April 26

Supply Utilization Management Isn’t a One-Time Event


If you think that supply utilization management (SUM) is a one-time event, then you don’t understand how SUM works. Specifically, SUM is a methodology, similar to inventory management, to manage and control your products, services, and technologies’ lifecycle (i.e., birth to death) in the short and long-term. 

Supply Utilization Misalignments Are Moving Targets

You might think that utilization savings (i.e., wasteful and inefficient consumption, misuse, misapplication, or value mismatches) in your healthcare organization’s supply streams would be static, but to the contrary they are really moving targets. In fact, your utilization savings are more like a balloon; squeeze one side of a balloon and the other side bulges out. We see this phenomenon over and over again with each new product, service, or technology introduction. Before adding a new product, the previous product’s utilization is within acceptable limits, but after the new product is introduced into clinical departments its utilization skyrockets because it wasn’t properly in-serviced, new protocols weren’t followed, or the clinical staff resisted the change in some way. 

Must Have Ongoing Benchmarking to Know Where You Stand

The only way to know, with certainty, where your hospital, system, or IDN’s utilization savings reside (trust us when we say that there are hundreds of them in your supply streams worth millions to you) is to have ongoing historic, internal, and peer benchmarking to determine where you stand. This means in practice that you need monthly, quarterly, and year-to-year benchmarking reports to alert you to when your value analysis teams need to investigate these anomalies in your supply streams. We have found that this chore can’t be accomplished with gut feel, intuition, or guessing. Instead, you need to pinpoint information that is actionable!

This reminds us of a client whose gut told him that his OR was utilizing too many OR packs annually and that he needed to assign a VA team to investigate. Luckily, he came to us first before charging a VA team with this study. Our benchmarks showed that his OR packs’ utilization was actually within acceptable limits.

The lesson here is to always have supply utilization benchmarks to rely on. Otherwise, you will expend your limited staff resources unnecessarily.

High Level Benchmarks Will Only Point You In the Right Direction

All supply chain and value analysis professionals have access to benchmarks from their GPOs, vendors, and other third parties that take a snapshot in time of their healthcare supply costs compared to their peers, but at a 30,000 feet level. This 30,000 feet data will only tell you that you might have a problem in price, standardization, or utilization in a particular product line, but won’t tell you who, what, or why this is happening. This is the disadvantage of high level benchmarks; they only point you in the right direction. What they don’t do is provide you with actionable data!

Your Ground Level Benchmarks Can and Must Be Actionable

Benchmarks that are at the ground level or SKU (stockkeeping unit) level are guideposts that can and must be actionable. Meaning, they can pinpoint with certainty what product, service, or technology in your hospital, system, or IDN’s formulary is a supply utilization misalignment and what negative financial impact on your bottom line this anomaly is causing. Any other benchmarks are too imprecise to be useful in eliminating these budget busting cost drivers.

Share Your Findings with Your Department Heads and Managers

One missing element in most SUM programs is the sharing of your data with historical, peer, and internal benchmarks with your department heads and managers. After all, it is their staff that has caused these supply utilization misalignments, so they should be the individuals to fix them. What’s more important is that they have insight that you don’t have on why these irregularities have been occurring. It might be a recent change in procedure, new staff members on board, or a misunderstanding on how to apply the new technology. Whatever it may be, your department heads and managers need to be more accountable for controlling their supply expenses. For without their ownership of this problem, no change can ever be made to solve the problem.


benchmarking, benchmarks, GPOs, healthcare, healthcare organization, hospital, IDN, inventory management, savings, supply utilization, supply utilization management, utilization, utilization savings

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