Supply chain management is becoming an even more complex and ever-changing discipline, since it is at the forefront of cost management efforts in any and all healthcare organizations today. If hospitals, systems and IDNs can’t hold the line on their supply expenses to below the annual inflation rate, for any given year, they won’t be able to eke out a profit. This is because third-party reimbursement always lags behind the true inflation rate by 12 to 18 months — if you are lucky.
To offset this reimbursement slippage, I believe that there are three “must have” supply chain survival software tools that are compulsory in every supply chain manager’s toolbox to pick up the slack:
1. Price-Check Manager: If you aren’t getting the best price on all of the commodities you purchase from your suppliers how would you know? Even your GPOs don’t know if their pricing is the best in class on every contract offering. I can make this bold statement since we review hospital, system and IDN prices daily that aren’t best in class and most don’t know it. So, if you want to ensure that you are obtaining the very best prices possible for your size healthcare organization on every category of purchase, you then need to have a Price-Check Manager get the job done right vs. gut feel.
2. Utilization Manager: Now that, hopefully, you have your pricing under control with a Price-Check Manager, you also will need to eliminate all the waste and inefficiencies in the consumption of your products, services and technologies. This is where 79% of all new supply savings are hidden. It’s not good enough to get the best price at the pump. Today, you also need to get the best mileage out of the products, services and technology you are buying. Products that are inferior, value mismatches, misused, misapplied or misappropriated must be identified and eliminated from your healthcare formulary. Don’t kid yourself, this can’t be accomplished efficiently and effectively without a utilization manager.
3. Value Analysis Manager: Value analysis is the most powerful savings tool in a supply chain professional’s arsenal. Though, to be truly cost effective, ultra-productive and self-managed, value analysis teams can’t continue to manage with spreadsheets, list servers and unwieldy forms. Your value analysis process and its activities absolutely need to be automated so that they can be monitored in real-time. Otherwise, you will never realize the full benefits of this boundless and never-ending savings methodology.
Supply chain managers will be put to the test over the next few years to do more with less, but still save more than ever before. This can’t be accomplished, in my opinion, with the old and tired tools of yesterday. Your healthcare organization’s aggressive savings goals can only be achieved with new and/or upgraded supply chain technologies to enable supply chain managers to meet this challenge head on. This isn’t a prediction, but a fact in the new healthcare economy that we are facing.