Let’s face it, savings and revenue are the almighty duo in the success path for any health system. Revenues are highly important for the growth of health systems in which there are always opportunities for new and better procedures. Even with added revenues, those must run through the operations funnel (staffing, inventory, procedure supplies, insurance, medical gases, etc.) and in the end, you may only find that you are profiting 2% to 10% overall on that new case. On average, a dollar of new revenue may only result in $0.02 to $0.10 of profitability. Take into consideration all of the increases in salaries and expenses and that revenue to profit margin gets quite thin. Even so, we must continue to push the envelope for more revenue sources.
While we develop more revenue sources, you should still optimize all cost categories at any given point in time. The good news about cost savings of any type is that spending has already been through the cost funnel, so when you find new savings they go directly to your bottom line. The big advantage we have with supply chain non-salary expense savings is that the impact is direct to profitability.
Clinical Supply Utilization Management is the Path to Wringing the Towel Dry of Savings
Clinical supply utilization management continues to be overlooked by health systems nationwide because it isn’t traditionally viewed as a source of significant savings. We call this type of savings savings beyond price. This approach can be difficult to fully grasp or prioritize in an environment heavily focused on contracting and price. As a result, many organizations struggle to recognize its potential as a meaningful contributor to overall savings strategies. Below, I’ve outlined several key reasons why CSUM has yet to become mainstream — along with clarifications to challenge these assumptions — so your health system can begin unlocking these valuable savings opportunities today.
You Don’t Realize the True Potential of Savings That Is Still There – Most organizations have a mature contracting, standardization, and rebate program in place — often award-winning through their GPO — and feel they are doing all they can. How can there be more savings beyond price? Easy: price is just one factor. Quantity utilized/consumed, as well as product selection across these endless categories, are also major drivers. Our studies have found that health systems average about 1% to 3% in new price savings each year, but utilization savings can range from 5% to 10% of the total supply budget. Imagine not addressing a cost savings opportunity year after year after year. That’s what is happening in many health systems, and will continue to happen until a formal Clinical Supply Utilization Management (CSUM) program is in place.
You Think You Are Somehow Covering All Your Bases with Value Analysis – Value Analysis (VA) is the engine that can help drive clinical supply utilization savings once they are identified and reported. However, VA is just as dependent on existing contracting and spend reporting as Supply Chain. In addition, VA teams are already stretched thin with new product requests, recalls, contract conversions, and problem solving. As a result, they are not likely to dive deeply into CSUM without a structured program in place.
It’s Not Supply Chain’s Job to Tell Clinicians How Much They Are Consuming, Wasting, etc. – Supply Chain has traditionally taken a hands-off approach when it comes to what clinicians choose to utilize, as long as it falls within the contract portfolio. Advising clinicians on the finer details of consumption and product selection is not something Supply Chain or Value Analysis has historically been comfortable with, so it often doesn’t happen. However, with a CSUM program in place, this becomes an ongoing, collaborative engagement with clinicians, helping fine-tune product use to exact requirements and preventing waste, inefficient utilization, or unnecessary feature-rich products from slipping through the cracks.
Your CFO Is Not Asking for CSUM – Supply Chain is often conservative in its progression, and moving into a new realm of clinical-side savings can feel like a significant leap. Your CFO may not be explicitly asking for this level of analysis, but the broader push toward a clinically integrated supply chain aligns directly with what CSUM aims to achieve. Specifically, it focuses on addressing increases in clinical supply utilization based on patient volume–centric measures and mitigating associated cost increases or overages. While this is somewhat aligned with traditional budgeting processes, it takes the approach to a much deeper level – one your CFO will likely understand and appreciate once presented.
There Are Diamonds Hiding in Your Own Backyard — Time to Harvest Them!
The bottom line is that clinical supply utilization management savings represent too great an opportunity to overlook in 2026 and beyond — especially if no formal program currently exists. By “formal,” I mean having dedicated reporting, teams, and Value Analysis professionals actively identifying and addressing these opportunities on an ongoing basis. With an active CSUM program, you ensure no stone is left unturned and, more importantly, unlock a powerful new source of savings for both the short and long term.
Below are some similar articles that you may find interesting.
Lining Up Your Savings Pillars for Short and Long-Term Savings in Healthcare Supply Chain
6 Keys to Engaging in Critical Clinical Supply Utilization Savings Conversations