I thought I would make your first edition of our Cost Optimization Newsletter a simple and straightforward set of ideas for you to take into 2024 to make your cost/value optimization program even better. Many healthcare organizations have very mature cost optimization programs and have done a lot of good work to make these happen, but as the adage says, “You are either moving forward or moving backwards, there is no in-between.” Below are some ideas for you to take into 2024 that will help you move the needle in a big way with cost/value optimization and will only improve the quality of the products, services, and technologies you contract for. All this without major changes to how you do business! These are in no particular order, but are all highly effective.
Simple Ideas That Are Worth the Upgrade to Your Cost Optimization Program
1. Bring You and Your Team Up a Level with Advanced Training – If you are looking for better results but you are not bringing your team members up a level to meet this new requirement then I highly recommend training your team in advanced cost/value optimization Everyone is never in the same place as far as education and experience on your teams so it is a good idea to raise the bar for everyone with solid training areas that you will get direct benefits from in 2024 and beyond. You cannot go wrong with training.
2. Incorporate Retrospective Value Analysis Reviews – Value analysis is very much a forward-thinking cost/value optimization strategy but there is high value in revisiting major categories of spend to wring the towel dry on savings. You will be surprised at what you will find when you do this, and you can just simply incorporate these retrospective reviews into your VA agendas. We have seen healthcare organizations that have done this save as much as $2.4 million on just one major product category. Don’t accept that big spend just happens, we can always trust but verify.
3. If You Are Not Already Doing This, Add Reprocessing Into the Mix for Big Savings – Most healthcare organizations are pursuing reprocessing in a big way and seeing the high value it can bring to the table, but for those of you who dipped your toe in the reprocessing water and it did not work out for you, perhaps it’s time to revisit this again. There are more companies and better processes that are bringing high value with not a whole lot of work. It just makes sense to have a fully functioning reprocessing program in place today.
4. Upgrade Your Software Technology – If all is working fine with the software you currently use then by all means keep it going, but in most cases, new advances in cost/value optimization normally require new technology to spur this on. A simple example of this is if you are just relying on your current ERP purchasing systems to provide you with all the necessary savings opportunities, you may want to upgrade here. Most ERPs are still transaction-oriented first, and then if they can, will let you run a few rudimentary spending reports. It is better to have systems that can help make the savings come to you every day of the year.
5. Give Clinical Supply Utilization A Chance and You Will Be Surprised – There is waste, inefficiencies, and opportunities to fine tune categories of purchase in your organization. I like to call this making the savings happen to you if you are always tracking your utilization to patient centric volume metrics like Adjusted Patient Days and Surgical Cases, etc. This will allow you to pick up on changes in use patterns, over-use of feature-rich products, and eliminate waste and inefficient use on clinical floors. We call this the last bastion of major supply chain savings.
6. Add Benchmarks/KPIs Into Your Product Categories – Most hospitals and health systems don’t know where they stand as far as low, medium, and high in a cohort of best practice hospitals. This is important as you will find where your best practice areas are, and you may want to just leave those areas alone in cost optimization and move on to the areas that are not within best practice parameters. Plus, this can be ongoing and when you optimize costs in categories you can then share the gains with the end users and your senior leadership.
I think we can all agree that doing nothing or just keeping things the same is a simple yet unsustainable way of doing business when you are looking for new and bigger savings opportunities that won’t affect the quality of care. Not to mention that most of the low hanging fruit has already been saved, so we must dig a little deeper to get after these new savings. That does not mean you need to work harder, but smarter instead. The big savings are still there. I wish you luck in 2024!
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