Evaluating Your Supply Utilization Management Evolution to Up Your Game

All healthcare organizations are uncovering some of their supply utilization misalignments (SUM), or wasteful and inefficient consumption, misuse, misapplication and value mismatches, because they stumble upon them in the course of business. But, does your healthcare organization have a sustainable strategy to capture and then eliminate all your utilization misalignments before they hurt your bottom line? Here are five stages of supply utilization evolution you can use to measure your hospital, system or IDN’s supply utilization management evolution that will give you that answer:

Level #1: Unaware Don’t realize and/or acknowledge that there are savings beyond price or standardization
Level #2: Ad Hoc SUM is addressed on an “as needed” basis without critical thinking or remediation
Level #3: Tactical SUM is addressed with a plan of action, but lacks data to eliminate all SUM
Level #4: Planned Value analysis teams weed out SUM as they encounter them in their product or service evaluations
Level #5: Strategic Systems approached with big data and analytics to identify and then eliminate all SUM in an organized manner

To summarize, if you are at the “Unaware” or “Ad Hoc” level, you are missing the opportunity to address this supply chain challenge head on. You are just nibbling around the edges. At the “Tactical” level you won’t be able to eliminate all of your SUM without data, because they can’t be seen with the naked eye. “Planned” is a good strategy, but still leaves too much money on the table. Lastly, “Strategic” is the ideal solution, since it ferrets out all of your SUM at one time and then it can be eliminated by a value analysis team.

Remember, there are only three ways to save money: price, standardization or utilization. If you look at all of your procurement tactics you are now employing you will find that they will all fit into those three categories. Since price and standardization savings are slowly disappearing, you need to address your utilization savings at the “Strategic” level to receive the full benefits (7%-15% savings) in your products, services and technologies. To continue at the “Ad Hoc” level of evolution, as most healthcare organizations are now, is a loss of millions of dollars in any given year for your hospital, system or IDN.

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