3. Prevents misuse or misapplications: The lack of training is the biggest reason we have found for misuse or misapplication of products, services, or technologies hospitals are buying. Like changing IV sets more often than is medically indicated or changing pulse oxisensors more often than is necessary.

4. Identifies value mismatches: There are many lower cost alternatives that you aren’t employing now which is costing your healthcare organization tens-of-thousands of dollars annually, such as buying a feature-rich custom tray when a standard tray will do the job reliably.

Healthcare organizations are hard pressed to save even more money than ever before. That’s why we as an industry must look to supply utilization to meet our savings goals for any given year. Otherwise, we will find that there will be a big savings hole in our supply chain expense budget. Remember, there is nowhere else to go for new significant savings!


Below are some similar articles that you may find interesting.

3 High-Impact Savings Areas to Increase Your Hospital, System, or IDN’s Bottom Line

Why Many Supply Chain Professionals Don’t Believe Their Supply Utilization Savings Are Realizable

Three Key Areas for Dramatically Lowering Your Supply Chain Expenses


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healthcare, healthcare organizations, hospitals, lower cost alternatives, save money, savings, supply chain, supply utilization, utilization management, value analysis


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