June 2

Why Your Hospital’s Reported Supply Savings Frequently Vanish


We talk about this topic (vanishing supply savings) a lot, but we aren’t sure we are getting our message across. That message is that every hospital in the United States, with few exceptions, is seeing that at least 23% of their reported supply savings are not happening. The significance of this statement is that almost all of these hospitals don’t even know this is happening. Are you one of these hospitals?

How do we know this is happening? Over the course of any given year, we process tens of millions of bytes of data for our clients which show all of their products and purchased services activities. Then when they tell us that they saved $100,000 on xyz product, we track this product’s activity to see if the savings actually shows up. Guess what – 23% of the time it doesn’t!

Why Your Supply Savings Vanish

Why does this happen? Here are just four examples that illustrate the point as to why reported supply savings frequently vanish after the value analysis team implements them:

1. Hospital fails to confirm that all clinical units receive in-service training on new urological catheter systems with securement devices. Securement devices are not properly used or not used at all on the patients on these units.

2. Hospital is 80% compliant on Oxisensor reprocessing but the storeroom manager forgets to purchase the reprocessed sensors back into stock at the lower rate for over six months. Hospital’s reprocessed stock is sold off to other hospitals until the problem is fixed at a major loss.

3. Inventory staff think it is best to replenish nursing floors with new compression sleeves first before then moving to reprocessed compression sleeves when it should be the other way around.

4. New expensive IV catheter system is deployed at a hospital where the nursing stick rate is higher than the national average 2.1 sticks per IV site which means the hospital is paying for an extra 1 to 2 catheters for every IV site set up.

Ensure Your Supply Savings Stick

How do you know this is happening at your hospital? If you have a system like our Utilizer® Dashboard it will set off alarms if your supply savings aren’t materializing. If you don’t have such a system, then you need to manually and visually validate all of your savings, every quarter, to make sure they stick. We see this as a best practice at some hospitals in the country, but not often enough to call it a universal best practice.

Don’t leave anything to chance! Make sure your price, standardization, and utilization savings are sticking. Otherwise, all your hard work to obtain these supply savings will vanish. Or worse yet, you might actually be spending more than you anticipate because – things change and people change – not always for the better.

Articles you may like:

Healthcare Value Analysis: The Best Formula for Good Questions

Hospital Supply Chain Evolution: Transform to Thrive and Survive

Healthcare Supply Chain Cost Drivers

Request Demo of SVAH’s Value Analysis and Utilization Tools


cost management, healthcare supply chain, Healthcare Value Analysis, hospital supply chain, Hospital Value Analysis, supply expense savings, supply expenses, supply savings, supply utilization

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