Why Do Healthcare Supply Chain Managers Work So Hard to Achieve a Supply Expense Savings Opportunity Only to Have the Savings Fade Away or Not Materialize as Planned, Promised, or Guaranteed?

The Key to Sustainable Supply Expense Savings is to Continually Track, Trend, and Then Verify Savings Over the Long Term

Most healthcare organizations are employing spreadsheets or workflow tracking tools to track their supply expense savings (e.g., GPO or local contracts) project results. Nonetheless, the results of these projects are only guestimates. SVAH’s studies show only 13% of the time are these savings verified at the end of the contract’s lifecycle. So, why do healthcare supply chain managers work so hard to achieve these savings only to have them fade away or not materialize as planned, promised, or guaranteed?

Lack of Automation has Created This Conundrum

Do you notice that the teller at your bank employs an automatic counter to count your cash before he/she gives it to you, even though he/she has counted it manually at least twice before your eyes? This is because manual counting of anything is subject to error. This is especially true of supply expense contract savings estimates on contracts with a lifecycle of one, two, or even five years. This is because anything can happen that will change your original estimate (i.e., volume, upsell, protocols, etc.) and usually does.

Automating this supply chain function (i.e., validation of savings) accurately counts savings on every contract and makes good business sense. When you don’t automate, you end up guessing what your contract savings will be one, two, or five years out and hoping nothing changes in the meantime.

More and More CFOs are Budgeting Your Reported Savings

It has now become mission critical for supply chain to report accurately your contract savings since, most likely, your CFO is counting on your reported savings that he/she has deducted from your healthcare organization’s budget. No longer is it okay to guess how much is being saved. Instead, prove it through validation. If you can’t validate, it didn’t happen.