December 6

4 Ways You Can Use KPIs To Move The Needle On Your Supply Chain Expense Savings Reductions


Every healthcare organization is under pressure to save money due to the aftereffects of the pandemic which has increased their labor, supplies, and overhead costs. This is a perfect storm for healthcare organizations nationwide! Therefore, hospitals, systems, and IDNs are now scrambling to uncover savings in these same categories. To compound this challenge, these same healthcare organizations’ group purchasing organizations are increasingly negotiating contracts with higher pricing on new and renewal contracts. So, where do hospitals, systems, and IDNs find new savings for the survival of their healthcare organization? This is where key performance indicators (KPIs) come into play! Specifically, here are four ways you can use KPIs to move the needle on your supply chain expense (or other non-salary expenses) savings:

How KPIs Can Move The Needle On Your Supply Chain Expense Savings

1. Measuring Your KPIs Year-Over-Year: Identifying changes year-over-year in your supply expenses can uncover utilization misalignments (i.e., wasteful and inefficient consumption, misuse, misapplication of products, services, or technologies) that have creeped into your supply streams and need to be eliminated.

2. Comparing Your KPIs To Peer Cohort Group: By comparing your healthcare organization’s supply expenses to your peer cohort group you can surface best practices that you didn’t even know existed. Like a colleague of ours who employed new waste-free exam glove dispensers that saved his healthcare organization 30% over their conventional exam glove dispensers. How would you know this was an emerging best practice without comparing yourself to your peers?

3. Evaluating Your KPIs With Internal Data: It has been our experience that there is more than one division, department, or unit that purchases the same or similar products, services, or technologies as you do and can provide comparative data. These internal benchmarks can also uncover waste and inefficiencies in your supply streams. For instance, various hand soaps used by departments, IV set usages per patient day on different nursing floors, or the number of cardiac catheter ports specified at different divisions.

4. Employing KPIs To Predict Future Performance: Not only can KPIs be used to identify today’s performance gaps, but they can also be employed to predict future performance, such as, when a hospital’s contrast media consumption increases at a double-digit rate that exceeds budget projections and needs to be investigated.

No one can see around the corner, evaluate their own supply chain organization’s performance, or proclaim they are best-in-class in a given supply chain category without multiple measurements or tests as we have outlined above. Just as important, if your GPOs are routinely increasing your pricing to you, the only place to go for cost reductions is…savings beyond price. That’s where KPIs can help you uncover a whole new flow of savings for your healthcare organization. Don’t ignore this powerful tool!

P.S. For more information on this important topic, just email me at [email protected] for your personal copy of our new ValueKPI Solutions White Paper. It could make a difference when you are looking for your next big savings ideas!

Below are some similar articles that you may find interesting. 

What is Savings Validation and Why is it Important?

Podcast 74-The Next Big Wave to Major Healthcare Supply Chain Savings Success

Shift Your Paradigm To Data-Driven Decision Making for Better Insights and Outcomes in Healthcare Supply Chain

Request Demo of SVAH’s Value Analysis and Utilization Tools


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