I recently had a sales call with a hospital Director who was interested in starting a Clinical Supply Utilization Management (CSUM) program at his hospital. His reasons were that they had been doing as much as possible with GPO/contract price and standardization but that they were doing nothing about clinical supply utilization. Being new to the CSUM space, he thought that he could start small and benchmark something like the top 10-20 categories and go from there and asked if that was realistic. My answer was that I wish it was, but it wasn’t.
There is Power in Knowing Where You Stand on Every Category
With our now over 20+ years of benchmarking hospitals, the answer to that question is that every hospital is different. Every category at every hospital is the same but they are all different in how they use them and how good they are with their clinical supply utilization of these categories. So, I could not just go in and benchmark 10-20 of what I felt were the top categories as it would have just been a guess. That is why our firm always benchmarks the entire organization (fiscal compare, cohort compare, historical compare, etc.) to truly see which categories need to be addressed and why. Understandably, I could not just benchmark the top 20 as they may have been good on just about all the top categories that I chose out of the over 700 major supply categories that a hospital purchases.
Every Hospital’s Supply Utilization is Unique
Every hospital is different in how they consume products which is why in order to launch a Clinical Supply Utilization Management Program you need to first report out where you stand. Where you stand is defined by your cost per surgical case, cath lab case, adjusted patient day, etc., on everything from absorbent hygiene to wound care dressings and all 700 major product categories in-between. Out of all of those product categories you will find that your organization is more than likely at or near best practice levels on about 50% of the products you buy. That leaves the other 50% that could have major utilization issues that need to be addressed and marginal utilization misalignments that don’t require action but should be monitored. The key is, now you know – and that is so powerful!
Throw a Blanket Over Everything in Your CSUM Sphere
Today, we have the technology and reporting to be able to throw a blanket over every product category that you purchase and marry them to operating metrics and continually track and benchmark them. Why do this? I may sound like a broken record here, but you will want to know where you stand on every category at any given time. CSUM is more an art and science than exacting measurements like unit price on a contract. There are the big X-Factors that are patient volumes and the quantity consumed on each category and the ebb and flow throughout each budget year.
Your CSUM reporting will tell you everything you need to know from where your low-hanging fruit is to your very difficult utilization challenges. For me, I like knowing where everything stands and then you can be strategic in how you want to address each area, such as finding a category savings as low-hanging fruit that I happen to have a new contract to deploy that I was uncertain about but now know is the right way to go. Another example is having a difficult product category that is a physician preference issue that I will pass along to my Surgical Value Analysis Team to find a solution to. I will send out charts and reports to various department heads on categories that I expect them to self-correct on or we will take further action on which they may lose control over the process. Most times, the departments do self-correct.
Clinical Supply Utilization Management – The Time Is Now
If you “think you’re okay” when it comes to CSUM then you need to realize that you must know where you stand on every category today. It is mission critical to know where you stand on your pricing strategies, but you must know where you stand on your consumption/utilization levels as well. Remember, you can at best gain a 3% to 15% price savings on any category today but with utilization you can save as much as 25% to 67% because you are looking at the end total cost of use. Your CFO may not yet be asking you to report out these areas, but they soon will be and may be astonished that your strategy was based on gut feel or guessing. Why not look like a superstar and lead your organization to the next level of big savings that will keep you saving big for the next few years.
| About Robert W. Yokl, President of SVAH Solutions |
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| Robert is the President of SVAH Solutions which provides value analysis, clinical supply utilization, and savings validation tools to help healthcare organizations gain the next level of savings beyond price and standardization. https://www.SVAH-Solutions.com https://www.SavingsValidation.com |
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