6 Savings Beyond Price Realizations You Need to Accept to Further Your Value Analysis Success

Just about everyone in the healthcare supply chain business believes that the most important things they can do to save money for their healthcare organization is to obtain the best price and standardize on the products, services, and technologies they are buying.

Nevertheless, SVAH’s studies have shown conclusively that these two savings strategies are the least important tactics in a supply chain leader’s arsenal to save money. This is because it is more important to effectively manage and control the six things that can and do happen when the products, services, and technologies you buy are in the hands of your customers. These are:

1. Usage Patterns Change: Suddenly, a product goes from being used once per surgeon and surgical case, to a whole category of cases each day, without a justifiable reason for this happening. For example, your value analysis team approves a new surgical instrument for a case for a specific surgeon and he starts using it on every one of his cases instead of the one case type that VA approved the instrument for. Or, other surgeons find out about the special instrument and now they all must have it as well.

2. Users Use the Wrong Product for the Wrong Patient Care Function: This could be as simple as using an underpad to clean up spills to using a high-end IV set for just a simple IV insertion.

3. Policies Change or Users Stray Away from Protocols: Even though VA implements a new product or makes changes to existing product categories, the users tend to stick with their old ways. You must audit that this is not happening, or all your months of hard work will go out the door. A simple example would be developing a reprocessing program and then finding that the end users don’t want to put the reprocessed items in the bucket or, even worse, refuse to use the reprocessed products that are brought back as part of the program.

4. Products Have Quality Issues and Failures: Your electrodes aren’t sticking, so your nurses are using twice as many (at twice the cost) to complete their EKGs.

5. Wasteful and Inefficient Bad Habits Form: This could be as simple as your OR nurse prepping a patient with skin prep solutions and using three to four tubes of prep solution when your policy is to use one to two.

6. Vendors Upsell Their Product Lines to End Customers: Instead of providing the commodity under contract, your vendor upsells your customers with a more expensive product that may or may not be on contract. Many times, vendors will solve problems by specifying higher cost products that end up negating any gains you have made on the overall contract.

Now that you know the six things that can increase your supply chain expenses many times over, we recommend that you automatically identify your utilization misalignments (i.e., wasteful and inefficient consumption, misuse, misapplication, and value mismatches) with the same intensity that you are pursuing better pricing and more standardization. Otherwise, while you will look like you have the best pricing and standardization in your region on paper, you could have the highest supply cost per patient day which isn’t a metric your senior management will be happy with.