Every healthcare supply chain organization is looking for new sources of accelerated savings to stem the tide of their healthcare organization’s red ink that is either here now or coming over the horizon. Two big savings sources that are often overlooked by supply chain professionals are supply utilization and purchase service analytics. Don’t let this oversight be the fatal flaw in your supply expense management program.
Most Healthcare Organizations Have an Array of Savings Sources
We have only seen a few healthcare organizations that have only one supply savings source, such as, group purchasing. Most healthcare organizations have two, three, or more sources: standardization, reverse actions, group buys, purchase services, utilization analytics, and value analysis to round out their arsenal of savings tactics. The challenge therefore is where a supply chain manager should focus his or her team’s efforts to maximize their supply chain savings.
Measure the Savings Sources that Are Most Valuable
The answer to this challenge is to measure your savings sources to determine which ones are the most valuable to you. Here is a typical list of annualized savings from six savings sources that we track to give you a feel for this answer:
|
Savings Source |
Percentage Savings From Total Supply Chain Budget |
|
Group Purchasing |
1% to 3% |
|
Standardization |
1% to 3% |
|
Reverse Auction |
1% to 3% |
|
Purchase Services Analytics |
11% to 18% |
|
Utilization Analytics |
7% to 15% |
|
Value Analysis |
1% to 3% |
Don’t take our word for it. You need to perform your own analysis to validate our data. Remember, you need to divide your annual savings, by category, by your annual supply chain budget expenditures to get your answers.
Accelerate the Savings Sources that Are Saving You the Most Money
You don’t need to be a mathematician to see that utilization and purchase service analytics are the winners in our above example. Therefore, this is where you want to accelerate your savings efforts over the next year. Then, just maintain your other savings sources that don’t warrant any extra time to generate the same savings yield.
Costs Are Our Enemy: We Must Always Be On the Attack
In this age of decreased reimbursement, costs are our enemy and we must always be on the attack. Therefore, pursuing savings sources without measuring their effectiveness is a no-win situation. This is because we must conserve our limited resources to work on our most productive savings sources, not just continue on the same old savings sources because “we have always done it that way.”