4 Powerful Supply Chain Expense Savings Trends You Should Not Ignore

SVAH Solutions has a unique opportunity to observe supply chain expense savings trends while working with hundreds of supply chain/value analysis professionals every year. With this said, we would like to share with you four supply chain expense trends that are on many healthcare organization’s radar screens:

1. Regional Group Purchasing Organizations (RGPO)

Regional Group Purchasing Organizations aren’t new, but they have been expanding at a rapid pace and are reinvigorated now that national group purchasing organizations have lost their savings edge. If you don’t belong to a RGPO, it’s now time to search out and join one in your own backyard.

2. Regional Shared Service Organizations (RSSO)

Regional Shared Service Organizations aren’t new either, but they have been expanding and revived by the necessity for healthcare organizations to reduce their expenses by 20% to 25% over the next few years. These RSSOs are owned or shared by hospitals, systems, and IDNs who then provide essential shared services to their members. These shared services could consist of the following:

  • Printing, mail, and courier services
  • Central processing and surgical pack manufacturing
  • Surgical instrument and scope repairs
  • Pharmaceutical repackaging
  • Robotic pharmaceutical compounding
  • Nuclear medicine manufacturing
  • Medical records retention 
  • Central laundry and central laboratory

It is predicted that many of these RSSOs will morph into Strategic Regional Organizations (SRO) that, in addition to providing shared services to their members, will also deliver business services as follows:

  • Develop joint ventures together
  • Engage in operating ambulatory care centers
  • Develop captive insurance company
  • Provide tele-health solutions

As you can see, a RSSO or a SRO can be powerful tools to lower your healthcare organization’s costs and improve its revenues without needing to provide all these services yourself. Keep an eye open for a RSSO or SRO in your region of the country, since they are the future of the ultimate expense/revenue management consolidated systems.

3. Clinical Supply Utilization Management (CSUM)

The is the next level of supply chain savings, whether you are a member of a RSSO or SRO or not. These are the hidden utilization savings (7% to 15% of total supply budget) in your own supply streams. Since clinical supplies represent 83% to 85% of your total supply budget, these costs need to be reined in. For more information on how to eradicate these unneeded costs, check out our new clinical supply utilization management white paper.

4. Strategic Sourcing/Benchmarking Projects

More and more hospitals, systems, and IDNs are benchmarking their supply expense pricing to determine if they have more lemon juice to squeeze. We can tell you from experience, since we have conducted a few of the benchmarking studies, there is about 2% to 3% left to be squeezed. However, you usually need more volume to do so, that’s why you need to join a RGPP or RSSO to boost your ability to save even more than you are saving now.

These are just a few supply chain expense savings trends that we are observing in healthcare today. If you have heard of others, we would love to hear from you at bobpres@strategicva.com. We will then share them with our readership at the next opportunity.

Robert T. Yokl is President and Chief Value Strategist, SVAH Solutions. Robert is the acknowledge healthcare leader in value analysis and clinical supply utilization management. He is the co-creator of the Clinitrack™ Value Analysis Software, Utilizer® Clinical Supply Utilization Management System, and Purchase Service Advantage System. For more articles like these go to www.SVAHSolutions.com.