Naturally, we in the healthcare supply chain look for those big projects with big results to close in on our saving goals for any given year. While this strategy is commendable, it might not be possible to flush out those big savings projects today, tomorrow or even in the future since our wells are running dry.
It might be better to set your sights on smaller projects with incremental, but large results that are within our grasp today if you only know where to look for them. To give you some insight into what I’m talking about, here is a list of four categories of multiple small projects that should be your first targets of opportunity:
1. Re-specify all of your products, services and technologies
I can assure you that most of the products, services or technologies you are buying now have changed their purpose (or reason for being) and no longer need all of the functions or features that you think they require. Now is the time to re- specify all of these commodities to eliminate anything that isn’t absolutely positively needed to meet your customers exact requirements. It’s time consuming work, but it is the right thing to do.
2. Ramp up your value analysis program to focus on alternatives
Most value analysis programs’ agendas are centered on evaluating new or renewal GPO contracts, and therefore are not focusing their VA efforts on identifying lower cost alternatives to what their healthcare organization is buying now. For example, it is much more cost effective (about 38%) to cut your own surgical mesh than to buy it pre-cut. Isn’t this worth the time and effort to do so?
3. Reinvent the way you buy your purchase service contracts
Most healthcare organizations let their vendors set the specifications for their purchase service contracts with their boilerplate contracts that are filled with unneeded services. Isn’t it time you write your own specifications for these multi-million dollar contracts? An example of this happening surfaced recently with one of our clients who found out that their food service vendor contract provided for 24/7 concierge service to their patients at a hefty additional cost to their hospital. Do you have these hidden clauses in your contracts too?
4. Reevaluate the prices paid on all of your commodities
We haven’t found a healthcare organization yet that can’t save 1%, 2% or 3% more on what they are buying if they have the competitive intelligence to do so. Have you taken the time to vet all of your contracts to ensure that you are obtaining the best prices available? If not, now is the time to do so!
Although with few exceptions, each one of these small saving projects, if addressed one at a time, will not result in double digit savings for your healthcare organization. Yet, over time the upshot of performing hundreds of these initiatives will result in millions of dollars of savings for your hospital, system or IDN. This is the wave of future…small saving projects with big results — over time.
Robert T. Yokl
Chief Value Strategist
Strategic Value Analysis® in Healthcare