Healthcare organizations nationwide are facing serious revenue gaps—and their costs are higher than ever. CFOs at leading health systems and standalone facilities alike are facing the same challenges: How can you provide excellent care at a reasonable cost? The answer is in your supply chain.
According to Health Catalyst, U.S. hospital supply chain overspend costs an estimated $25.4 billion annually, which represents 30 percent of all hospital spending. The traditional supply chain model only serves to exacerbate these costs, and the resulting challenge is drastically limited revenue. To ensure long-term sustainability for today’s hospitals, a new value chain model must be developed—one that is care-centric, outcome-focused, and process-driven. Learn more about each of these elements in our team’s white paper.
An Outcome-Focused Approach
To save on supply chain costs, healthcare executives must determine whether their current spending is actually producing results. Are your practices and products delivering the kind of outcomes that patients expect?
Data analysis is the cornerstone of improved care because it enables physicians and researchers to see costs and benefits of certain drugs, supplies, and treatments. This provides a complete picture of what is most effective in delivering desired outcomes. Evaluating your current resources and comparing their performance will show you where you should be spending your money—and where you can afford to cut back.
“If I’m using a product and the product has no differentiation from its competitive product, then perhaps it’s a commodity and perhaps it should be priced like a commodity,” says Bob Taylor, senior vice president of supply chain at RJW Barnabas Health. “Or the information may show us that there’s an improved clinical outcome, whether that’s a reduced length of stay, less time in the operating room, less anesthesia, less readmissions or less complications…those are the things we want to purchase, even if we pay more.”
Improving outcomes also involves maintaining clear communication with clinicians. “[Physicians] drive the value analysis process,” says Robin Czajka, vice president of cost management at Premier, Inc., who specializes in developing a clinically integrated supply chain. In her experience, the most successful supply chains are owned by physician input. When communication is effective, it creates a feedback loop, rather than siloed opinions. If clinicians determine that certain products are not sufficiently impacting outcomes, they provide consistent and clear feedback. This directly impacts supply chain efficiency and enables better decision-making throughout the organization.
Taking an outcome-focused approach to your supply chain will help you determine which elements of care are most effective—and which ones you can afford to eliminate. For more tips on reducing costs by focusing on your supply chain, download our white paper.