July 23

Holes to Plug in Healthcare Supply Expense Management


When we think of holes, we naturally think of leaks which can cause quite a bit of damage to our home or facility. It is the same with supply expense management holes that can cause irreparable harm to your healthcare organization’s bottom line. Here are four holes you need to plug to keep your savings machine in good working order:

1. Purchased Service Contracts: Most hospitals have delegated the management, maintenance, and control of their purchased service contracts to department heads and managers with questionable results. This practice has led to big leaks in savings that should be plugged before they become gushers. This can happen if supply chain professionals take the lead to effectively manage these assets.

2. Excessive Inventories: It seems that supply chain managers believe that inventory management is only applicable for their hospital’s warehouse, distribution, and floor stock, thereby leaving half as much inventory house-wide unattended. This is unacceptable in the age of leaning all hospital inventories that have a value of $100,000 or more. It’s time for supply chain managers to step up to the plate and manage all of their hospital’s inventories as professionally as they do their warehouse, distribution, and floor stock inventories.

3. Weak GPO Contracts: All GPO contracts aren’t created equal. In some cases, they aren’t competitive at all. This is why you need competitive intelligence (i.e., benchmarks) to ensure that all of your GPO contracts are as cost-effective as possible. This can’t be accomplished by “gut feel” or intuition! You will need a power tool to capture and interpret this data and then repeat this exercise at least quarterly.

4: Utilization Misalignments: This is a hospital supply expense area where there are huge leaks in supply spends, since few hospitals have plugged these gaping holes. These represent 7% to 15% of lost savings opportunities that can be plugged by doubling down on the waste and inefficiencies in your supply streams. It will take time, focus, and attention to detail, but the rewards will be well worth your efforts.

No longer can we sit by and watch our hospital’s supply expense leaks get bigger and bigger. We need to plug them now, so we can help our hospital sustain a healthy bottom line. If we wait any longer to do so, it will be more difficult to fix these seepages when the whole building is falling down.

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Healthcare Supply Chain Managers: What is the Biggest Difference Between Price Savings and Supply Utilization Savings?

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Request Demo of SVAH’s Value Analysis and Utilization Tools


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