“Fads and
Trends Come and Go Like the Wind. In My Opinion, Gain
Sharing Certainly Fits into This Category”
A
recent poll
conducted by my firm asked the question “is gain sharing
the next evolution in supply chain savings?” In
response to this question 67% of our readers said YES, while
33% said NO. If you’re interested in what my vote was, my
vote is with the “NO” group.
Here’s why!
All hospital employees and physicians should be incentivized
to improve the quality of their patient outcomes and lower
the cost of doing business at their hospital. However no
group, like orthopedic and cardiac surgeons, should be
singled out to be incentivized while the teams of employees
who greatly contribute to the positive outcomes of their
patients’ surgeries are left out in the cold.
Incentives only work if they are fair and
equitable and are shared by all stakeholders equally.
This means that all employees and physicians need to be
rowing in the same direction – not separately. A case in
point is the new “pay-for-performance” and
“team-oriented incentive plans” that have been
introduced by healthcare organizations over the last few
years where all stakeholders share in the rewards. A survey
conducted of 300,000 healthcare employees said “YES”
they believed incentive plans like these would enhance their
healthcare organizations’ performance.
A good example of how incentivizing employees works to
improve their organizations’ performance is our
“team-oriented incentive plans” that our supply value
analysis teams adopt as part of our Strategic Value
Analysis® Planning Process. As an incentive to improve
their hospital’s quality and lower their supply expenses our
value teams are receiving $500, $1,000 and
even $3,500 per member when they reach their annual
savings goals. Since we initiated these incentive plans into
our Strategic Value Analysis® Process “no” value team has
missed receiving these incentives, because when
incentivized with rewards and recognition in a timely
fashion we all become better performers.
Yes, “pay-for-performance” and “team-oriented
incentive plans” work if they are fair and
equitable to all stakeholders, but “gain sharing” for a
few is a formula for disaster!
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MAILBOX
What do you think of “Reverse Auctions” as a way to further
reduce my supply chain cost? I have been hearing a lot of
good things about it lately. R.P.
“Reverse Auctions” are now a proven supply
chain tool that can save, on average, 18% on the
commodity group that you are bidding and reduce the time of
traditional bidding by 30% to 70%. In fact, a client
of mine told me the other day that he saved 25% on
his IDN’s soaps and lotions annual purchases by using a
“Reverse Auction”.
But like any other tool in your savings
toolbox “Reverse Auctions” shouldn’t be employed in every
bidding situation. First, there is a cost to use” Reverse
Auction” software, which needs to be factored into your cost
of bidding on line. Second, there is also the danger
of vendors “underbidding” in the heat of battle (remember
“Reverse Auctions” are bidding wars on line in real time)
and then can’t deliver on their promised price,
and third, errors and mistakes in your bid specifications or
the vendors interpretation of your specs can reduce
your projected savings dramatically. Lastly, in many cases
with “Reverse Auctions” vendor relationships are lost
forever in the process. No longer is it about quality,
service and price, but the relationship is reduced to one
criteria only -- that being PRICE.
So I wouldn’t shy away from “Reverse
Auctions” as another tool in your savings toolbox, but I
would surely investigate the PROS and CONS of
“Reverse Auctions”, before jumping into this new way of
doing business.
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.
There Is Still “Gold In them Thar Hills”
“I Don’t Believe Your Benchmarks”, Is That Another Way To
Say I Don’t Want To Save Money
If You
Don’t Want To Save Money Just Say So. Don’t Beat Around The
Bush!
There is
an old saying “if you don’t want to do something, any
excuse will do”. This is what I hear from senior
management at hospitals, systems and IDNs in many different
ways and in many different situations every day. They might
say something like this, “I don’t believe your
benchmarks” or “We have had so many cost reductions
initiatives over the last few years, I can’t believe there
is more money to save” or ” We have too many other things
happening (new building program, Joint Commission
inspection, purchase of new MRI, etc.) to think about this
now”. But what these senior executives are really
saying with these “excuses” is that they don’t want
to save money now!
If not now – when!?
If a healthcare organization defers saving money for any
reason (other than a natural disaster like Katrina) they
aren’t protecting their bottom line from an impending
catastrophe. Benchmarks don’t lie! There is always more
savings to be uncovered and a Joint Commission inspection is
a weak excuse for stopping your money-saving machine from
generating needed savings for your hospital, system or IDN!
Now I am a realist and therefore realize that
everything has a priority and that your hospitals, systems
or IDNs only have so many resources to attack each challenge
your healthcare organizations faces at any given time. But,
with this said, just like your payroll check is processed
every two weeks without fail, your healthcare organization
must have in place at all times a money-saving systems that
is always churning out savings for your hospital,
system or IDN or you might find that someday your payroll
check might also fail to show up on your desk.
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