Most health systems’ supply chain departments have a hidden superpower that, in many cases, they are not taking advantage of and therefore achieve little or no results from. These results can be in the form of cost savings or quality or performance improvements. Don’t get me wrong, most health systems are doing some form of benchmarking in the areas of departmental and procedural performance which is great. But you are not going to be able to make much headway when you are told that your surgical costs are higher than your peer group’s by 22%. So, what do you do with that?
Price is a Benchmark but Its Value Has Diminished
Most focus on easy benchmarks like price benchmarks which are quite straightforward, give or take a few tier levels for standardization. Price is in fact a comparable benchmark, but the reality is that due to confidentiality clauses you may never know the best of the best prices as compared to your own health system’s pricing. Either way, there is still a very limited share with this type of data. Let’s face it, price savings are starting to fall into the law of diminishing returns. You do want to keep your pricing comparable going with your GPOs, but it is time to fully develop your next level of benchmarking beyond price to save big.
What Are We Talking About?
Benchmarking is not just comparing one category or hospital or health system to another, but is about finding the best practice that you can emulate and learn from to make your department, hospital, or health system better in the process. Benchmarking is extremely powerful if done correctly because then you will finally know where you stand as compared to the best of the best in your category, department, hospital, health system, state, or region. We all want to believe that we are running at high levels of performance, utilization, and pricing, but do you really know without having your own benchmarking system to tell you where you stand?
There are Many Levels of Benchmarking
Benchmarking is universal but in the healthcare supply chain we have found that it is best to focus on the individual categories that you purchase for supplies and purchased services which can number over 1,000 categories. By mapping your categories to patient volume centric metrics, you can then begin the reporting and tracking your actual consumption and utilization. This will then show you where you stand historically and compared to the best practice within your health system which will help you identify what we call your first level of benchmarking savings.
The Potential is Endless
Once you start configuring and tracking your utilization, you can then start to work within your hospitals and health system to find the best practice to learn their methods to keep their utilization low. In essence, you will be learning from the best with pride and they can also learn from your best practices. You can even expand this to your regional GPO members you work with on an ongoing basis if they are willing to align with your methods for tracking utilization and benchmarking. Everyone wins in this relationship in the form of major savings that you never thought was possible before.
Benchmarking Helps You Take Cost Optimization to a Whole New Level
If done correctly, you will find your benchmarking system will be your savings engine, driving quality cost optimization results in the short and long term while allowing you to continuously measure your results. Let’s face it, Supply Chain needs to have a system that is totally geared towards making the savings come to them instead of always chasing savings that sometimes materialize and sometimes do not. No more spinning wheels or finding dry holes – your benchmarking will allow you to find the sure thing when it comes to savings. Start benchmarking today!
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