Your Best Savings are Below the Waterline
Most healthcare organizations have attacked their cost (above the water line) with their GPO, capitation, standardization and custom contracts strategies, which is only yielding them 1%, 2% or 3% savings annually — at most. But did you know, as one of our clients astutely observed, “That it isn’t about price any longer (that is slowly disappearing), it’s about utilization”. Especially since the inflation rate this year could be as high as 3.4%. All of your savings gains are being washed away.
On the other hand, if you attack your utilization savings (below the water line) I can almost guarantee you that you can achieve 7% to 15% savings that aren’t affected by inflation. Value analysis is the key to doing so!
This is due to the fact that your hospital’s staff are generally so swamped that they don’t have time to stop and analyze whether this is the best use of this product, service or technology, is it being wasted or is there a lower cost alternative that could meet this function.
Here’s an example of what I’m talking about. At one hospital we worked with, the staff was using only a primary IV set. No secondary set had been purchased (yes, you heard right). The staff used these primary sets for every patient for a year without anyone questioning it, until we pointed it out, and this wasn’t a cheap oversight. The hospital spent close to a million dollars it didn’t need to spend until this utilization misalignment was resolved.
No that you know the facts, where do you think you should be focusing your savings efforts: Price or Utilization?
