Price and Standardization Savings are Waning
Show me a hospital, system, or IDN that is achieving double-digit price and standardization savings, and I will show you a healthcare organization that is falling behind its peers. The record shows that most hospital, system, and IDN’s price and standardization savings are waning. That’s why it’s time to transition beyond price and standardization for even greater savings.
79% of New Savings are in Your Clinical Supply Utilization
SVAH’s studies show that if you broke down just your annual clinical supply expenditures you would discover that they represent 70% to 80% of your total supply (less purchase services) budget spend. Interestingly, our continuing studies show that when you look beyond contracting, price, and standardization initiatives, you can save 7% to 15% on your clinical supply utilization misalignments (CSUM) (e.g., wasteful and inefficient consumption, misuse, misapplication, and value mismatches). This is in addition to what you are saving now on price. So, why aren’t we focusing more attention on CSUM?
Are You Really Eliminating Your Clinical Supply Utilization Misalignments?
We are noticing that supply chain professionals think that they are attacking their clinical supply utilization misalignments when they are in fact only scratching the surface. Yes, they are stumbling over a few dollars in utilization savings in gloves, oxisensors, or I.V. sets, etc., while overlooking a hundred-thousand-dollar savings in say stents, pacemakers, or cardiac catheters. This is the state of clinical supply utilization management today. Don’t confuse stumbling into savings opportunities with having a full-blown effort to attack these utilization savings.
Is This Happening at Your Healthcare Organization?
There is only one way we know of to rein in all clinical supply utilization misalignments in a healthcare organization; doing it with data and analytics. This is because you can’t see your clinical supply utilization misalignments with the naked eye. For instance, we worked with a teaching hospital that for one year did not buy any secondary I.V. sets and no one realized this oversight; therefore, the hospital was using only primary sets for this period at an additional $660K before our CSUM analytics identified this anomaly. I.V. sets is only one of over 350 major clinical product categories that can give you a whole new level of savings beyond price, but you have to take action to save!
Are You Ready for Double-Digit Savings?
We are seeing, on average, 26% savings per line item at our client hospitals, systems, or IDNs when supply chain professionals not haphazardly but scientifically attack their clinical supply utilization misalignments. This could be your experience too, if you transition beyond price and standardization into leading the charge to an even more robust savings source. Think of this change as the future of supply chain cost management.