3 Ways to Plug Your Leaky Savings Bucket

Imagine a bucket filled with a dozen holes. Now, imagine trying to keep that bucket full of water by adding more water to the bucket. Guess what. The holes continue to leak water, creating a vicious cycle that can go on forever. Now, change the word “water” in this sentence to “savings” and you can see how your healthcare organization could be losing millions of dollars annually in wasteful and inefficient consumption, misuse, misapplication, and value mismatches in your supply streams*. To stop this vicious cycle, here are three ways to plug your leaky savings bucket so you don’t lose any saving in the future:

1. Verify Your Savings Before, During, and After Your Contract Term: We have documented that millions of dollars of savings are lost at healthcare organizations annually owing to inadequate or no in-service training, changes in polices or procedures, and product, service or technology upselling. For instance, we often see a hospital, system, or IDN having a product failure with a GPO contracted electrode, only to have the electrode replaced by the manufacturer’s sales representative, without any fanfare, with a 12% higher priced “off contract” electrode to  replace the defective electrode. Thereby, losing the projected savings of the GPO electrode contract forevermore.

2. Monitor Your Expenses for Unfavorable Patterns and Trends: If you write a new local contract, jump on a new or renewal GPO contract, or initiate a new value analysis savings and then forget it until its renewal time, I can guarantee you that you have been leaking thousands of dollars annually from your savings bucket. Why? Because anything can happen (and usually does) when you buy and then deliver a product, service, or technology to your customers. Like using two or more diabetes test strips per patient vs. one because your diabetes testing equipment is defective. Or, overlooking for one year to buy secondary IV sets, and then only utilizing higher priced primary IV sets at a premium price for one year. The list could go on, but I’m sure you get my point.

3. 100% Compliance on Your GPO and Local Contracts: I just read that one of the major GPOs reported to their shareholders a jump in their sales in 2019, not due to new or renewal contracts, but because of their new contract compliance program. This can give you a clue of where your savings too are leaking.

I’m sure you would agree that it’s hard enough to uncover new savings opportunities, only to then lose them due to your leaky bucket. This isn’t a theory, but a fact. So, I hope you will take these three suggestions seriously as we begin a new year. To paraphrase writer John Updike, “(Savings) are like water in a leaky bucket: No sooner there, it begins to (leak).” Don’t let your hard-won savings disappear before your eyes when there are strategies, tactics, tools and techniques to plug your holes.

(*) If you are looking for a technology solution to plug your leaky bucket, please check out our SavingsValidator tool that can make your savings verification, monitoring, and compliance job a whole lot easier.

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