Healthcare Supply Chain Best Practices Podcast

How do you know when to start, stop, or continue with a value analysis review? There should be valid reasons why you are going to perform a value analysis review, why you may stop it midstream, or why it must continue out to a final resolution. These are valid issues that VA/supply chain team members deal with every day. Today I am talking about the “Start, Stop, Continue” conundrum. If you get this dynamic right, you will do big things and get great results for your health system. If you get it wrong, you have just wasted a bunch of time with little or no results to show for it. The strategy here is to get it right more than you get it wrong.

Supply chain and value analysis seem like an endless world of projects, initiatives, conversions, problems, recalls, and new product request evaluations that just go on and on. Once you think you have everything taken care of, other problems or initiatives show up. One thing is for sure, there also comes a lot of uncertainty with all these initiatives, projects, and new product requests. You need to know with confidence how you are going to handle these situations strategically to meet your goals and objectives.

Pricing is tight. Sometimes we can find a few big savings opportunities but many times we are guarding against price increases in these inflationary times. Senior leadership is always looking to find new ways to reduce costs without having to face things like major layoffs or hiring freezes. Clinical supply utilization management (CSUM) is still a new element that has not yet been embraced by most health systems' value analysis programs, but they should be considering it as a new way to save big beyond price.

In this special podcast we spoke with Jonathan Jarashow, CEO of OmniChannel Health, and discussed the unique needs and challenges of the healthcare supply chain. Jonathan and I delved into issues related to pricing, backorders, shortages, and how strategic value analysis and companies like OmniChannel Health can help to alleviate these challenges.

In this special podcast we interviewed hospital supply chain experts from Vuemed, the leading solutions firm in inventory management. Chris Anderson, Director of Technical Program Management, and Katherine McAlister, Customer Support Operations Manager, delve into the UDI system in the medical device supply chain and clinical management.

Everyone knows that value analysis is a big money saver from the standpoint of cost avoidance with new product requests as well as picking the right products from contract conversions. Not to mention, managing the supply resilience and recall issues that occur oh so often which hospitals cannot afford to throw major dollars at anymore. Value analysis allows you to manage all these issues and keep costs in check, but is that all value analysis can do? The answer to that question is no, value analysis can do so much more.

A Special Interview with Mark Copeland

Let's face it, inflation, clinical labor shortages, and market conditions are doing a number on our health systems' bottom lines and forcing organizations to find new and better ways to eke out costs while maintaining quality and outcomes. This is easier said than done. Group purchasing organizations and your own custom contracting are readjusting to the new normal, but inflation has taken away the majority of what I call “home run savings opportunities” that we once had. There are still some singles and doubles with savings that can add up, but they just aren't what they used to be, nor can they alleviate the hit our health systems' bottoms lines are taking. None of this is new to anyone in the healthcare industry, we all know what the market conditions are. The big question is, where are we going to get the next major level of savings to start hitting doubles, triples, and even home runs again in the savings department?

A new year will no doubt challenge many in our supply chain industry to up our game to new levels that we never thought possible. Let's face it, there is a heck of a lot of change going on and higher demands from our Chief Financial Officers to optimize costs to mitigate the budgetary shortfalls that all health systems are seeing. All this on top of the new product requests, contract conversions, recall facilitation, and managing teams and projects. This year could be a daunting year if you don't have some form of strategic plan with clear-cut goals and objectives.

Timing is everything and it does apply to the cost/value/quality world in our healthcare supply chain. In a perfect world, you would want to take the time and have your value analysis teams review all of their major product and/or service category spends and wring the towel dry on savings. But given that the average hospital purchases anywhere from 5K to 25K line items (major systems can be 25K to 85K in SKUs) with over 2,000 contracted categories, there just isn't enough time in our teams' agendas to undertake this. This is a tough challenge that you need to be prepared for.

Cost optimization is the art and science of saving money for our healthcare organizations and, at one time, used to be fairly easy by just implementing that right group purchasing contract and garnering the savings that the contract would bring at the best tier level. This has dramatically changed in the past few years with the record inflation and market conditions all but eliminating the big savings we once got from our group purchasing organizations. So where do we go from here? No matter where you take your organization in the next level of cost optimization, you will need to incorporate the following dynamics into this next level of savings.

What is the point of signing a new or renewal contract with the goal of saving money if the savings do not materialize as planned? That's what savings validation is all about. In fact, here are four ways to leverage savings validation for maximum results.

This podcast was a conversation with Rob Corley, Chief Growth Officer, from Impensa Advisors. Rob has previously been a VP of Supply Chain Services and Analytics for major GPOs and has a vast wealth of savings knowledge and experience in advanced non-salary (supplies & services) expenses. Our goal was to share with you the true potential of looking beyond contract price and thinking outside the box but with your existing data sets in order to save as much as 7% to 15% of your total non-salary budget. We packed a lot of great information and even some benchmarks into this podcast. We hope you enjoy this episode!

Everyone has a degree of experience in cost management, personal and business-wise, which we bring to the table in our value analysis meetings. There is also common sense that can guide us as well, but these experiences and common sense can only get us so far in the savings game. We need to have solid mindsets, knowledge-based tools, and some clever methods in order to find the next level of major savings led by value analysis. Here are the top four elements that will help you save big with your health system's value analysis program.

We are in tough budgetary times right now with regards to expense reduction at just about every health system in the country. Increased labor costs, supply chain issues, pricing increases, and inflation are really hurting our health systems' bottom lines. As a value analysis professional, you may ask, how do we make a big splash in the savings bucket when a good amount of our efforts are related to new products, product problems, contract conversions, and recalls? The answer is, retrospective value analysis reviews (RVAR).

With Suzanne Smith, Solutions Advisor, Lumere—a GHX Company, and Kerry Lepage, Clinical Nurse Leader and Director of Surgical Services at Maine Health. Suzanne and Kerry discuss how they got into healthcare supply chain and value analysis, successful strategic sourcing initiatives, the key stakeholders in value analysis, and how to gain buy-in for successful change.

We continue to see value analysis professionals working through a value analysis committee structure on new and renewal GPO contracts, new product requests, recalls, etc., even if they call them value analysis teams. Let me remind you that there is a big difference. To this end, here are three tips about value analysis committees vs. teams you can't afford to miss:

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.

As we begin a new year, it is good to take a step back and take a good look in the mirror at your value analysis and cost management programs. These are especially important right now in these tough economic times where your Chief Financial Officer is looking for every dollar of revenue and savings they can muster. Plus, it is just a good time to improve the things that need to be improved and make your value analysis program more efficient, time savvy, and get better results than you have in the past.

Too often when a product, service, or technology is purchased, it is considered a completed transaction by your contract managers once they have obtained the best price, and then it is quickly forgotten. You might not realize it, but this is the #1 reason why you would have higher per patient day supply costs than your competition. Remember, price is the smallest element of your lifecycle cost equation. To this end, your optimal lifecycle cost drivers reside in the following six things that happen when the products, services, and technologies you are buying are put into the hands of your customers:

Everyone is back in saving money mode in a big way, but many of the streams of savings have fallen off or fizzled out altogether. That does not mean that there are not major savings still left in the healthcare supply chain, because there are. Most healthcare supply chain pundits and afficionados agree that the next big wave of healthcare supply chain savings is about to happen. This is right at your fingertips, but in order to gain this next level of savings you have to position your organization for the big wins.

I don't think I need to tell you that the effects of the double whammy of the pandemic and inflation (8.5% as I write this article) is eating into your healthcare organization's margins. That's why the need for big supply chain savings couldn't be greater as your healthcare organization's volumes drop, supply costs soar, and increased agency nurses and temporary personnel usages are incurred to meet the demand of patient care. To assist you with this challenge, here are five strategies for big healthcare supply chain savings in the current inflationary environment:

Price is a very simple element of the healthcare supply chain procurement process. You order the product at that price and get the total spend for that line-item product. This is the total spend that we see every day from the vendors and manufacturers that we purchase from. Now envision this same scenario happening to thousands or even tens of thousands of products on an ongoing basis at your health system. Standard operating procedure, right? That is a lot of prices to look after and, yes, a heck of a lot of spend to track after as well. There is a synergy to these that add up to the total spend cost at your organization. No surprises here, yet. None of this is surprising anyone in the healthcare supply chain world, but the true “total cost” really involves keeping the organization's quantity used to the lowest possible level while maintaining the best price. There are many ways that price can get out of line, but we also need to track utilization cost, which goes beyond total cost and uses a patient volume centric metric to measure it. So, tracking Cost Per Adjusted Patient Day to the Supply Category Cost or Cost Per Cath Lab Case Per the Cath Lab Category is a quality measuring tool. So, why aren't we employing this further?

Now that the value analysis community has embraced value analysis software (VAS) as a best practice, more hospitals, systems, and IDNs are acquiring this easy to master technology. However, for those value analysis practitioners contemplating purchasing value analysis software in the future, here are some of the top mistakes to avoid that can be costly when deciding on your own VA software:

I don't need to remind you that the cost of just about everything you buy is increasing due to supply chain shortages, higher labor cost, and surging energy prices, which all contribute to the high inflation rate we are now experiencing. In fact, many economists believe this situation can get worse in the coming months! Is there anything you can do about it? Our position is that there are three strategies for dealing with our healthcare organization's rising supply chain costs that we would like to share with you:

There are many different iterations that value analysis has morphed, evolved, and emerged into leading up to 2022. Value analysis is predominantly applied to products, services, and technologies in the healthcare supply chain. The primary focus of value analysis practitioners is working with hospital and/or system-based value analysis teams that are assigned categories of products and services to review. The main goal is to validate the efficacy of these products and services but also to assist with the selection of the right product used in the clinical environment. Lastly, healthcare value analysis should be a catch point for savings and quality improvements while performing various reviews, studies, and evaluations on an ongoing basis.

We are often asked how a healthcare supply chain organization can get better than just good. Our answer is always to employ KPIs (or key performance indicators) to quantify and measure your supply chain performance over time. This way your employees and teams have goals to shoot for, milestones to meet, and insights into your operations.

Value analysis software is here to stay in the healthcare supply chain and there are good reasons why. Those who employ value analysis software at their hospital, system, or IDN know that it easily consolidates all of their information in one platform. This aids in vetting new product, service, and technology requests and can provide important resources for evidenced-based decisions. Slowly and surely, the days of value analysis professionals toiling with multitudes of Word documents and spreadsheets that create even more work can be behind you if you embrace and deploy one of the versions of value analysis software on the market today.

We recently conducted a webinar for our value analysis/supply chain community on the benefits of integrating supply utilization management (SUM) into their value analysis program because we believe there is nowhere else to go to achieve double-digit supply chain expense savings. Here are some highlights from this webinar.Over the last 76 years value analysis has evolved from a purely manufacturing technique to a universally applied strategy to save money and improve quality in all industries worldwide and has saved billions of dollars for organizations who champion its use. VA is now evolving in healthcare since our new cost and quality challenges require new ways of doing business. In short, our old VA methods need to be updated or they won't get us where we want to go over the next few years.

With the new term “Clinical Integration in Supply Chain” that has been embraced by many health systems throughout the country, there seems to be a little confusion regarding the actionable steps with this next level modality. You could easily say that you need more physician involvement in value analysis teams or need to add more clinicians to the teams as well. Most value analysis teams are already made up of key clinicians, including some doctors. What exactly are you going to accomplish with just adding these titles to your teams?

We are all in a new world of mitigation, PPE, social distancing, etc., that has been a laser focus for over two years now. The goal was to stop the coronavirus pandemic from spreading and prevent the overwhelming of our healthcare systems. Now that we see a light at the end of the tunnel, we need to start thinking about refocusing our hospital supply chain efforts on cost optimization to ease the budget pressures of our healthcare organizations.

The number one strategy for saving money in the healthcare supply chain is by saving on price. When you look at contracting and strategic sourcing, it's all about price. Standardization is a function of consolidating volume towards a common vendor(s) to attain a better tier or negotiate a better price. When an organization changes their group purchasing organization to another or joins a regional cooperative, it is to get a better price. Let's face it, the healthcare supply chain has always been heavily leveraged towards saving with price. Price is King, but is this the only savings opportunity we have?

As hospitals, systems, and IDNs see fewer savings results from their GPO/local new and renewal contracts, more and more healthcare organizations are preparing to launch their own Supply Utilization Management (SUM) Program to make up for these shortfalls. To this end, here are five tips on establishing your own Supply Utilization Management Program that might make this transition to new and better savings even easier:

Hospitals & health systems have achieved huge savings gains from group purchasing and internal supply chain contracting/sourcing over the past 10-15 years. There is no doubt that the healthcare supply chain contracting and strategic sourcing programs have reached a high level of maturity. A byproduct of this high level of maturity, unfortunately, is less price savings opportunities on the table than there used to be in all the major and minor supply categories. Add to this fact that we now have the fallout of 2020 with all the revenue, PPE, and other product sourcing challenges that are still ongoing today.Though this news may sound bleak, it only means that supply chain needs to add new avenues of savings that have not been tapped into in the past. This podcast is going to take you down this path to Savings Beyond Price and give you a vision, strategy, and tools to find as much as 7% to 15% in additional savings from your supply budget.>>>Gain A New Perspective of Why “Savings Beyond Price” is the Future of Supply Chain Expense Savings>>>Set a Path for Finding and Driving Out All Hidden Costs That Are Ready for You to Act On>>>Find Out How You Can Enhance Your Value Analysis, Standardization, and Strategic Sourcing with New Savings Beyond Price Strategies, Tools, and Techniques

Over the last few decades, GPOs have been the driving force on price and standardization savings for healthcare organizations. However, as Isaac Newton's third law states, “With every action there is a reaction.” The reaction or result of taking your GPO's price and standardization at face value is that you are missing three things you must know about savings to make them stick

Every supply chain professional is looking for that magic bullet to squeeze a few more dollars out of their supply chain expenses this fiscal year. However, let me tell you a secret I have learned in my long supply chain career about saving money. There are no magic bullets; just proven strategies, tactics, and techniques that strengthen your supply expense management efforts. Here are five that we recommend for you to employ for this purpose.

Every supply chain professional is looking for that magic bullet to squeeze a few more dollars out of their supply chain expenses this fiscal year. However, let me tell you a secret I have learned in my long supply chain career about saving money. There are no magic bullets; just proven strategies, tactics, and techniques that strengthen your supply expense management efforts. Here are five that we recommend for you to employ for this purpose.

I was just made aware by my staff last week that they are now seeing annualized price savings for even the most contract compliant hospitals, systems, and IDNs that have shrunk to 1% to 2% from 2% to 4% of overall budget over the last decade. This is a startling change in supply chain economics that I would credit to the positive impact of national and regional GPO contracts over the last ten years. However, these price reductions (1% to 2% annually) aren’t nearly robust enough to move the needle on supply expenses in today’s unstable healthcare economy. That’s why it is mission critical for healthcare organizations to formalize, operationalize, and institutionalize (see explanation video) their supply utilization programs (SUM) to close their price gap. To sell this concept to your senior management, here are four reasons why supply utilization savings are better than price savings in our ever-changing healthcare marketplace:

I was just made aware by my staff last week that they are now seeing annualized price savings for even the most contract compliant hospitals, systems, and IDNs that have shrunk to 1% to 2% from 2% to 4% of overall budget over the last decade. This is a startling change in supply chain economics that I would credit to the positive impact of national and regional GPO contracts over the last ten years. However, these price reductions (1% to 2% annually) aren't nearly robust enough to move the needle on supply expenses in today's unstable healthcare economy. That's why it is mission critical for healthcare organizations to formalize, operationalize, and institutionalize (see explanation video) their supply utilization programs (SUM) to close their price gap. To sell this concept to your senior management, here are four reasons why supply utilization savings are better than price savings in our ever-changing healthcare marketplace:

In any industry there is terminology that is slow to be adopted but then becomes mainstream and functional. One of these mainstream terms that we use in healthcare today is supply chain management, which was created in concept in 1961 but not fully adopted by the healthcare industry until the late 1990s. Another one is healthcare value analysis which was created back in the late 1940s after World War II but did not transcend into the healthcare supply chain world until the 1970s and is not fully adopted as of yet.

In any industry there is terminology that is slow to be adopted but then becomes mainstream and functional. One of these mainstream terms that we use in healthcare today is supply chain management, which was created in concept in 1961 but not fully adopted by the healthcare industry until the late 1990s. Another one is healthcare value analysis which was created back in the late 1940s after World War II but did not transcend into the healthcare supply chain world until the 1970s and is not fully adopted as of yet.

Since hospitals have been asked to temporarily shut down primary revenue sources of their operations, such as major elective surgeries, they will need to reduce costs to the lowest possible levels while regaining their bottom lines. Here are just a few ways that I would recommend this be accomplished:

Since hospitals have been asked to temporarily shut down primary revenue sources of their operations, such as major elective surgeries, they will need to reduce costs to the lowest possible levels while regaining their bottom lines. Here are just a few ways that I would recommend this be accomplished:

“The pace of decline of profitability margins is slower than it has been in past years, but they are still down. Median operating margins reached 1.7% in 2018, down from 1.8% in 2017. A more sustainable operating margin would be around 2.5%,” said Christopher Kerns, executive director at the Advisory Board. That's why it is mission critical for supply chain professionals to dramatically lower their supply chain expenses to boost their hospital, system, or IDN's margins. There are few other options left for healthcare organizations to do so. With this said, here are three keys to dramatically lower your supply chain expenses in 2020 beyond just price and standardization:

“The pace of decline of profitability margins is slower than it has been in past years, but they are still down. Median operating margins reached 1.7% in 2018, down from 1.8% in 2017. A more sustainable operating margin would be around 2.5%,” said Christopher Kerns, executive director at the Advisory Board. That’s why it is mission critical for supply chain professionals to dramatically lower their supply chain expenses to boost their hospital, system, or IDN’s margins. There are few other options left for healthcare organizations to do so. With this said, here are three keys to dramatically lower your supply chain expenses in 2020 beyond just price and standardization:

The dynamics of value analysis in healthcare have radically changed for the better in the last 20 years. We have watched as healthcare organizations moved from “sole practitioners” managing this VA function to vice presidents (in some healthcare organizations) determining the relative worth of the products, services, and technologies they are buying. Yet, with few exceptions, hospitals, systems, and IDNs have not reached the “Superior Performance Stage” of evolution in this supply chain discipline.

The dynamics of value analysis in healthcare have radically changed for the better in the last 20 years. We have watched as healthcare organizations moved from “sole practitioners” managing this VA function to vice presidents (in some healthcare organizations) determining the relative worth of the products, services, and technologies they are buying. Yet, with few exceptions, hospitals, systems, and IDNs have not reached the “Superior Performance Stage” of evolution in this supply chain discipline.

Imagine a bucket filled with a dozen holes. Now, imagine trying to keep that bucket full of water by adding more water to the bucket. Guess what. The holes continue to leak water, creating a vicious cycle that can go on forever. Now, change the word “water” in this sentence to “savings” and you can see how your healthcare organization could be losing millions of dollars annually in wasteful and inefficient consumption, misuse, misapplication, and value mismatches in your supply streams*. To stop this vicious cycle, here are three ways to plug your leaky savings bucket so you don't lose any saving in the future

Imagine a bucket filled with a dozen holes. Now, imagine trying to keep that bucket full of water by adding more water to the bucket. Guess what. The holes continue to leak water, creating a vicious cycle that can go on forever. Now, change the word “water” in this sentence to “savings” and you can see how your healthcare organization could be losing millions of dollars annually in wasteful and inefficient consumption, misuse, misapplication, and value mismatches in your supply streams*. To stop this vicious cycle, here are three ways to plug your leaky savings bucket so you don’t lose any saving in the future

During a recent conversation that Robert W. Yokl (SVAH's VP, Supply Chain & VA) had with a system supply chain executive. This thought-provoking discussion he had with the system supply chain executive was about how he was targeting supply utilization in a new savings initiatives to achieve his organization's savings goals beyond price strategies. Clearly, he knew what we know and that is that supply utilization management is the next new savings strategy that will take us to new levels of savings beyond price in the healthcare supply chain. But why don't more healthcare supply chain leaders adopt supply utilization savings as the next big savings opportunity and start building or buying systems to help them achieve this next level of savings? Is it because they don't believe the savings are there or realizable?Check out the FREE Bonus included with this podcast!

During a recent conversation that Robert W. Yokl (SVAH’s VP, Supply Chain & VA) had with a system supply chain executive. This thought-provoking discussion he had with the system supply chain executive was about how he was targeting supply utilization in a new savings initiatives to achieve his organization’s savings goals beyond price strategies. Clearly, he knew what we know and that is that supply utilization management is the next new savings strategy that will take us to new levels of savings beyond price in the healthcare supply chain. But why don’t more healthcare supply chain leaders adopt supply utilization savings as the next big savings opportunity and start building or buying systems to help them achieve this next level of savings? Is it because they don’t believe the savings are there or realizable? Check out the FREE Bonus included with this podcast!