“Once you have a Supply Utilization Management Program in place, it will be quick and easy for you to ascertain where you need to put your focus in order to further savings and optimize your products and services. Just a few clicks of your mouse will give you all the reporting and drill downs you need.”
There are a lot of misconceptions as to the true outcomes of what supply utilization management (SUM) can mean to your supply chain and utilization management programs. Most utilization misalignments that involve waste and inefficient use or even feature-rich products can go unseen in a supply chain if your pricing is at optimal levels. Don’t be fooled by having the best pricing. You must also have the best utilization. Price and utilization have nothing to do with one another but are tied together. Below are several other areas that should open your eyes to the misconceptions you may have about SUM and what it could do for you and your healthcare organization.
What You Need to Know About Healthcare Supply Utilization Management
1. It’s Not Value Analysis – Value analysis is the study of function to find lower cost with equal quality alternatives that provide equal or better reliability.
Often when I talk to VA professionals and mention utilization management, they will inevitably say that utilization management is their job. To me, this is wishful thinking as a Supply Chain or VA Professional does not really know the utilization level of any product or service without specific data and reporting. This is not spend management. Our gut is no good in telling us whether the product category is fat or not. VA is the process in which you follow to weed out the utilization savings opportunity once it has been identified and proven that the savings opportunity is real. Then and only then can VA take responsibility for utilization management.
2. Value Analysis Studies Do Not Always Uncover Utilization – Most value analysis studies are focused on the product at hand and do not always address the consumption levels of the product being studied. When I sit in on VA meetings with clients, I am always looking up their utilization on new product categories to see where they stand. If a surgeon is asking for another ablation product and their category is already 29% higher than it was this time last year and is 25% over cohort best practice benchmarks, then it is important to know this.
Plus, you should be addressing why a high dollar category like cardiac ablation is running over by 29% in a year and find what has changed and whether you can mitigate that and find savings. The savings will help pay for the new product they are requesting.
3. It’s a Form of Evidence – Seeing outside evidence is nice but it still must translate to your health system. Having your own utilization management system makes it easy to tap into your use patterns on all products.
4. It Transcends Price to Cover Total Cost of Products and Services – In many respects, Supply Chain and Value Analysis are in the business of managing and optimizing products and services. Yes, you want the best pricing and contract terms but there may be even bigger savings in optimizing high consuming areas in your healthcare organization to best practice levels. What good is having the best price if you are consuming 20% to 30% more products in any given year?
5. Utilization Management is Not a One-Time Event – Everything is continual in the healthcare supply chain, and utilization management and optimization is the same as well. When you knock down opportunities, you will then find that others pop up in their places due to the ongoing changes of products and services within your contracting proposal. Plus, products, people, and policies change and that of course can cause utilization misalignments and cost increases that must be addressed on an ongoing basis.
6. It’s a Major Time Saver – Once you have a Supply Utilization Management Program in place, it will be quick and easy for you to ascertain where you need to put your focus in order to further savings and optimize your products and services. Just a few clicks of your mouse will give you all the reporting and drill downs you need.
7. Savings Are Going Untouched – In a time that your supply chain/value analysis departments are working on minuscule standardization opportunities to save $2K here or there, there is a totally untouched area that you are not saving a dime on. That untouched area is Supply Utilization Management (SUM) which is not spend management but is marrying spend to your ongoing patient volume centric measures. I call this the gift that keeps on giving which can power your savings initiatives beyond price on an ongoing basis. You need to have a SUM Program to even realize how big these savings are!
Do you want to plan for a Supply Utilization Management Program in the near future? I would suggest you do as the savings are nothing you want to ignore or have someone else find for you. This is not something that your group purchasing organization is ever going to do for you even though they have reports that show you year over year spend increases/decreases. There is more to supply utilization management than spend; it is based on your patient volume centric measures married to every one of your over 2,000 product and service categories. That is the difference, and the huge savings are just waiting for you to take advantage of.
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