Non-salary cost reductions are top of the mind with the majority of healthcare supply chain professionals in the coming year, but these savings won’t happen with your new or renewal GPO contracts alone. In our opinion, you will need to dig deeper with Clinical Supply Utilization Management (CSUM) if you want to move the needle on your supply chain savings next year. These CSUM savings can be achieved in the following three ways:
Achieve Clinical Supply Utilization Management Savings
1. Identifying Waste and Inefficiencies: We have found that all 500+ hospitals, systems, and IDNs we have worked with in the last three decades have significant waste and inefficiencies in their supply streams. Just the other week, one of our team members discovered over $85,000 in improper billing for one of our clients from their purchased services vendors. These savings had been overlooked for years, until we identified these savings with our CSUM analytics. You, too, have hundreds of these same issues if you would only decide to get rid of them.
2. Eliminating Misuse and Misapplications: Due to inadequate training, poor communication, or misunderstandings, your hospital staff routinely misuse or misapply products, services, or technologies like having more rental beds than are medically necessary or not reusing your DaVinci arms as per the manufacturer’s guidelines. This costs your healthcare organization hundreds of thousands of dollars unnecessarily annually.
3. Searching For Value Mismatches: A typical problem we have observed that all healthcare organizations are experiencing is buying higher priced products, services, or technologies when lower cost alternatives are available. For example, utilizing a feature-rich IV catheter with features that may only be required for use in your ICU but instead are utilized throughout the hospital for an increased cost of 33% to 67%.
Clinical Supply Utilization Management Savings Vs. GPO Savings
Cumulatively, these three CSUM savings categories represent about $1 million dollars per occupied bed or 7% to 15% of your supply chain budget. If you do the math, you will discover that your new or renewal GPO savings (about one to three percent in a good year) won’t match these CSUMs in any category of purchase. That’s why it makes sense to expand the scope of your savings initiatives to include utilization misalignments or the wasteful and inefficient consumption, misuse, misapplication, and value mismatches in your supply streams.
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