It’s About Time

May 15, 2008 · Filed Under Best Practices, Cost Management 

It’s About Time!

The 2008 Hospital Financial Managers’ Supply Chain Survey documents that one of the top areas where both MMs and CFOs agree is that there are “tremendous” savings opportunities is contract management.

Yet, our own surveys show that MMs spend the least amount of their time and effort in this area of their responsibility, an area where 7% to 15% in new savings can be achieved.  How can we reconcile these two assessments?

It’s my opinion both of these analyses are correct! I can make this statement because when I talk to MMs about their contracts (supplies, and purchase services) they tell me that they know that there are big savings in their contracts, but they don’t have the time, point of reference or tactics to ratchet down these huge costs any further.

Considering that most hospitals’ purchase services are equal to or greater than their supply expenses, this is a vast unexplored area where there is a lot of ripe fruit to be picked. Now how can we get this fruit harvested?

The answer: First, automate your contract administration function so you can have the time to save. Second, benchmark your contracts so that you know where to save.  Third, perform value analysis studies on your contracts so that you can wring the towel dry on savings. Lastly, set performance standards for your contractors so that you can be assured that you are getting what you paid for.

With this said, isn’t it about time we ALL start focusing on the 50% to 55% of our supply spend that we have been overlooking for years.

Your Partner In Innovative Savings,

Bob Yokl

Robert T Yokl

Chief Value Strategist

Strategic Value Analysis® In Healthcare

P.S. If you are looking to establish, enhance, re-energize and dramatically improve your value analysis program (or you have hit the wall on savings) then our Certified Value Analysis Leader Program to be held on June 24-26 is the ticket for you. And, as a bonus, you will receive a one-year subscription to our new Value Analysis Resource Web at “no cost” to you.

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