How to Save Even More Money with Five Lessons Learned with Your Purchase Services

We at SVAH Solutions have been working with clients for 31-years to rein in their purchase services costs, so we have learned a few things (specifically five things) that we would like to share with you to help you save even more money than you are saving now.  Here they are:

1. Purchase price is just the tip of the iceberg: If you think the big savings are in bidding your purchase contracts, then you will be leaving big dollars on the table every time. The real robust savings are in the utilization or consumption cost of your contracts. For instance, if you save 10% on the price of contracting to clean your linens, there could easily be another 17% in waste and inefficiencies found in your laundry/distribution operations that could be reduced.  But if you don’t venture to even review this area then you are missing a huge opportunity for big savings and possible quality improvements.
2. Prioritization is how you eat an elephant: There could be hundreds of purchase service contracts in your hospital’s or system’s portfolio of contracts, so which contracts should you attack first? Well, there are two options: prioritize by contracts spend or savings opportunity. We like the option of prioritizing by savings opportunity, since it will eliminate your dry holes.
3. Every savings opportunity isn’t worth the squeeze: We would all like to save 100% of the savings that are identified. However, sometimes it makes sense to delay, defer or skip, for the time being, a savings opportunity until the time is right (e.g. retirement of a surgeon).
4. Don’t stop at the first savings opportunity:  Most healthcare organizations would stop at the first savings they achieve on a contract, when it actually  makes good sense to continue until you have squeezed the towel dry on all savings. However, to do so you will need to invest in a purchase service benchmarking database* to gage the amount or savings available on each of your purchase service contracts.
5. Purchase services need to be monitored for the life of their contracts: Most healthcare organizations believe that once they have made a pass on their purchase service they are done with this initiative. The fact is that you are never done monitoring, managing and controlling your purchase services.  For instance, while your price may remain the same for your reference lab tests over the term of your contract, the volume of tests could be increasing by 13% over the course of a six-month period. This jump in volume needs to be addressed immediately.

Most hospitals’ or systems’ purchase services are ripe for saving money now, but you need to attack them strategically or you will find yourself generating a lot of activity but yielding little savings in this category of purchase.  These five tips can go a long way to help you avoid this from happening.

Want to learn more about SVAH’s Purchase Service Advantage Program?  Fill out the contact sheet below for more information or a no obligation demonstration.