Clinical supply utilization management (CSUM) sounds very straightforward in that it helps Supply Chain and VA Leaders to uncover the waste, inefficiencies, over-consumption, and value mismatches that drive cost increases. No matter how good your prices and standardization are at your organization, your costs can still be high due to other factors. Most who don’t employ a CSUM program do not know the true dollar savings opportunities that are available for them. This article today is about the unexpected impact that CSUM can have on your organization beyond just helping you uncover all savings beyond price at your health system.
Today, we’re focusing on the additional impacts CSUM can have, including the benefits that support you and your health system by improving cost efficiency, while also enhancing quality and overall performance.
1. Gauging Approval for New Product Requests – In Value Analysis Team meetings, I frequently evaluate new product requests by reviewing category utilization and cost trends to understand where the category stands financially. For example, when an organization proposes a new EP Lab ultrasound catheter, I examine the cost per EP Lab in that category to assess their current position. In this case, the category has been trending down by approximately 10% over the past two years, creating an annual buffer of about $76K, while the new system would add only $43K in cost.
However, if the trend were the opposite — showing increased utilization and spending – that information would be critical for the Value Analysis Team to consider. Often, though, this broader financial context isn’t available, which means it gets overlooked in the decision-making process. How many new products are approved without recognizing that their categories are already overutilized, effectively compounding the issue?
From my perspective, a true 360-degree Value Analysis approach should always include this level of category-wide insight as part of the evaluation.
2. Savings You Are Achieving but Not Capturing – There are savings out there that every health system is achieving and does not have a clue that it is happening, unless they have a Clinical Supply Utilization Management System in place. Just as a CSUM system will show you where your savings opportunities are, it will also show you areas where you have achieved major savings, most of which you may not know were happening. Or if you did know there were savings being achieved, you did not realize how much more you were saving. When it comes down to the bottom line, you are going to want to capture exactly how much savings you are attaining, especially when your CFO comes for their budget numbers every year.
3. Knowing When Not to Pursue Change in the Name of Savings – To achieve new pricing opportunities, health systems often need to change vendors and/or product lines. However, there is typically no systematic way for a GPO to determine whether your current cost structure is already optimized. As a result, they may simply present a switch as a savings opportunity.
But what if you are already operating at a best-practice level for utilization-to-cost ratios in that category? In those cases, disrupting that balance across an entire health system to achieve marginal savings may do more harm than good.
On the other hand, if a category is clearly overutilized relative to cost, a GPO-recommended change can serve as an important first step toward improvement. In fact, that transition can also create an opportunity to evaluate and capture utilization-based savings — either during the conversion or even prior to contract execution.
The key is having visibility into the full picture so you can understand the direction of travel — before, during, and after any clinical supply change.
4. Uncovering Where You Are Already at Best-Practice Levels – I’m often surprised by how clearly organizations understand their clinical strengths and weaknesses. When changes or cost overruns arise, there’s sometimes hesitation to adjust pricing, utilization, or other factors, especially in areas recognized as top-performing — out of concern for disrupting what already works well.
With CSUM, you gain visibility into where your health system is already operating at best-practice levels, category by category, as well as where improvements are needed. This insight is powerful: just as you protect and learn from your strongest clinical outcome areas, you can be equally intentional about preserving and managing your supply best-practice areas.
Even more importantly, you can leverage those high-performing facilities and departments as benchmarks. By identifying their methods and practices, you can replicate their success across the rest of your organization and elevate overall performance. Many health systems don’t realize how easily this can be done with CSUM.
CSUM is just at the beginning stage of growth in health systems throughout the country because we have been caught up in the price world that has dominated the past 20 years. Unfortunately, the price world is losing steam in that the savings are just not that big anymore and we need to look to areas that will cover the next level of savings beyond price. The next level is Clinical Supply Utilization Management. Get your CSUM program started today and get the major savings and all the other unexpected impacts that come along with it.
Below are some similar articles that you may find interesting.
Healthcare Supply Chain Leaders: Stop Waiting for Your Cat to Bark
What Would I Change to Dramatically Improve Cost Optimization for Health Systems?