Let’s say this exercise shows that your hospital is on the high side of this metric. Does this information allow you to make decisions or take action to reduce your supply cost? The answer is no!  This metric is only directional. Meaning, it only shows if your hospital is going in the RIGHT or WRONG direction on your supply expenses. However, it doesn’t tell you why or how you can change the direction you are going if results are unfavorable.

That’s why you also need to have ACTIONABLE metrics that will help you make informed decisions and take immediate action to correct the defects in your supply chain.  For instance, we just had a quarterly review with one of our Supply Dashboard clients where we talked about how his lab reagent metric (total reagent cost/Billable Lab Tests –CMI adjusted) has been going up. He then told us that he picked up this fact on his supply chain radar screen too. After some research, he found that he had a few reagents that he was buying that weren’t under contract that was causing this anomaly, which he said has now been fixed.

That’s what ACTIONABLE metrics can do for you (enable you to make informed decisions and take immediate action) vs. generic metrics that ONLY tell you that you are going off course.  For this reason, if you want to make positive change happen at your healthcare organization you will need to establish ACTIONABLE metrics at the ground level to greatly enhance your supply chain decisions.  Otherwise, you will be nibbling around the edges of your supply chain expense savings when a windfall of savings is just waiting for you to take action.

Savings Beyond Price -Weekly eNewsletter – May 12, 2009

Robert T. Yokl

President & Chief Value Strategist

 

Greetings,

Do you know how much supply expense savings you are leaving on the table by “Skimming the Surface” of your supply chain savings?  The answer is 7% to 15% of your total supply spend, or 1 to 2 million dollars per occupied bed.

For example, if your hospital averages 180 occupied beds, you can almost guarantee a savings of $1.8 to 3.6 million over a 12 to 18 month period.  You do the math for your healthcare organization. I can promise you that new utilization savings opportunities you are losing today will outshine your current and even future GPO savings. 

You can dig deeper and broader into your supply chain for new, different and more substantial savings opportunities that won’t be uncovered by traditional supply cost management efforts. You will need to mimic the methods and practices of Sherlock Holmes (the fictional 19th century English master detective) to discover these hidden savings.

Holmes was famous for his intellectual prowess and renowned for his skillful use of astute observation, deductive reasoning and inference to solve his most difficult cases. You too will need to observe, deduce and greatly expand your investigative skills to determine how your customers are actually employing the products, services and technologies you are buying for them.

In most situations, you will find that your customers are swamped with work. They don’t have the time to stop and analyze the best use of this product, service or technology, if they are being wasted, or if there is a lower cost alternative that could meet the required function.

That’s why it’s your job (or your value analysis teams) as a supply chain professional, to avoid “Skimming the Surface” of supply chain savings. Instead, become a supply chain master detective who performs detailed investigations in order to uncover your hospital, systems or IDNs utilization misalignments.  That’s where your biggest savings opportunities reside today — not in price. 

 

Your Partner In Savings Beyond Price™,

Robert T Yokl

Chief Value Strategist

Strategic Value Analysis® In Healthcare

Bobpres@strategicva.com

1-800-220-4274

 

P.S.  If you are looking to get better than good at project management, you might want to sign up for a “test drive” of our Utilizer™ Dashboard so that you can see for yourself how our project management module will enable you to easily manage multi-projects with two clicks of your mouse.