August 2

Why Do We Believe in Some Benchmarks and Disbelieve Others?

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We have been collecting, measuring, and interpreting thousands of benchmarks for over 30 years, so we feel qualified to speak on this topic. We have seen the good, the bad, and the ugly of benchmarking and can empathize with those who shun it. Yet, we have found benchmarking to be the undeniable X-Factor for uncovering savings in labor or non-labor expenses; no other technique has worked as well.

We Like Benchmarks that are Favorable to Our Situation

The one constant in our benchmarking practice that never fails to amaze us is that we all like benchmarks that are favorable to our situation. Why is that? My guess is that the answer to this question is that we don’t like to be challenged on our practices. Hence, when we have received a favorable benchmark we can feel at ease with the product, service, technology, or function that is being studied. 

Why We Shun Benchmarking

It’s our opinion that supply chain professionals and others shun benchmarking because they have had a bad experience with national or regional benchmarks that weren’t customized for their use. We have frequently seen benchmarks that don’t even match a hospital to its exact cohort. This is why many benchmarking services and processes lose credibility! But that doesn’t mean you should abandon this best practice.

Benchmarking is One Proven Technique to Improve Anything

If done correctly (apples to apples comparison), benchmarking can improve just about anything. Just today, my staff was talking about uncovering a big variance for one of our client’s wound care product’s in-use costs (not price) that were twice as high as their peer group. This hospital wouldn’t have ever known this fact without benchmarking. Now they can investigate this utilization misalignment with full confidence that there are savings to be achieved in this category of purchase. Wouldn’t you, too, like to have this kind of confidence?

You Have to Be in the Benchmarking Game to Win

We like to tell our clients that, “Even if we are 2%, 3%, or even 5% wrong with our benchmarking – you still win!” That’s how confident we are in our benchmarking. You should feel the same way, too, about your own benchmarking. If you perform benchmarking correctly, you always win at higher than expected savings levels. This is because even if your benchmarks say that you are utilizing one category of purchase well, you have just eliminated an area you don’t need to be concerned about. Then, you can move on to other categories of purchase to search for new savings. That’s why benchmarking isn’t a onetime event, but an ongoing process for quality, safety, and savings improvement.  


Tags

benchmarking, benchmarks, hospital, savings, utilization


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