A new study by CAPS Research states that 40% of all supply chain employees are assigned primarily to purchase services to close the gap in their savings. Has this been your experience, too? If not, when are you going to close the gap in this category of purchase?
Few Other Categories of Purchase Have the Potential for Double-Digit Savings
We have been focusing our supply chain expense savings efforts on purchase services for over 24 years and have discovered during that time that very few other categories of purchase have the potential for double-digit (documented to be 11% to 18%) savings on each purchase service contract. This is mission-critical now that the low-hanging fruit has been picked from your vineyard. That’s why progressive hospitals, systems, and IDNs are assigning 40% of their supply chain employees to their purchase services.
Price Savings is Just the Tip of the Iceberg with Purchase Services
Here is the big surprise for purchase service contract administrators; price savings is just the tip of the iceberg. What our extensive studies have shown is that there are even more savings in utilization (i.e., wasteful and inefficient consumption, misuse, or misapplication of the products, services, or technologies) than price.
For instance, a client of ours saved 8% on the price of their transcription service by bidding it, but then saved an additional 23% (yes, 31% combined savings) by outsourcing all their transcription services. Prior to a SWOT Value Analysis of their transcription service opportunities and capabilities, this hospital had a mix of in-house and contracted transcription services. With this example, you can see that price is really the smallest element of cost in your purchase service value equation.
Build a Case for Change with a Purchase Service SWOT Value Analysis
As we did for our client in the above case study, you need to perform a SWOT Value Analysis (*) of every high-value purchase service contract you have in your healthcare organization’s multi-million-dollar portfolio. But first, you need to normalize, classify, and the then identify your high-value purchase service contracts by employing an analytical tool that will automatically show you where your best purchase service savings opportunities reside. Otherwise, you and your staff will sink too many dry holes (i.e., a lot of activity, but no savings) that will cost you hundreds of hours in lost time for your efforts. Remember, purchase services, like supplies, should be tracked on an ongoing basis based on a hospital centric volume baseline standard because of the ebb and flow of hospital patient days, cases, etc.
Are You Ready to Move to the Next Level of Purchase Service Savings?
I just provided you with a short-hand formula that I can assure you will rein in your purchase service cost and save your hospital, system, or IDN hundreds of thousands, or maybe even millions, in less than a year.
Now, you need to decide if you are ready to move to the next level of purchase service savings, or risk this function being outsourced to a contingency consultant or even your own GPO who will make your job even harder than it is now, get all the credit that you rightly deserve, and then take home for themselves hundreds of thousands of dollars in fees that go into their pockets, not yours.
Why take the chance of this happening to you when you could be the superhero at your healthcare organization by taking on purchase service management, thereby not leaving it to these outsiders to get all the accolades!
(*) If you are interested in a quote on a SWOT Value Analysis that can make your job easier by facilitating the process of identifying your high-value purchase service contracts, please contact me at bobpres@SVAHSolutions.com.