We are coming to a point in the healthcare industry when hospital supply chain managers must say “NO” more often than they say “YES” to the requests they are receiving for new products, services, and technologies. We, as an industry, actually need a freeze on what we are buying if we are to weather the perfect storm that is upon us now.
Hospital Supply Chain Managers Say “Yes” Too Often
Unfortunately, there is a tendency in hospital value analysis circles today to say “yes” too often to get along by going along because of the pressure they feel to acquiesce rather than taking a stand. We see this with our Utilizer® Dashboard service; hospitals, systems, and IDNs increasing their SKUs each quarter by as much as 25% by buying new products, services, and technologies. We can’t think of any other industry that adds that many products, services, and technologies in just one quarter to their supply chain formulary.
What we need to ask ourselves is, who is really driving these requests? Is it our department heads and managers who have unmet requirements or is it our sales reps who need new sales every quarter?
In fact, one of the phenomena we are witnessing is that sales reps are moving their customers up their product line to more expensive products, when their basic offering is adequate to meet the hospital’s functional requirements.
Just recently, we observed that one sales rep fixed a quality problem on one of their electrodes by moving our client to one of their higher priced electrodes. This isn’t an anomaly, but a trend we are seeing as manufacturers are looking for new ways to obtain even higher margins on GPO contracts.
Any New Purchase Must Increase Savings or Quality
Our basic rule that we recommend to our clients for approving new purchase requests is that if a product, service, or technology can’t be proven, with irrefutable evidence, to increase your savings or quality (it can be measured) by as much as 5% to 10% (or more), then you shouldn’t even be considering it for purchase. Or, if you have a new or emerging technology request that you have never used before, are you going to be reimbursed for it? Why else would you purchase it?
The whole purpose of this article is to get you thinking about how often your hospital’s value analysis teams are saying “NO” to new product, service, and technology requests. If your team’s batting average is 500 or more, then you are saying “yes” too often and you need to rein in your approvals.
Better yet, freeze all of your purchases and then only approve emergency purchases going forward. This will quickly stem the tide of the avalanche of requests you have been receiving to a trickle. This may seem harsh, but tough times require bold and hard-hitting measures for your healthcare organization to survive and thrive in the new healthcare economy.
I predict this will be the “new normal” (more NO’s than YES’s to purchase requests) in healthcare supply chain management circles.
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