“Here at SVAH, when it comes to cost optimization we do nothing about price but instead focus our efforts with our clients on the areas beyond contract prices, which results in amazing savings year after year.”
Healthcare organizations are looking for new and better ways to reduce costs and increase revenues further. When reducing costs, every dollar goes right to the bottom line whereas new revenues must filter through your organization’s overhead expenses and thus there may only be a few percentage points in the end. Reducing costs, which is the bread and butter of Healthcare Supply Chain and Value Analysis Professionals, is a major area that can assist our organizations’ bottom lines as increased expenses are hitting continually.
With increased costs, you must always be in cost optimization savings mode, which is okay – Supply Chain Professionals are used to this, but mostly when it comes to pricing and standardization. There is still more beyond the best prices and that is the area that has gotten the least amount of attention over the years, but you can change that.
Going Beyond Price to Even Bigger Savings Must Be Systematic Instead of Sporadic
Most think when they stumble upon a large cost and then delve further and weed out some big savings that they are in fact engaging beyond price, which of course they are, but this is not systematic. You basically bumped into the savings, but you need to think on a system-wide scale. Do not leave anything to chance but instead work towards implementing systems, benchmarks, or reporting that will make these savings opportunities come to you automatically. Here at SVAH, when it comes to cost optimization we do nothing about price but instead focus our efforts with our clients on the areas beyond contract prices, which results in amazing savings year after year.
New Savings Beyond Price Year After Year
Supply Chain is perpetual in nature because of the constant changes with contracts, products, vendors, distributors, not to mention the different staff and procedural changes that can occur in any hospital or health system. This complexity frequently leads to inconsistencies, waste, value mismatches, and inefficiencies that drive costs higher even when you have the best contract pricing in place. Therein lies the root cause for most cost overruns that if identified early and often can be optimized or eliminated altogether with the net result being major savings. This sounds so simple, yet you need to start to plan out how you are going to make all these savings come to light. First and foremost, you need to prove that the savings opportunities are real for yourself and your VA Teams to engage in the savings project. With viable savings opportunities, your Value Analysis Program can become that ongoing major savings machine that your senior leadership is counting on.
Cost Optimization Success
We highly recommend that you plan to deploy cost utilization management and benchmarking software that will make all the savings come to you. This way, you can strategically pick and choose which projects you will engage in and when. Having this type of reporting and benchmarks in place will solidify your cost optimization program over the long term and you can then work toward wringing the towel dry on every savings opportunity that you deem viable. There is no time to waste – start planning your Cost Optimization Program today!
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