September 30

What’s Working in Hospital Supply Expense Management


We are often asked what’s working in hospital supply expense management that can make a big difference in people, performance, and projects that will quickly yield big dividends. Our answer is usually the following three supply expense optimizers:

1. Value Analysis Analytics: It’s been our observation that most hospitals are throwing darts at an elusive and moving target to find their best value analysis candidates, and with meager results. This is because most hospitals aren’t employing a scientific approach to identifying their best value analysis targets of opportunity. That’s where Value Analysis Analytics™ comes into play. It’s the art and science of measuring trends, patterns, anomalies, and variations in your supply chain to quickly identify your best savings opportunities. If you aren’t employing this new and better tool you are leaving millions of dollars of savings on the table untouched.

2. Utilization Management: As you have heard us say scores of times, 79% of your new supply expense savings will be realized in utilization (i.e., wasteful and inefficient consumption practices), not price or standardization savings that are slowly disappearing. You should understand this concept by just looking at your own personal experience. Do you save more on your laundry detergent by getting the lowest price, or the best yield? Can you save more on your automobile’s tires by buying them on sale or by searching out tires that will give you the longest tread life? All you need to do is apply this same logic to your utilization management efforts and you will save more right out of the gate.

3. Demand Management: The term “Demand Management” might be new to you, but this term means “measuring the velocity, intensity, and frequency of the products, services, and technologies utilized over time.” We have found this to be a key performance indicator that enables healthcare supply chain professionals to begin a meaningful dialog with their physicians and department heads to understand why the frequency of any commodity they are buying is increasing or decreasing — beyond acceptable, justifiable limits. If you aren’t tracking this type of data, then you are missing an opportunity to save hundreds of thousands of dollars in any given year.

Well, there you have it, three proven supply expense optimizers that can quickly yield big dividends for your healthcare organization. So, if you are still chasing after price and standardization savings to the exclusion of these three savings boosts, maybe now is a good time to add them to your savings arsenal. You have everything to save and nothing to lose by doing so!

Articles you may like:

Healthcare Supply Chain Managers: What is the Biggest Difference Between Price Savings and Supply Utilization Savings?

How to Best Utilize Your Hospital’s Limited Supply Chain Resources

What Does It Take to Be In the Top 5% In Healthcare Supply Chain Expense Management?

Request Demo of SVAH’s Value Analysis and Utilization Tools


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