February 20

How Are You Handling Savings Validation? It Really Matters!


“With your own savings validation system in place, you will instantly be on top of every trend and change inside your supply chain purchases.”

I cannot tell you how many times that we run our ongoing validation reporting for clients and find that a recent savings initiative that was implemented with the highest level of professionalism and value analysis acumen has suddenly gone sideways. The bottom line is that it was supposed to save major dollars but instead is rapidly increasing costs. This is not as bad for our client because they are being alerted that something is amiss and can go back and fix the issue. The real issue here is for those of you who are not running any type of ongoing Savings Validation Reporting/Software. You’re flying blind and don’t know this is happening.

Is Ignorance Bliss? Not with Savings Validation!

Just because you are following up 60-90 days after a major savings or value analysis initiative is put in place does not mean that something cannot happen just beyond that threshold of 90 days. Just recently, we ran a 6-month comparison on a major clinical purchased service in which the previous year had a $112K annual reduction but suddenly is now trending 41% higher or $142K (annualized) over in just six months. Their value analysis team went back to the original value analysis study and will reel this opportunity back in before the entire $142K is lost for the entire year (only $71K has hurt the bottom line so far).

Validation Knowledge Is Your Next Supply Chain Superpower

Nobody likes to be the bearer of bad news with any real savings opportunity but if we are going to manage our supply chains upstream and downstream, we have to be aware of all of the major and minor changes that are going on with our costs. Let’s face it, there is power in knowledge and having your own Savings Validation Reporting in place is the next superpower that you and your team are going to want to have.

Did You Know That Savings Validation Has Hidden Benefits?

Interestingly, Savings Validation Reporting will also tell you where there are major positive improvements (that you had no idea were happening) and will detail them out for you to add to your savings reports for your CFO. One health system was showing $1.5 million in five different contractual savings opportunities that were only supposed to save about $735K. How can this happen? Because the changes shine a light on many things and there is a bit of a Hawthorne Effect that occurs and will thus drive costs even lower with small changes and adjustments to contracts or with vendors.

Once again, you must be reporting these things out with ongoing validation, otherwise nobody takes credit for these changes and even worse, nothing is learned from not knowing.

Time to Turn the Corner on the Savings Game

With your own savings validation system in place, you will instantly be on top of every trend and change inside your supply chain purchases. This will give you a valuable opportunity to further mine your own purchases for major savings that you may not have realized were there before. Take a step back and develop your Savings Validation Reporting today.

Below are some similar articles that you may find interesting.

4 Little Adjustments to Make Your Hospital Value Analysis Program Flow Better and Faster with Improved Results

Is Value Analysis Software Mission Critical to Healthcare Organizations?

Consumption Management: Supply Chain Doesn’t Own this Problem but Can Help Uncover Big Savings

Request Demo of SVAH’s Value Analysis and Utilization Tools


healthcare supply chain, Healthcare Value Analysis, hospital supply chain, Hospital Value Analysis, purchased services, savings reporting, savings validation, validate savings

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