I think we all realize that we need to save more money today due to the effects of the 2020 pandemic to right our ship, but we also need to prepare for our healthcare organization’s future growth that requires even more effective supply chain expense controls going forward. We have found that the one innovative supply cost optimization strategy that can meet both these conditions is a Clinical Supply Utilization Management (CSUM) Program. Here are some reasons why I can make this statement.
The Need for More Granular Data to Make Better Decisions
If you knew that your DaVinci disposable supply cost expense per procedure was double your historical standards, wouldn’t you investigate why this was happening? If you realized that your pacemaker per procedure cost was 12% higher than your peers’, wouldn’t this pique your interest? If you were utilizing three I.V. sets per patient day vs. 1.4 PPD, wouldn’t this statistic get your attention?
This is the kind of granular data that a CSUM program can give you, so you can act on these anomalies immediately. Instead, the only tool I’m aware of that a healthcare organization might have to make spend decisions today is a “Spend Manager” that only provides you with price variances, spend visibility, and enables you to audit your spend policies. That’s why we need better tools now and in the future to master our supply chain domain, not just manage and control it.
The Need for More Controls to More Effectively Manage
Are we really controlling our supply chain expenses? Or are we just monitors of our supply chain expenses? There is a difference! By controlling I mean verifying that all of our supply expenses total costs are within acceptable limits vs. monitoring our spend with a “Spend Manager” without effectively managing their outcomes. How would this be possible without a tool that measures, manages, and controls your products, services, and technologies’ consumption, application, and use to ensure that your purchases are being employed in the most efficient and cost-effective manner?
The Need to Know That Your Savings Actually Stick
It is SVAH’s estimate that hospitals, systems, and IDNs are understating their contract and value analysis savings by as much as 23% to 46% on their GPO, local contracts, and value analysis projects in any given fiscal year. This is a universal truth for all healthcare organizations based on our extensive studies. This doesn’t make it an acceptable practice.
We have documented further that healthcare organizations are overall underreporting 14% to 17% in their non-salary savings to their management each fiscal year. Meaning, hundreds of thousands or even millions of dollars are going unreported each year. Why shortchange yourself of these reported savings? The answer is to verify, verify, verify to save even more with a Clinical Supply Utilization Management Program.
Let’s Be More Scientific with Our Supply Chain Management Now and In the Future
Scientific management is a theory of management invented by Fredrick Taylor (1856 – 1915) that employs the latest business concepts, theorems, and practices to improve efficiency, eliminate waste, and enhance productivity. That is what CSUM is all about; bringing about advanced business strategies, tactics, and techniques to help healthcare organizations save money today and prepare for future growth.
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