The fall 2014 Economic Outlook survey by Premier, Inc., shows that cost pressures at hospitals and health systems are unabated. When asked which factor would have the biggest impact on supply chain in the coming year, “cost savings goals of the organization” was the leading response, unchanged in its priority since 2011.
Savvy healthcare supply chain leaders must go beyond medical product pricing to achieve the next level of savings for their organizations.
Here are 3 areas to consider the next time your organization begins the search for additional savings.
1. Purchased services
Purchased services spend is widely believed to be equal to supply spend (if not slightly greater) for most organizations. Sometimes referred to as indirect spend, it consists of expenses outside of medical products and labor. For many organizations purchased services spend is highly fragmented with owners and contracts spread across the organization.
A couple of tips to help uncover savings in purchased services:
Know your numbers
Review your accounts payable records to determine where your organization is spending money. Many organizations report being surprised to find out how many vendors they use for a single service. Consolidating spend with a smaller number of vendors often yields significant savings.
Herd the cats
Seek out copies of contracts from across your organization and carefully review terms and conditions. Contracts could have been in place for a very long time and may have expired or have recurring price increases. Creating a centralized repository for purchased services agreements ensures transparency and maximizes your ability to keep the terms relevant.
2. Capital equipment planning and procurement
Every dollar spent on clinical capital equipment is being pressured by budget cuts and IT technology investments. So evaluating the capital equipment life cycle in your organization is critical.
Engage supply chain staff
Ensure that supply chain staff is engaged in the purchase decision early in the process. Supply chain leaders are able to identify product alternatives and opportunities to maximize savings.
Use the power of the pen
Take advantage of opportunities to aggregate spend within your organization or across organizations (the purchase of 10 MRI machines will undoubtedly yield a better price than a single purchase).
Think big picture
Understand what equipment is in use and how it’s covered by service or maintenance.
3. Corporate contracts
Corporate support teams like human resources and finance are often charged with entering into agreements for things like benefits and audit consulting services.
Think outside the box
Supply chain leaders can play an important role in negotiations for corporate services. From assistance with developing an RFP, to leveraging expertise in pricing negotiations, supply chain employees can add a lot of value in these situations, while allowing your corporate colleagues to focus on the relationship with the vendor. Services like pharmacy benefit management can be competitively bid and often yield significant savings for organizations.
This article appeared first at Action for Better Healthcare.