We see more hospitals, systems, and IDNs focusing their supply chain savings efforts on supply utilization management (SUM) but, too often, they aren’t sure where to get started with their SUM initiatives. To help you with this challenge, here are five questions you need to answer when formulating a supply utilization management strategy:
1. Do we have a baseline of activity cost per metric for our 750 major supply chain categories? If you don’t know where you are now, how would you know if you have changes in your activity cost per metric that will identify where your utilization misalignments (i.e., wasteful and inefficient consumption, misuse, misapplication, and value mismatches in your supply streams) are hidden? This methodology is the gold standard for all scientific knowledge; measuring a known against an unknown to determine changes from your baseline.
2. Do we have a supply utilization team that is responsible to analyze, investigate, and then eliminate all of our supply utilization misalignments? We have found that most value analysis teams are tasked to evaluate new product requests and new and renewal GPO contracts. Thus, leaving little or no time to analyze, investigate, and then eliminate your supply utilization misalignments. That’s why you need a separate supply utilization team focused on your utilization misalignments to be successful.
3. Do we have a reporting system that identifies our supply utilization misalignment savings opportunities in real-time? You need to have a reporting system that automatically notifies (monthly, quarterly, and annually) your supply utilization team of changes in your supply utilization trends, patterns, and frequencies. This way your supply utilization team can act on them before they damage your healthcare organization’s bottom line.
4. Do we have a savings validation system to ensure we have locked down our supply utilization misalignments? After your supply utilization team reports that they have eliminated a supply utilization misalignment, they must validate this action with a system that validates that your reported savings has been actually achieved. Too often, a reported savings isn’t a savings at all because things change and people change, which invalidates your savings.
5. Do we have the right training for our supply utilization team and our department heads and mangers to manage supply utilization? Eliminating your supply utilization misalignments takes a new mindset that can only be instilled in your supply utilization team and department heads and managers with extensive training. This is because price and standardization have always been the go-to methods of saving money, and we seem to have blinders on when it comes to other money-saving tactics. That’s why supply utilization savings takes a different approach to savings that needs new training to be successful.
Supply utilization management is becoming a hot topic in healthcare supply chain circles, but to be effective in this new supply chain discipline, your hospital, system or IDN needs to invest some time, talent, and training in formulating a supply utilization strategy. Hopefully, these questions will give you a good starting point to envision the supply utilization management program that will meet the test of time.
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