Today’s healthcare supply chain professionals are eager for frameworks that can assist them in analyzing and improving their supply chain for maximum effectiveness. One of the most direct and effective ways to streamline processes and reduce costs is through standardization and volume commitment.
Identifying and eliminating duplication, in some cases helping or guiding providers to use less of something or eliminating its usage entirely, is very important. By eliminating redundancies in supplies, facilities are better able to commit to, and contract with, suppliers to negotiate improved rates. Supply chain data analysis can also provide opportunities for the use of comparable products that can drive costs down dramatically. In many situations, similar products from different manufacturers can be reviewed and declared comparable. The best price then becomes a leading differentiator. Also, in some cases, the same product by different distributors can be found at different costs.
As you begin to work through a standardization strategy, early on, it is generally smart to stay focused primarily on med-surg categories where price is the primary differentiator, and aggregation is the correct strategy. Further, leveraging a standardization strategy for these types of categories can help your organization deploy internal resources to other value-added areas.
In addition to direct cost reduction through better pricing, standardization will also bring down the number of SKUs present within your system. Each SKU stocked within a system adds inventory and maintenance costs. Reduction in SKUs helps reduce the overall expense of inventory management activities, and helps increase supply chain effectiveness.
Finally, product standardization is a platform upon which practice standardization can be built. Less product variation can aid clinicians in improving clinical efficacy through increased familiarity with a single product. It also decreases the need for cross training across different product lines at different system facilities.
Personal preference on certain items does not assist in reducing costs or necessarily ensure a better patient experience or better outcomes. While some exceptions are valid in individual cases, the reasons why individuals or departments deviate from standardized purchasing practices are usually subjective and not grounded in evidence. According to Intermountain Healthcare’s Dr. Brent James and several other nationally-recognized experts on variation, inappropriate variation is a known cause of poor quality and outcomes.
For an in-depth look at how a standardization and commitment program can bring cost reduction and better clinical results, read this success story on how Intalere collaborated with owner Intermountain Healthcare to bring nearly $3 million in savings, process improvement and enhanced clinical outcomes.