There is so much change going on in the healthcare supply chain world on a continuing basis it is difficult to know what to look at next, what is happening with what you are working on now, and the results of what you recently completed. This is what we call the before, during, and after effect of the healthcare supply chain which is critical to any supply chain organization’s success. Of course, we are all aware of the constant flow of supply chain conversions, fixes, new products, recalls, standardizations, and classic value analysis projects that go on. These all are subject to the before, during, and after effect. Just like our responsibility in the finding, diagnosis, and solution implementation, we must also be keenly aware of the end results.
Everything Starts with the Before Effect on Our Supply Chain
This may be one of the most challenging areas to master as we may not know much about the before effect on our supply chain other than running a 12-month spending report on the line items that we are working on. That may not tell the whole story as there are other factors to consider like patient volumes that may come into play. It is important to know one way or another if patient volumes are affecting a product category’s sudden rapid increase or whether it was due to some other factor.
Today, you can’t just take a department head or manager’s excuse that, “We were really busy last month,” or, “We did more knee revisions this year than most.” This is where the trust but verify comes in for which you have to know exactly what is going on. You are going to need to know if it warrants your attention at this point (e.g., “Is the juice worth the squeeze?”). We have found the best way to factor in any change is to measure using patient volume centric activity-based costing (i.e., suture cost per surgical case, IV catheter cost per adjusted patient day, angio cath cost per cath lab case, etc.). Compare these to year over year or even to your best practices in your system and you will have a true measure of the before effect in order to set your goals or know whether to move forward with your initiative at this time.
Things Can Still Happen During a Project Review
Okay, you have moved forward with your supply chain/value analysis project. Analysis, solutions finding, and implementation is not going to happen overnight but that still does not mean that the spend or the volume centric usage is not doing things while you are reviewing your project. For instance, a value analysis review at a community hospital was being worked on but during that time it was reported that the cost per case had gone down by 15% during the review. That is extremely important to know, as the physician-led team streamlined the solution piece of the study because of this versus dragging surgeons further down the rabbit hole than they needed to. It is very powerful to keep track during your reviews.
Another example was a large university teaching organization that was looking into pulse oxisensors because they were running $500K over that current fiscal year and set out on a long drawn-out value analysis review. But what happened during that period while they took eight months to complete their analysis was that they not only were burning the extra $500K more than the previous year but their cost per adjusted patient day went up by another $650K while the VA review was happening. All they needed to do was make sure they kept reporting during their review.
After Can Be Just as Challenging for Supply Chain and Value Analysis
The conversion, VA study, recall fix, standardization, implementation, etc., are done and the project coordinators are moving on to the next project. This sounds normal, right? The problem here is that the majority of organizations put solutions in place but never follow up on them to make sure nothing has gone sideways. This is when it is extremely important to go beyond the normal 30-60 days and look out 90 days, six months, and even one year after to ensure that your project is getting the results that you projected when implemented. We have found that as much as 25% to 46% does not happen and because there is no validation, your hard work goes down the drain. Follow-up reporting is now a thing!
There is also a positive after effect that most don’t realize which is that sometimes you save way more money than you projected. However, if you aren’t validating, you don’t get the credit on your savings report. We see this all the time and make our clients aware of their added savings, which is more important than ever before to them.
Tracking the Before, During, and After Effect of Your Supply Chain/Value Analysis Work Is Worth It
If you are thinking that further tracking is going to create more work for you or make you look bad, think again. Today, our leaders are looking for us to be on top of everything that is going on in our supply chain and this is no different. Do you really want to send your CFO a big report that states that you saved $3.5 million last year when 25% to 46% didn’t happen due to things you did not realize? It is better to be on top of all results upstream and downstream to which you can be strategic with which steps you take moving forward. Most times, when variances are found there are easy fixes as the tough project work has already been done.
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