June 24

What Happens When You Run Out of Price Savings for Your Hospital?


What happens when you run out of price savings for your hospital? I once asked this same question at a seminar that I conducted, and a participant said that she “would find another line of work.” Another participant said that he “would squeeze his suppliers even harder to find savings.” But the reality of the healthcare marketplace is that price savings are harder to find, contain, negotiate, or even identify now that everyone (including your suppliers) understands and are highly skilled at playing the price game.

Just as important, your suppliers’ cost for transportation, energy, plastics, cotton, etc. (or 80% of what you buy for your hospital) is at an all-time high, so who do you think your suppliers are going to pass this cost along to? Yes, you got that right – YOU!

Hospital Price Savings are Diminishing

This stark reality just set in to a major teaching hospital client of ours who is scrambling to find more price savings in their orthopedic and spinal implants, but even after benchmarking his costs and bidding orthopedic implants by employing our value analysis analytics he only shaved a few percent off his orthopedic implant prices. By the way, this client belongs to two GPOs and still can’t obtain better prices even with his own custom contracts.

Then the next day, I talked to another client of ours who is the Vice President of Purchasing for a six-hospital system who is racking his brain to get better prices for his hospitals. A challenge he never had before. He could always find a new and better price on any commodity he was purchasing. You might say that he has “hit the wall on savings.”

Supply Utilization Management is the Way to Savings

What does this mean to you? If you think that your hospital’s price savings are limitless, infinite, and inexhaustible, then you are in denial of the facts that I just shared with you. Yet, there is good news in this state of affairs if you look beyond price and then take a quantum leap forward to supply utilization management where the savings are never ending and right in front of your eyes, ready to be harvested.

Utilization management will open a whole new world of savings for you, beyond price and standardization. Why wait until your well runs dry? Act now to fill up your reservoir with new and even better savings opportunities for your healthcare organization.

Articles you may like:

All of Your New Contracts Must Be More About Clinical Supply Utilization and Less About Price

Cost Savings for Your Hospital in Challenging Times

Best Healthcare Supply Benchmarking Process Technique

Request Demo of SVAH’s Value Analysis and Utilization Tools


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