June 11

Healthcare Supply Chain: 3 Simple Ways to Save Majorly and Not Create a Bunch of Work Doing It


“Once you set your healthcare supply chain program to delve further into these areas, you will have that constant flow of savings you have been looking for beyond your GPO and custom contracts.”

Let’s face it, there is only so much time in the day, week, month, etc., for you to engage in a project to reduce costs further at your healthcare organization. The inertia of the healthcare supply chain contracting, procurement, logistics, value analysis, and resilience that goes on day-to-day chews up your valuable time and resources. Yet, our organizations need to reduce costs further than what we are bringing about, as well as the offset that needs to occur for all of the increases due to inflation, market conditions, new products (not all come with reimbursements), and alike that happen every year.

The savings game does not need to be sophisticated or complex for you to save big, even in this day and age of GPO and custom contract maturity. There is still much more to save. I call this “the road less traveled savings.” The road less traveled savings are areas that have been left virtually untouched by the majority of healthcare organizations, yet when you truly delve (or bump into them as some do) into them you realize there are multitudes of diamonds in your own backyard.

The Road Less Traveled for Healthcare Supply Chain Savings

1. Make the Savings Come to You – The use of healthcare supplies and purchased services is based on the direct proportion of patient volume that requires set numbers of supplies and devices to be consumed. When you marry up your major categories to a patient volume centric metric and then start tracking those metrics year over year, quarter by quarter, and even month by month, it will give you so many savings opportunities that you did not even realize are possible. That is the first report I run when we are looking for savings opportunities for customers as the end customer cannot argue that they simply just had increases in patient volume. With this in place, you have an ongoing savings machine that will always pay major dividends and you can then take your time addressing each and every opportunity accordingly.

2. Use Your Contract Renewals to Look Further – A perfect time to do a further review to flush out savings opportunities is when you are renewing and or implementing a new contract altogether. Your end customers know full well that change is afoot so that is the most perfect time to drill down and challenge the use patterns and expensive features of your incumbent products and services. This can help you identify products that are too feature rich. You can then find lower cost alternatives that meet the functional and reliability requirements of your customers, all while maintaining your contract compliance!

3. Continual Benchmarking Tells You Everything – The year-over-year savings can be a high benefit but if you take that activity-based costing model a step further and start benchmarking it with your peers, or even within your own health system, it will once again uncover major savings you did not realize are there. I cannot tell you how many times organizations have had everything together, great pricing, great compliance, and have even picked the most perfect functional/reliable product but were still consuming too much and had no idea. The best way to capture those savings is to benchmark with your peers or within your health system at minimum. Plus, it will also tell you where you are at best practice levels so you can share that with all involved.

SMART Healthcare Supply Chain and Value Analysis

None of what I shared with you above is rocket science but just good old fashion SMART Supply Chain and Value Analysis Reporting/Reviews. Once you set your program to delve further into these areas, you will have that constant flow of savings you have been looking for beyond your GPO and custom contracts. This will take the heat off your contracting program and instead direct it to the areas that continually run over and have nothing to do with contracting or procurement but something else entirely.

Below are some similar articles that you may find interesting.

3 Reasons Why You Should Be Taking Advantage of Value Analysis Strategic Planning

The Worst Number is One When Performing Hospital Value Analysis Studies

Why Do Leaders Feel Training is Not a Strategic Advantage to Your Value Analysis and Supply Chain Programs?

Request Demo of SVAH’s Value Analysis and Utilization Tools


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