Healthcare Value Analysis & Utilization Management Magazine - Volume 9|Issue-3|

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From the Publisher's Desk There is Nowhere Else to Go for Savings Robert T. Yokl

We are hearing the alarm bells going off at hospitals, systems, and IDNs nationwide because they have squeezed just about every dollar out of their GPO contracts, and have largely standardized and removed the variation in the products, services, and technologies they are buying. Yet, the ugly truth is that these same healthcare organizations still need new double-digit supply chain expense savings this fiscal year to stay competitive. So, where are these new supply chain savings coming from?

A New Reliable and Obtainable Source for Supply Chain Savings As we have preached in this magazine for nine years now, there are only four sources (e.g., price, standardization, value analysis, and utilization) of supply chain savings available to your healthcare organization. Once you have exhausted your price, standardization, and value analysis savings, there is nowhere else to go for supply expense savings other than to attack your product, service, and technology utilization misalignments (the wasteful and inefficient consumption, misuse, misapplication, and value mismatches in your supply streams). All it takes to achieve these new savings is a laser focus on your product, service, and technology usage, as well as past, current, and future trends, patterns, and anomalies in these commodities’ value streams. However, you need to have a proven methodology to identify these new savings, or you will only nibble around the edges with little to show for your efforts. Activity-Based Costing Is the Key to Uncovering New Utilization Savings Activity-based costing is an industry accounting best practice that identifies the activities associated to the cost of a product, service, or technology according to the actual consumption by each. By employing this same ABC methodology to your supply chain expense utilization, you can identify the lifecycle cost of any commodity for any period of time (month, quarter, year), thus, uncovering where your utilization misalignments reside right down to the department, floor, or unit level. Then you can eliminate them before they damage your healthcare organization’s bottom line. As I said, there is nowhere else to go for savings!

Volume 9/Issue 3

Healthcare Value Analysis & Utilization Management Magazine