Discover Roadblocks to Healthcare Supply Chain Savings

Discover Roadblocks to Healthcare Supply Chain SavingsYou’ve given it your best shot.  New IT systems, value analysis teams, stricter contracts, tighter controls.  Yet at the end of the day, you somehow still aren’t achieving your efficiency and savings goals.

The reason?  Because you haven’t yet addressed the core business issues that cause the inefficiencies and disconnects.

There are five (5) key areas issues undermining your healthcare supply chain savings:

  • Poor data quality and sharing
  • Incomplete supply spend visibility
  • Lack of information at the time of purchase
  • Weak contract compliance
  • Inability to easily compare like products

Here’s what you need to do to eliminate these roadblocks and clear the way for savings:

Improve data quality and remove data silos:  Industry organizations estimate that 30% of buyer systems are inaccurate.[i]  Some estimates put that figure at 40%—going up to 80% when factoring in pricing discrepancies.[ii]  With bad data and information trapped in silos, savings come to a screeching halt.

The answer is to integrate all of your information into one source of data truth—combining your item and charge masters, purchase history and contracts with industry data like vendor catalogs.  Normalize and rationalize the data so it uses uniform descriptions. Now you’re talking!  You can identify duplicates, and group like items for standardization. And users don’t need to hunt around—they can stop at one place for the information they need.

Increase supply spend visibility:  We find that typically 40-50% of an organization’s medical-surgical supply spend falls outside its materials system.[iii]  When you can’t see spend, you can’t compare or control it.

By implementing a preemptive formulary procurement system, you can bring your entire supply spend into view.  Every purchase goes through the system—even those illusive physician preference items (PPI).  Now you can see what you’re spending your money on before your folks purchase it.  And that allows you to bring more purchases under contract to drive new savings.

Direct users to the preferred purchase—up front:  When Nurse Sally searches three clinically comparable catheters, how can she know which one you’d prefer her to buy?

A preemptive formulary procurement system stops poor decisions in their tracks. Using sophisticated algorithms and artificial intelligence, the system reviews all the possible choices and suggests the exact contract line and price that offers the best value for your organization.  Nurse Sally is directed to your organization’s preferred choice at the point of requisition—before she buys.

Increase contract compliance—up front:  Most procure-to-pay systems are great at analyzing where you went wrong—which prices and contracts didn’t match up, and where you missed on contract compliance.  The problem is you’ve already made the purchases.  It’s like driving by looking in your rear-view mirror.

The advantage of a preemptive formulary procurement system is it stops those off-contract purchases from being made.  This virtually eliminates all that back-end work to justify pricing and contracts.  Now your folks can focus efforts on long-range planning.

Enhance ability to compare:  One of the challenges to successful standardization and value analysis is how to identify functionally similar and functionally equivalent items for comparison.

A preemptive formulary management system takes all of your purchased items and uses unlimited attributes to describe them.  These “smart attributes” allow you to see exactly which items appear to be functionally equivalent—the system even identifies opportunities for you.  Now you can work with clinicians to standardize and limit vendors—especially critical for policing those high-ticket PPI.

Once you remove these five roadblocks, you’ll find your information and process flow speeds along—putting your savings on the fast track.

Learn more on how to make the hospital supply chain your best source for savings.


[i]Association of Healthcare Resource & Materials Management (AHRMM)/Global Data Synchronization page of website;; and  “Data Quality: The Foundation for Significant Supply Chain Enhancements,” Supply Chain Solutions, Healthcare Financial Management Association (HFMA), 2007.

[ii] 30% figure is from Global Data Synchronization Network, Current Facts about Data/Data Synchronization; AHRMM Website; 3/14/2012.  40% and 80% figures are from Why the Item Master is the Center of Your Universe; white paper; Global Healthcare Exchange; page 3; 2013.

[iii] McKesson/Meperia healthcare marketplace data.