Purchase Cost is the Tip of the Iceberg!

What Happens After the Right Product, at the Right Price, at the Right Time is Delivered to the Right Person?

Robert T. Yokl, President/CEO, SVAH Solutions

We all assume that when we buy a product, service or technology for our customers that it is used as intended, is appropriate, and has no added cost to it. The fact is, SVAH’s experience over the last 15 years in the new discipline of Clinical Supply Utilization Management is that anything can happen and does when you aren’t there to observe it. Here are six specific things that we have documented that routinely happen when you hand off these products, services and technologies to your customers:

  • Usage Patterns Change: All of a sudden, your volume or usage increases on a product by 20% over a three-month period without explanation. How would you know this is happening?
  • Users use the wrong product for the wrong patient care function: A four-port cardiac catheter is used when only a two-port cardiac catheter is functionally required. This could represent thousands of dollars a year in unneeded and unnecessary expenses for your hospital, system or IDN.
  • Policies change, or users stray from procedures: Changing your bed linens daily vs. every other day, which is your hospital’s official policy, will increase your linen utilization cost by 50%. Just imagine the hundreds of other policies that are changed when users decide that they have a better way of doing things.
  • Products have quality issues and failures: Just the other day, a value analysis manager told us that she uncovered that every other lancet device that her hospital system was buying was defective and costing her healthcare system twice as much for months. Generally, you only hear about 1 in 10 quality issues or product failures before they become very costly to your healthcare system.
  • Wasteful and inefficient bad habits: Using more than two sterile gloves, even though the procedure you are performing only requires one sterile glove, or, taking specific supplies from patient admission kits and wasting the rest of the contents.
  • Vendors upsell their product lines to end users: Too often, when a vendor or manufacturer receives complaints about a product, (e.g. trays, electrodes, gloves) you are buying from them, they will substitute a higher cost product to solve a quality issue without compensating your hospital for the higher price item. This will then be reflected in higher utilization costs for this product.

It is hard to argue that things change and people change over the course of weeks, months, and years. So, why should it be any different with the products, services, and technologies you are buying for your customers? That’s why you need to have a Clinical Supply Utilization Management System* in place to monitor, control, and when necessary, eliminate these utilization misalignments. That’s what elimination of variation is all about.

(*) See video explainer of the CSUMS concept at www.SVAHSolutions.com