Publisher’s Letter April 2012

The Savings Chase

Is a model based on measuring demonstrated savings sustainable?

The old adage rings true today, that desperate times call for desperate measures. The present results of these desperate measures involve drastic supply chain initiatives and counting every dollar possible toward the lofty goal of demonstrated savings.

I have the good fortune to talk to our nation’s most progressive supply chain leaders every day. When we are discussing their initiatives and priorities, almost without fail they will mention what their goal this year is in demonstrated savings and where they are in the pursuit of that goal. It is very common for me to hear

“I have a demonstrated savings goal of $50 million, and I am on track for over $60 million.”

It seems like chasing the line item savings to achieve demonstrated savings has become a thundering mantra. I wonder if increasing the quality of outcomes and enhancing patient experience aren’t getting lost in the mix.

Whether you love or hate reform, the basic principles of it – decreasing cost, increasing quality and enhancing patient experience – are appropriate and necessary for improving the state of the U.S. healthcare system.

I have great faith that our nation’s hospital and IDN leaders will embrace these tenants of reform, not because it is law, but because it is good for their organization, their community and their patients. In the near future, most everything a provider organization does internally and externally will be measured on these three initiatives.

I look forward to the day when I speak to a progressive supply chain leader and in addition to the savings they have mustered they can quote how their systems and processes have also increased the quality of outcomes and enhanced the patient experience.

Thanks for reading this issue of The Journal of Healthcare Contracting!

About the Author

John Pritchard
John Pritchard is the publisher of The Journal of Healthcare Contracting.
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