Savings beyond price sounds like a simple term but it is much more complex than you think in order to actually make savings happen. Ideally, savings would be all about gaining a better price or reducing the quantity of products consumed. That would be a simple solution but that would make this all too easy. But what if the quantity of use is not the problem? Perhaps it’s the process around the product, that the product is too feature-rich, or that it does not hold the life cycle use/reliability as intended when it was implemented at your health system. There are so many factors to consider, plus you have to know what categories, what products/vendors, and/or who the end users are causing the true issues. Then you have to perform a dynamic value analysis study to work through all of this in order to gain the savings all while maintaining and/or improving quality of patient care, a daunting task!
Savings Beyond Price Potential Is 5% to 15% of Total Supply Budget!
It sounds crazy to think that there are still so much more savings beyond price in health systems’ supply chain, but most don’t actively focus on just savings beyond price. No focus, no savings. When I say focus, I mean you need to have a plan in place and software crunching your data.
Most think they are focusing on savings beyond price when focusing on things like new product requests, but what about all the other existing spending that encompasses 99.5% of your purchases? Who’s working that side of the coin? The answer is probably VA, but most VA professionals are caught up in other duties, with at least one dedicated VA Team focused solely on new products, contract conversions, recalls, and resilience challenges, leaving very little time to focus on the 99.5% of existing purchases and the savings opportunities they may contain. There is just very little time left to go after something as dynamic as savings beyond price, but it needs to be addressed, and the savings are worth the effort.
We Want the Savings Beyond Price, But Have Little or No Time
Time and resources are a challenge for all organizations, but the goal is still clear, which is to wring the towel dry on not only price savings but on any and all savings beyond price. Your organization needs those savings to be identified and weeded out more than ever before, so what will give you the savings and not overwork your team trying to get it?
Putting the Focus on Savings Beyond Price
First, let’s start by knowing where your savings opportunities are residing. If you know where the majority of your savings beyond price opportunities are, then you can strategically plan when, why, and where you are going to get after those savings. This will give you control. You can push the petal to the metal at times and ease up on the accelerator when other areas require your attention. The most important thing is that you need to have a benchmark that tracks your purchase categories so you can quickly identify and prove that the savings opportunities are real. Most organizations have benchmarks, but do you have them in a patient volume centric manner comparing to all of your major and minor categories? Probably not, but you need to.
Once the savings are proven to be real, then you and your VA/Supply Chain team can focus on value analysis efforts with confidence that your efforts are worth it. Plus, using benchmarking will make everyone’s job easier from day one of implementing it and ongoing thereafter. These systems are not a one-time event but an ongoing system to help you manage the savings beyond price.
Savings Beyond Price is a Strategic Advantage You Need to Deploy Now!
We are all looking for better software, better tools, better strategies, and more areas to allow us to find more savings for our health systems. We are looking for that strategic advantage that will put us on a whole new level. By focusing on and embracing the methods of savings beyond price in concert with your contracting and value analysis processes, you can create a whole new savings modality and gain major results that you didn’t even realize were available. It’s time to plan your next level of savings beyond price today!
| About Robert W. Yokl, President of SVAH Solutions |
|---|
| 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 |
Articles you may like:
