July 26

Healthcare Supply Chain Expense Management: The Missing Piece Of The Puzzle


We here at SVAH are big proponents of group purchasing organizations in controlling the price at the pump. Yet, when it comes to saving money on your expenses there is more than group purchasing considerations to contend with if you want to wring the towel dry on your non-salary expenses. This is especially true at this time in our nation’s history when there is a huge surge in prices for almost all healthcare supplies, services, and technologies due to historic inflation. We believe there isn’t a better time for healthcare supply chain professionals to consider savings beyond price alternatives to dramatically reduce their hospital, system, or IDN’s total supply cost. For you see, it is the individual pieces of the puzzle that make up the big picture, and you need all the pieces to complete the picture!

The Pieces Of The Healthcare Supply Chain Puzzle

If you want to truly impact the total cost of the products, services, and technologies you are buying, you first need to think about the individual pieces of the picture (price, standardization, and consumption/utilization) of the healthcare supply expense puzzle as separate but interconnecting entities. This is because if you aren’t attacking all three of these cost drivers simultaneously, then you can’t expect to reduce your supply chain expenses to the lowest level possible. For instance, we have seen healthcare systems have the best GPO pulse oxisensor tier pricing, and have standardized their oxisensors under one manufacturer, but their oxisensor consumption is 8x higher than their peers’. In this instance, we are talking over $630K more in spend than their peers. This indicates that this system has two of the three pieces of the puzzle in place but is missing the third piece – consumption/utilization management. This consumption/utilization problem can be especially acute in the inflationary environment we are now experiencing where your prices are fluctuating daily. Nevertheless, you need to ratchet down the cost of everything you are buying for your healthcare organization to have a healthy bottom line. Missing one of the pieces to this puzzle won’t enable you to meet this goal and objective.

The Missing Piece

It is our contention that healthcare supply chain professionals have done a good job on controlling their pricing and the standardization of commodities they buy, where applicable, in most categories of purchase. However, based on our observations, these same supply chain individuals haven’t made a dent in the reduction of the consumption/utilization of the products, services, and technologies they are buying. This is the missing piece of the supply expense puzzle that is holding back millions of dollars of supply expense savings at healthcare organizations nation-wide. We hope you will consider this as an imperative in the months and years to come to truly complete the picture with the missing piece of the supply chain expense management puzzle.

Below are some similar articles that you may find interesting. 

Healthcare Supply Chain Professionals: Is Your Job Done When You Find The Best Price For A Commodity?

3 Reasons Purchased Services Management Is Crucial To Improving Your Healthcare Organization’s Operating Margin

Can You Pass The Clinical Supply Integration Insight Test?

Request Demo of SVAH’s Value Analysis and Utilization Tools


cost management, expense management, expense savings, group purchasing organizations, healthcare supply chain, hospital supply chain, supply chain, supply chain expense management, value analysis

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