September 7

5 Strategies For Big Healthcare Supply Chain Savings In The Current Inflationary Environment


I don’t think I need to tell you that the effects of the double whammy of the pandemic and inflation (8.5% as I write this article) is eating into your healthcare organization’s margins. That’s why the need for big supply chain savings couldn’t be greater as your healthcare organization’s volumes drop, supply costs soar, and increased agency nurses and temporary personnel usages are incurred to meet the demand of patient care. To assist you with this challenge, here are five strategies for big healthcare supply chain savings in the current inflationary environment:

Healthcare Supply Chain Savings Strategies

1. Establish A Clinical Supply Utilization Management Program (CSUM). It is one thing to stumble over a utilization misalignment (i.e., wasteful and inefficient consumption, misuse, misapplication, or value mismatches in your supply streams) every once in a while. It’s a better thing to establish a formal Clinical Supply Utilization Management Program that can yield supply expense savings in the range of 7% to 15% of your total supply budget. And the best news of all is that these CSUM savings are ripe for the taking today!

2. Promote Functional Analysis Studies. Every product, service, and technology has a primary, secondary, and aesthetic function that would to be useful to your customers. Consequently, it is the goal of Functional Analysis Studies to determine that the commodities you are purchasing absolutely, positively meet the requirements on all of the functions that have been specified by your customers. And, decide whether some functions can be eliminated or substituted with a lower cost alternative. For example, do you continue to use towels or bath blankets to elevate patient’s legs and arms in the ED or do you use a lower cost, functionally equivalent, reusable elevation device that can be wiped down and used again? This idea would save hospitals tens of thousands of dollars annually and would also reduce their linen usage overall in the ED and other patient areas.

3. Mandate GPO Contract Compliance Organization-Wide. It has been our observation that there are still some holdouts (i.e., laboratory, maintenance, biomedical engineering, marketing, food service, etc.) not utilizing GPO contracts exclusively on all purchases at all healthcare organizations. Now is the time to mandate GPO contract compliance in all departments of your healthcare organization because it can increase your savings yields. For instance, we often see laboratory departments buying exam gloves off contract at higher prices because of convenience or they are unhappy with their healthcare organization’s selected standardized glove. Remember, there is rarely a reason for a department to buy off contract if they consult with supply chain to work through their issues.

4. Encourage Customization Vs. Standardization. Typically, hospitals, systems, and IDNs standardize on one commodity group (e.g., gloves, catheter trays, PICC lines, underpads, etc.) organization wide that could actually cost them money. Their thinking is that “one-size-fits-all” of their department’s requirements and that they are lowering inventory SKUs. When in fact, all departments don’t need every function and feature you are buying them, since some can accept lower, and others need higher specifications in their products. You can save money by customizing what is actually needed (no more/no less) by your customers. A case in point is PICC lines. Most departments only need one port PICCs, but there are exceptions like ICU level units that would require more.

5. Adopt Value Analysis Analytics. It is our observation that most healthcare organizations are throwing darts at an elusive and moving target to uncover their best value analysis savings opportunities. That’s where Value Analysis Analytics comes into play. It’s the art and science of measuring trends, patterns, anomalies, and variations in your supply streams to quickly identify savings opportunities. It’s like taking the steps when an elevator can get you where you want to go faster.

It is a misconception to believe that GPO contracts (along with standardization) are the only solution to reducing a healthcare organization’s supply chain expenses. As you can see from these five strategies, there are other savings approaches that can be even more effective than group purchasing in our current inflationary environment. It could be a good time to consider, investigate, or employ them.

Below are some similar articles that you may find interesting. 

Podcast 72 – How Clinical Supply Utilization Reporting Helps You Pick Up Savings Opportunities Including Price

Healthcare Supply Chain Benchmarking Success Pillars

Clinical Supply Integration Insights

Request Demo of SVAH’s Value Analysis and Utilization Tools


customization, healthcare supply chain, Healthcare Value Analysis, hospital supply chain, Hospital Value Analysis, standardization, value analysis analytics, value analysis software

You may also like

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}

Subscribe to our newsletter now!