Savings Beyond Price™
Innovative Supply Savings and Quality Solutions That Work
by Strategic Value Analysis® in Healthcare
Did You Know...?
That Value Analysis Was Developed Back In the 1940's After World War II as a Way to Find Lower Cost but Higher Quality Alternative products and methods. This was Due to the Lack of Material Resources At The End of The War.
Savings Beyond Price -Weekly eNewsletter - May 13, 2010
Robert T. Yokl
President & Chief Value Strategist
Here We Go Again!
Greetings,
We have all realized that our hospital, system or IDN’s reimbursement from all sources has been static over the last few years, and that a low rate of inflation has kept our boat afloat in stormy waters. However, there is now universal agreement in healthcare financial circles that inflation is slowly creeping back into the NEW HEALTHCARE ECONOMY we now live in with an expected inflation rate of 2.9% in late 2010 through the first half of 2011.
Here we go again! Some experts are predicting laboratory supplies going up 4.6%; environmental services 6%, medical supplies 3.2%, food and nutrition 4%; office supplies 4.1%; orthopedics 5.5%; IV solutions 5.5% and surgical supplies 2.2%. This will mean a big hit to your healthcare organization’s supply budgets even if your GPO can hold the line on inflation on some of these categories of purchase.
Beat inflation rate! Even though these statistics are challenging, it’s always been my philosophy that it is a supply chain manager’s job to beat their regional inflation rate (which could be much higher or lower than the national rate) each and every year. You won’t do this exclusively with price cuts, but you can do it by managing the consumption of the products, services and technologies that you are buying.
For example, office supplies are ripe for utilization savings if you control the WHO, WHAT, WHERE AND HOW of the buying of this commodity group by as much as $96.00 per full-time equivalent employee. By delving into WHO is authorized to buy office supplies, WHAT they are buying (brand name or generic), WHERE they are using these supplies (home or office), and HOW they are being delivered (desktop vs. storeroom), you then would have a good starting point for dramatically reducing the consumption of these products.
Inflation fighter! You should see it as your job to be an inflation fighter, since if you don’t beat back the rate of inflation that your healthcare organization experiences in any given year you could find it almost impossible for your hospital to balance its budget. Why? Your third party reimbursement organizations aren’t giving your hospital the actual rate of inflation each year. In some cases (Medicare is a good example of this trend), they are actually taking back money from your hospital which they already paid you that they are calling overpayments.
Looking forward, inflation is returning to the healthcare marketplace this year and it could get worse before it gets better due to our country’s ballooning deficits. So be prepared to meet this challenge with a new focus on consumption, not just price, if you want to be a winner in the inflation game.
Wouldn’t you agree?
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
1-800-220-4274
P.S. If you want to read more about how to beat your inflation rate I would suggest you read my article “Price is the Smallest Factor in Your Savings Equations” to get a better idea of how to do it.
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