I was just made aware by my staff last week that they are now seeing annualized price savings for even the most contract compliant hospitals, systems, and IDNs that have shrunk to 1% to 2% from 2% to 4% of overall budget over the last decade. This is a startling change in supply chain economics that I would credit to the positive impact of national and regional GPO contracts over the last ten years. However, these price reductions (1% to 2% annually) aren’t nearly robust enough to move the needle on supply expenses in today’s unstable healthcare economy. That’s why it is mission critical for healthcare organizations to formalize, operationalize, and institutionalize (see explanation video) their supply utilization programs (SUM) to close their price gap. To sell this concept to your senior management, here are four reasons why supply utilization savings are better than price savings in our ever-changing healthcare marketplace:
