Why Savings Validation is Mission Critical

Robert T. Yokl, President/CEO, SVAH Solutions

Every value analysis practitioner can tell you that they save money for their healthcare organization, but can they prove it? This is a crucial question since this is what your hospital, system, or IDN plans for when they formulate their supply expense budget. However, our research has shown that less than 26% to 46% of the reported savings never materializes for the following reasons:

Things Change and People Change: Anything can happen and usually does over the term of a contract or change in a policy, procedure, or practice. For example, a predicted savings on an electrode is negated because of an upsell, at a higher price, from the original manufacturer to resolve a defect in the contracted product.

Inadequate In-Service Training: If a new product isn’t properly in-serviced, or not in-serviced at all, it will often cause the customer to overuse, underuse, or reject the supply item altogether.

Waste and Inefficiencies: New technology that doesn’t work properly leads to inefficiencies and supply waste. We saw this happen with defective point-of-service glucose test strips which required using two strips on every test to obtain one good reading.

Misuse or Misapplication: Sometimes a best practice is not known or is even ignored, like not placing IV time labels on IV sets to inform the next shift that the IV set has been changed. This one oversight could cost your hospital hundreds of thousands of dollars annually on just one product category.

This is why savings validation is mission critical for your healthcare organization to ensure that every projected savings that value analysis practitioners report happens as planned. Just think of validation like checking your bank statement to make sure that the check you deposited today was actually banked. Remember, a savings isn’t a savings until it is validated.

About Robert T. Yokl, Founder & Chief Value Strategist for SVAH Solutions
Robert T. Yokl is President and Chief Value Strategist at SVAH Solutions. He has four decades of experience as a healthcare supply chain manager and consultant, and also is the co-creator of the Clinitrack Value Analysis Software and Utilizer Clinical Utilization Management Dashboard that moves beyond price for even deeper and broader clinical supply utilization savings. Yokl is a member of Bellwether League’s Bellwether Class of 2018.