It’s ultimately your department heads and manager’s job to be responsible for their supply chain expenses
If you would think about it, supply chain professionals can’t control every aspect of your hospital’s supply chain budget. Yes, you can obtain the best pricing for what your department heads and managers are buying and you can encourage them to standardize as much as possible and cut down on their waste, but ultimately they must be responsible for their own supply chain cost. We have discovered this little known fact in our own utilization management practice after working with hospitals, systems and IDNs for 27 years. We call this “Creating a Culture of Ownership” that we believe can truly ring the towel dry in your supply chain expense savings if you decide to change the way you do business.
This point of view is especially true now that no one has time to participate in your value analysis team meetings or do the hard work outside your VA meetings where the real work is done. It’s only going to get harder to get your department heads and managers to participate in your value analysis program considering the demands put on them with the new regulations of the Affordable Care Act. However, budget control is still one of your department heads and managers’ primary responsibilities that needs to be redoubled in this era of reduced reimbursement.
Here’s how supply chain managers can complement, supplement and enlarge your department heads and managers’ ownership and visibility over their supply chain expenses.
Provide your department heads and managers with a supply chain expense quarterly report (figure 1) of their supply chain expenses favorable and unfavorable patterns, trends and anomalies in their supply streams.
Point out areas where they need to reduce the utilization of the commodities they are buying and then offer to assist them in making the savings happen. Note: graphs and charts work best when presenting this data to them.
Make sure that the savings ideas you recommended are implemented and are sticking when you review your next supply chain expense quarterly report. Then, repeat this cycle all over again.
This is what one our client’s supply chain manager does quarterly. He actually sits down with his department heads to review their supply chain expense reports and then gives them guidance on how to rein in their cost. On the department level we have seen for instance, laboratory managers seeing the data for the first time that their reference lab test’s utilization was beyond acceptable limits, reduce these expenses by $500,000 or more within three months when they took ownership over the supply chain expenses.
The reason we are seeing this new supply expense management tactic working at every size healthcare organization where we are retained to provide these reports, is that their department heads and managers don’t have a clue that their supply chain expenses are out of line before they are presented with their supply chain expense quarterly reports. Once they do, 98% want to rein in their supply chain expenses. How’s that for a batting average?