STRATEGIC VALUE ANALYSIS® IN HEALTHCARE

Advancing Healthcare Organizations to the Next Level of Supply Chain Savings

Savings Beyond Price -Weekly E-Zine- July 29, 2005

by Robert T. Yokl, President and Chief Value Strategist

How To Expand Your Supply Chain Management Charter To Enlarge Your Influence, Authority And Savings

Most Supply Chain Professionals Focus Their Efforts On 20% of Their Hospital’s Operating Budget (supplies), While Ignoring Their Biggest Chunk Of Expenses (30%) In Other Purchases   

Have you ever heard of the “law of diminishing returns”?  It’s an economic term meaning that the more time and resources you throw at something, the less return you get for your investment -- exponentially. That’s just what’s happening in the supply categories at our hospitals and systems today.  Supply chain professionals are spending every waking hour trying to reduce the unit prices of their supplies (20% of their hospital’s or system’s budget) by a few percentage points for the hundredth time. They are literally ignoring uncultivated savings opportunities in 30% (purchase services) of their hospital’s or system’s budget. Does this make sense to you?

Expand Your Charter And Your Savings Opportunities Too!

Supply chain professionals in other industries (automotive, pharmaceutical, energy, airline, banking, etc.) are light years ahead of healthcare organizations with their laser focus on their purchase services (e.g. consultants, IT contractors, temporary labor, advertising, marketing, service contracts, preventive maintenance contracts, outsourcing contracts, etc.), that has generated 12% to 32% savings in these categories of purchase for their corporations.   They have accomplished this feat by:

1. Clearly articulating to their executive management that, by expanding their charter to include purchase services, they could add value and dramatically improve their organization’s bottom line.

2. Building a case for change by establishing cross-functional teams to attack their purchase service expenses.

3. Spending as much time implementing as designing changes to ensure acceptance and compliance.

4. Leverage technology systems to identify and quantify savings opportunities and document results.

This charter expansion is a new industrial best practice that must be imitated by mature supply chain professionals, especially if you have plateaued with your price savings reduction initiatives.  Who isn’t facing this business reality yet?

Opportunities, Hurdles And A Real Life Example

What I’m preaching to you here is something I learned over 27 years ago as a Corporate Director of Material Management for a larger for-profit healthcare IDN. I came to the realization that to keep my savings-machine humming year after year (and keep my bonuses flowing too) I had to expand my supply chain management charter, authority, influence and staffing to manage ALL categories of purchasing for my corporation.

MAILBOX 

I’m a Regional Material Manager for a larger IDN and My Vice President of Materials Management has asked me to start up surgical and clinical value teams.  Since I haven’t done this before, what would you suggest?  R.T.

I would like to say this is a tall order your boss has given you if you haven’t established and trained value teams before.  It’s a little like asking you to fly a plane without any training or experience. Don’t you think that there is a good chance you will crash on take off?

By way of comparison, it took me 18 years to figure out how to plan, organize, train and coach successful value teams. If I were you I would purchase “The Ultimate Value Analysis System” which will give you the fundamentals you will need to safely get off the ground.

Good luck,

Bob Yokl, Sr.

Chief Value Strategist

Strategic Value Analysis In Healthcare

800-220-4274

bobpres@strategicvalueanalysis.com

P.S.  If anyone else has a burning question that you would like me to answer, please call or e-mail me and I would be delighted to answer it.

There is Still “Gold in Them Thar Hills”

Paperless Hospitals Have The Lowest Printing Cost And Improved Quality Too!

 46% Savings Possible If Your Hospital Goes Paperless!

I had a big surprise a few years ago when I benchmarked the printing cost of one of my IDN clients. Their printing cost metric was .23 per adjusted patient day, while their peers were spending, on average, .75 per adjusted patient day.  When I talked to my client about this revelation he told me that their seven hospital systems had gone paperless about year ago with no adverse results. In fact, they found that their quality improved as well!

For example, a recent study documented that by going to an electronic patient record, patient safety is perhaps the best reason for a physician to consider implementing a paperless system. The ability to view a patient’s complete prescription history allows doctors to make the right therapeutic choice for the patient at the right time. Physicians, individually or in a multi-user scenario, have the ability to pick a medication and check to see if it conflicts with other medications the patient is currently taking. Having immediate access to medication information can also improve patient care, allowing physicians to better inform patients about the medication being prescribed. In the study “Clinician Use of a Palmtop Drug Reference Guide,” more than 750 physicians said it took from one to five minutes to manually find drug information when using traditional search methods, as opposed to 20 seconds when using the study’s ePrescribe software. (Source: www.mdneguide.com/specialty_editions/marketer/v1n1/paperless.htm).

This is just one example of how your hospital will find that paperless systems will pay for themselves in a very short time due to decreased printing and administration cost and improved quality outcomes.

NO COST Tele-Seminar (1-Hour) August 23rd at 12:00pm Healthcare Supply Chain Benchmarking for Peak Performance ($99 value)

Are you still challenged about where to find benchmarks?
Do you have a benchmarking system that works for you?
Do you know the 10 biggest benchmarking mistakes ?

Then join the leading authority in healthcare supply value analysis Robert T. Yokl on Tuesday, August 23 at 12: 00 P.M. Eastern on the phone and learn:

• How to measure the effectiveness of your supply chain.

• Determine where the savings gaps are in your supply chain.

• How to measure those gaps and fill them with new best practices.

• Learn a new six step benchmarking system re-energize you savings machine.

• And how extreme benchmarking can really save big bucks for your hospital.

All you need is a telephone. We'll email your phone number for the Tele-Seminar. The Tele-Seminar is FREE!  Robert normally speaks for about 40 minutes and then will open the line for any question you have about benchmarking for peak performance.

      Register now and we will email all of the conference details

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