Increase Your Supply Savings with These 3 Tips on Variation Reduction

I would believe that all of us in the healthcare supply chain business agree that variation in our products, services and technologies isn’t a good thing and it must be reduced with a vengeance. For instance, I just read that one healthcare system had 44 different spinal systems they were employing at their hospitals.  And when they reduced the variation on these medical devices they saved millions of dollars in the process.  While this example may seem like a “no brainer” to you there is an art and science for efficiently reducing your variation. Here are three tips that will help you increase your savings on any commodity group you choose to modify or adjust:

  1. Research and then identify the lowest metric cost (not price) hospital within your system who is employing the product, service or technology you are targeting: There are many systems you can utilize to reduce your variation in a product, service or technology, but we have discovered that the best way is to research and then identify the lowest metric cost of say a spinal system in your IDN.

 

  1. Visit the hospital with the lowest metric cost to understand how they have achieved this breakthrough: It is one thing to see facts on paper, it’s another to see a product, service or technology firsthand so that you can investigate why this hospital prefers this product, service or technology. Find out what is its infection rate, outcome, safety record, etc. is and would they recommend it as your IDN’s standard?

 

  1. Realize that removing all variation in your system’s products, services or technologies could be counterproductive: Simply stated, one size doesn’t fit all your customers. Therefore, you will discover by surveying your customers that some of them need differences (e.g. one surgical glove vs. two in a kit, four case specific drapes vs two case specific drapes in a pack, etc.) in their products, services or technologies to cost effectively perform their functions.  If you try to force them to use a standardized product, service or technology you are either over-specifying or underspecifying their requirements at your peril.

 

Working with hundreds of hospitals, systems and IDNs over three decades, we see variation in their products, services and technologies as being one of the biggest challenges for healthcare organizations in reducing their supply cost. We believe these three tips will help you to go a long way toward meeting this challenge.