Clinical supply utilization misalignments (CSUM), or the wasteful and inefficient consumption, misuse, misapplication, or value mismatches in your healthcare organization’s supply streams, are a widespread epidemic in our industry. They represent 7% to 15% of your annual supply chain expense budget and generally can’t be seen with the naked eye. However, there are seven types of clinical supply utilization misalignments shown below that should trigger a value analysis study to reverse this trend:
1. Standardization: The philosophy that one-size-fits-all of your customers’ requirements has always been the conventional wisdom to save money. However, you really should optimize your supply savings through customization, not standardization. For example, we have seen healthcare organizations standardize on IV sets hospital-wide costing $6.36 each, when only their OR and ICU require this sophistication. Instead, this hospital should have provided a $4.37 IV set hospital-wide, then authorize their OR and ICU to use the $6.36 IV set. Thus saving at least a hundred thousand dollars annually for their hospital.
2. Over-Specification: Too many products, services, and technologies are too feature-rich, since your customers don’t need everything they are specifying (we call this catalog buying). For instance, we have seen two, three, or even four ports being specified for central line catheters that can’t be functionally or medical indicated, costing hospitals tens-of-thousands of dollars a year unnecessarily. There are many alternative cost-effective configurations for central line catheters.
3. Under-Specification: Too few components and wrong or missing features are costing hospital staff time, money, and effort because they need to do workarounds to have their products function properly. Take for instance a hospital system that has eight different patient belonging bags for their eight hospitals. However, not one would fit all of their patient’s clothing, so they need to use two to get the job done.
4. New Technology: The chances that a new piece of equipment will work as advertised is 50/50 from our experience. Thereby, this costs your hospital money. We saw this with a university teaching hospital’s point-of-service glucose test that required two or three test strips to get an accurate reading until we identified this CSUM and had it corrected. By the way, this CSUM was costing this hospital $58,892 annually in waste and inefficiency.
5. Old Technology: If a piece of equipment has passed its useful life, there is a good chance that it is costing your healthcare organization money. We saw this phenomenon at a university teaching hospital that we identified was buying four times the IV sets than was medically required. The cause of this occurrence was that the hospital had 38 old IV pumps that were giving false alarms, but the nurses didn’t know this fact, therefore, they changed an IV set every time an IV pump would alarm. This problem was solved when 38 new IV pumps were bought from the savings from correcting this clinical supply utilization misalignment.
6. Too Many Hand-Offs: Revising, correcting, changing, or handling products or tasks more than once (e.g., forms, drugs, food, supplies, etc.) causes utilization misalignments. It can be caused by defective products, equipment, or antiquated (linen/laundry, distribution, infection control, etc.) policies that need to be revised.
7. Value Mismatches: A lower cost alternative product, service, or technology is available, but not employed. One of our clients recently substituted a DaVinci Robot disposable positioning pad with a functional equivalent pad at a savings of 47% over the manufacturer’s price. And this pad was a better functional alternative than its expensive predecessor. This is what value analysis (the study of function and the search for lower cost alternatives) should look like at your healthcare organization.
Every healthcare organization today is looking for new and better ways to save money beyond price and standardization. So, don’t overlook clinical supply utilization misalignments in your search for more supply savings that will give you the best return on investment on your staff’s time, effort, and results or you will be missing a bonanza of supply chain expense savings that are ready to be eliminated.
P.S. If you want to learn more about this new supply chain discipline, may I suggest you download a copy of our FREE book, “Healthcare Supply Utilization Management: The Future of Supply Expense Management 2nd Edition” at www.SVAHSolutions.com.
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