Four tips for finding supply chain efficiencies

The supply chain represents about 25 percent of a healthcare facility’s operating budget, and industry trends strongly indicate that this percentage will continue to grow. Thus, supply chain optimization is not an option, but an imperative.

Here are some solid best practices that can help your facility build a “new” supply chain focused on efficient processes and maximized outcomes.

Obtain Senior Management Commitment
Continual commitment from senior management helps keep projects moving and demonstrates their importance to all hospital staff. Even if the project originates in materials management, the materials manager should win executive team support before engaging physicians and surgeons. Senior leadership must be willing to support the process, stay with it through difficult moments and see it through on an ongoing basis.

Build a Representative Project Team Including Physicians and Surgeons
Initiatives will affect numerous stakeholders ranging from physicians, surgeons and nurses to materials managers, the CEO and CFO. To ensure that the project meets both its quality and cost goals, the project team must include representatives from each of these areas. Physicians and clinical staff will support the final cost-savings initiative if they are invited to work with senior management and materials management through benchmarking and establishing protocols.

Also, nearly all physicians and surgeons say that money is not their top motivator. What motivates physicians is positive patient outcomes, professional recognition and a sense of pride in the work they do. Any alignment model or project should make sure to include this component.

Data is the Foundation
Relevant, actionable data is the basic building block for an organization’s economic direction and also provides the facts and evidence needed both internally and externally to communicate the realities facing every stakeholder.

Armed with data and actionable information, effective supply chain leaders can create a marked impact on the overall efficiency of their supply chain operations. This can encompass every supply chain function, including the basics such as contracting and price integrity, inventory control and distribution efficiency that will ensure clinicians receive high quality and cost effective product availability and delivery. Even more significant to the overall success of the supply chain is the effective management of clinical preference items, with their significant cost and impact to the quality of services delivered to the patient

Efficient value analysis processes will ensure that all bases are covered with regard to high tech and high touch healthcare products, including reimbursement, safety, education and clinical credentialing, product standardization, appropriate utilization, and finally, and most importantly to the organization’s cost structure, compliance with negotiated contracts and agreements. 

For example, value analysis of data lends credibility to, and must then be accompanied by, purchasing controls to make sure that all new products go through the process. There should be a major initiative to increase purchasing’s role in product selection and identification of acceptable product alternatives with end-users. Under many inefficient processes, too much responsibility is placed on end-users, and there is too much discretion on what they can order.

Also, analyzing detailed data relating to inventory levels and usage for certain products can help identify possibilities for reduction in inventory, reduced numbers of storage locations and replenishment processes that require less labor while delivering greater accuracy and appropriate product availability to the end user.

Track and Measure Results
Finally, the process must also include a tracking and outcomes evaluation component. Tracking outcomes and correlating this to standardization initiatives will ensure product use and selection is also a contributing factor to overall organizational quality improvement efforts. Outcomes tracking by the value analysis team will evaluate clinician adherence to approved standardization programs, quantify the savings gains, build credibility by attending to any unforeseen issues, and establish a new baseline for the next initiative. Proactive tracking also allows the team to ensure that protocols are working properly and make adjustments if necessary.

Current economic challenges, declining reimbursements and the ever-changing dynamics of the healthcare industry will continue to force healthcare professionals to “do more with less,” when it comes to the supply chain. But with a sound team, protocols and processes in place your facility can be positioned to act quickly and decisively to deliver high-impact, positive change.