Based on the new healthcare mandate for value-based purchasing rather than fee-for-service payments, have you thought out your supply utilization management strategy yet? Why? So you can help your healthcare organization improve quality and reduce its overall cost structure to ensure survival in the new healthcare environment we live and work in.
It’s Not About Price Any Longer
I was just reminded this morning, by one of my staff, that I say the same thing in my writing, in different ways, all the time. Well, how do you say that the supply chain game is changing dramatically and that price will have the smallest effect on your healthcare organization’s bottom line?
One good way is to tell a story. I recently read about a New Jersey pharmacy buying group that spends only 25 to 50 percent of their time on contract price strategies; the remaining time is spent on utilization savings. This group is looking for more insights for their members about utilization trends within our networks as their price savings diminish.This should be your focus, too, or your well will run dry!
The Focus Is Quickly Shifting to Supply Utilization Management
Although your healthcare organization will be able to squeeze out a few more single-digit price savings with regional GPO’s price strategies and tactics, your healthcare organization’s biggest opportunity for double-digit savings is with supply utilization management. Yes, you can start to save 7% to 15% almost overnight, if you know where to look for these savings. But this won’t happen without an exacting analytics system to guide your way. No longer will your MMIS and Spend Manager be able to light the way for you, because they are transactional, not predictive tools.
What Your Supply Utilization Strategy Should Look Like
First, you need to believe that supply utilization savings are real and obtainable. Once you have this mindset, you can search out an the right analytics system that will identify where your utilization savings reside. You can then establish a savings goal for any given year to budget for your administration.
Beware of Imposters: Don’t believe that all analytical systems are created equal. Too often, vendors and even GPOs say they can identify your utilization savings with their analytical tools, when in practice they can’t.
Next, you should establish a multi-disciplinary supply utilization management team to focus on investigating and then eliminating all of the identified supply utilization misalignments. This is the most straight forward way to attack these savings.
Don’t Nibble Around the Edges
Instead of a comprehensive supply utilization strategy, we see too many healthcare organizations nibbling around the edges of these savings. When they should be saving millions of dollars annually, they are only saving a few thousand dollars, because they are employing traditional tools to discover these anomalies in their supply streams.
Don’t waste your staff’s or value analysis team’s time and energy chasing after these elusive savings. Get it right the first time with the right tools, training, and process that can make it easy to find your healthcare organization’s supply utilization savings.