“Savings validation is one of the most effective tools for improving accuracy and confidence in healthcare supply chain savings figures.”
Next to getting the right product at the right time to the right place at the right price for your internal customers, there is no other important element than to generate savings while maintaining or improving quality of care. Savings come in all forms and are a bit tough to track beyond just entering them into a simple savings spreadsheet like most health systems do.
Finally Have Confidence in Your Savings Numbers!
In today’s Supply Chain world, your Chief Financial Officer is not only reviewing your savings report but is also expecting concrete, actionable numbers that can be removed from the budget. As a result, many Supply Chain Leaders hesitate, questioning whether their reported savings will hold up under scrutiny and how much of those savings will actually be realized. However, Supply Chain Leaders should not have to lose confidence in their hard-earned savings simply because they lack the proper tracking and validation processes to support them.
Savings Validation is the Next Level of Savings Reporting
Savings validation incorporates spending and your patient volume metrics and statistics into the fold to ensure that all savings are measured the same. You can then track your savings using these measures and customize what you track by category or even by product(s). The bottom line is that you will have a proven system to aggregate and report your savings across any fiscal year, 12-month period, or longer, across not just a single hospital, but your entire system of hospitals and clinics.
Find out more about what savings validation can automatically do for you below!
1. More Savings Exist Than What You’re Currently Tracking – While you have a defined list of savings projects, contracts, and initiatives that you and your team actively monitor, there are often additional savings occurring that go unnoticed. These are areas where positive financial results are happening, but because they are not being tracked or identified, you are unable to recognize or take credit for them. These unintentional savings still contribute real value and should be captured. By using savings validation, you can gain full visibility into all savings activity, including those that occur more frequently than you might expect.
2. Nothing Will Catch You Off Guard Related to Savings – I have heard on countless occasions from Supply Chain Leaders about how they like not having any product category catch them off guard. What does this mean? Increases occur in any given product category that we don’t know about, some of which are inconsequential, others can be major. With savings validation, you will not get caught off guard on anything that shifts from neutral to good to a major cost issue. This is invaluable in the high-stakes world of savings tracking.
3. Price Savings Might Not Be Saving You as Much as You Think – Establishing a new contract for a product or device category does not guarantee that you will realize the exact savings percentage projected in your pricing model. Why? The biggest variable is utilization. If the new pricing involves a change in vendors and product conversions, the transition is rarely seamless. In addition, if the new product does not perform as expected but you are contractually committed to the vendor, it can create challenges at the clinical level that ultimately drive costs back up.
4. Proven Method for Holding Your Vendors Accountable for Promised/Contracted Savings – Most contracts today include promised savings opportunities, yet many organizations lack the visibility needed to determine whether those savings were actually achieved. You should know, down to the dollar, whether a contract is delivering the expected value. If there is a significant gap between the savings promised and the savings realized, it is time to hold the vendor accountable. Vendors expect you to uphold every contractual commitment, so your organization should expect the same level of accountability from them.
5. Pinpoint Upsells You Didn’t Realize Occurred – Even with today’s Value Analysis new product request processes, product upsells still occur on an ongoing basis. Most don’t realize this is happening until it’s too late, or worse, until it is well embedded into the clinical department and almost impossible to change. Why let that happen? Just implement savings validation tracking and catch these early.
6. Easily Project and Track Your Savings – I cannot tell you how many health systems ask for savings validation software because they want to accurately project the expected savings within a specific category. In many cases, organizations are relying solely on spreadsheet calculations, which requires a level of uncertainty and trust that those projected savings will hold true throughout the fiscal year. There should be no need to take a leap of faith when it comes to savings. With savings validation, you gain the visibility and confidence to understand your projected savings, track performance, and know the true impact over both the short and long term.
7. Automate Follow-up on All Savings – The majority of health systems are not truly tracking their savings after it is set in the savings tracking spreadsheet or database. It becomes a static forgotten number when it really is a living trackable element of your supply chain that needs to be tracked over the fiscal year and perhaps the life of the contract. With savings validation, this is all automated and will also incorporate patient volume centric measures to ensure that patient volumes increasing and/or decreasing are taken into consideration. All this will happen automatically!
Savings validation is one of the most effective tools for improving accuracy and, more importantly, confidence in healthcare supply chain savings figures. While many organizations continue to rely on basic spreadsheets, this approach overlooks the automation, structure, and rigor that savings validation software provides. Few organizations have the time or resources to manually audit every savings element in depth. By implementing savings validation reporting, you can streamline the process, enhance credibility, and unlock the full range of benefits this capability delivers. The result is greater savings, improved consistency, and significantly higher confidence in your reported outcomes.
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