Many healthcare organizations are now actively looking for new and different ways to reduce costs beyond the normal strategic sourcing and/or group purchasing model. Why? Because they are not getting the big savings (or any savings at all) that they once provided due to market conditions, inflation, etc. So, the next major area to get into, which we have been talking about for the past ten years, is clinical supply utilization management or savings beyond price.
Know Where You Stand with Clinical Supply Utilization
Clearly there are savings opportunities when you have the right metrics, the right spend, and the right key performance indicators to show you where you stand on any given category of purchase. Case in point; a 530-bed Tertiary Medical Center with a pulse oxisensor cost per adjusted patient day at $2.19 over the past 12 months. The KPI low is 1.10, the mid is $1.60 and the high is $2.60 (these are real benchmarks for today), so they clearly have a major savings opportunity. The challenge is that hospitals and health systems don’t really know where they stand when it comes to even the simplest category cost per metrics like the pulse oxisensors opportunity I just laid out for you.
Supply Utilization Savings Over Price Savings
The KPI for just one category of purchase like this pulse oxisensor example is showing a savings opportunity of $345K to $925K for the organization highlighted above. Organizations are all standardized for the most part on their pulse oxisensors and are buying through their group purchasing organization as well as buying the reprocessed sensors from their manufacturers which this organization is doing too. Yet their costs remain high, why?
The reason this organization’s costs remain high with something like pulse oxisensors is because they have the best pricing possible, but the savings has nothing to do with price – it’s the quantity that they are consuming/buying. How can you solve or obtain huge savings on something you don’t know is there unless you deploy KPIs throughout your over 750 major supply categories. Remember, supply utilization is all about eliminating waste and inefficient use, and getting the full life cycle out of the products per use.
Supply Chain to the Rescue with Another Round of Clinical Supply Utilization Savings
Most supply chain leaders are apprehensive at first when it comes to quality key performance indicators, especially when their senior leadership and clinicians are going to see these reports. Keep in mind, it really is not supply chain’s job to tell clinicians how or how much to use on a patient or procedure, but somebody has to let them know that they are over-using, wasting, or inefficiently utilizing certain products. Supply chain and value analysis teams can then assist these clinicians and end users on how to make the adjustments to achieve the savings that the KPIs helped point out. Remember, you have to start down the KPI road with that first KPI in order to create the snowball effect to cover all of the most important utilization areas and find huge savings.
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