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 - November 16th 2010

Robert T. Yokl

President & Chief Value Strategist

 

From Average to Awesome Supply Chain Savings

Greetings,


Everyone likes to be seen as above average in their life and business. I can’t help you with your life, but how would you like to be considered more than just above average, but actually AWESOME (i.e. tremendous, remarkable and amazing) with your supply chain savings? All it takes is breaking free from your self-limiting ideas to realize your full supply chain savings potential…NOW

First of all, when most people think about savings they think of PRICE! While these savings are easy, safe and predictable, it only represents about 21% of the imbedded cost of the products, services and technologies that you are buying. Although, it will provide you with, on average, (or normal, middling or standard savings) of about 2% to 3% in annually -- if you are tenacious!

So the first lesson you need to learn if you want to achieve AWESOME (26% or more on each commodity you target) savings you need to think Savings Beyond Price --- not price alone. For instance, on a recent client assignment we identified with our Value Analytics a 42% utilization savings or $42,233 on their specialty bed rentals. Whereas, after a quick review of their rental bed pricing with our PriceCheck™ software, we found this client’s price to be well within acceptable limits. My point here is that if we were just thinking price alone we would have hit a brick wall on savings for this client. But with our mindset of Savings Beyond Price we hit the bulls eye – dead center!

Another self-limiting idea is that standardization is the preeminent way to save money for your healthcare organization. The idea that standardization (one size fits all) works is not wrongheaded, however it can cost you healthcare organization money in the long run. We see this all the time with I.V. sets. A hospital standardized on one feature-rich I.V. for all its departments (anesthesia to the emergency room) and then pays up to 6.62 per set, when a customized approach (providing the right I.V. set with the right features to the right department) could enable this same hospital to have an average cost of $3.37 per set and save thousands of dollars annually by doing so.

I must admit that moving from average to awesome savings is a transformational process that requires purpose, persistence and an action plan to discover a balance between your price, standardization and utilization savings initiatives that will give you the best return-on-your investment of time, technology and resources.

I call this plan the 10%, 10% and 70% rule! You should be expending 10% of your limited time and energies on price savings, 10% on standardization and then 70% on utilization. This way you can almost be guaranteed not just above average savings, but AWESOME and EXTRAORDINARY savings that you never thought possible.

 

Warmest Regards,

Robert T. Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
Bobpres@strategicva.com
1-800-220-4274

Your Partner In Savings Beyond Price™,

 

P.S. You might want check out my weekly blog article “Value Analytics vs. Gut Feeling” at the Journal of Healthcare Contracting on line if you are looking for more savings ideas to add to your arsenal.  

 

 

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