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 - September 9, 2010
Robert T. Yokl
President & Chief Value Strategist
Products, Products Everywhere -- but are they needed?
Greetings,
We have worked with hundreds of large and small hospitals, systems and IDNs over the last 23 years and to our amazement we have only been able to match 18% of their products to each other. This means that only a small few healthcare organizations actually buy the same products (i.e. from the same manufacturers with the same functions and features) as their peers, even if the hospital is owned by a healthcare system.
One reason for this is that “Manufacturers have expanded their product offerings at unprecedented rates over the past decade, often by taking a popular product and selling it in various sizes, brands, fabrics and flavors” according to the Wall Street Journal. Some manufacturers even think by offering more products (being all things to all people) it will increase their sales and deter competitors from entering the market.
There is also a trend by manufacturers of up selling almost any product that is on your GPO contracts now, so manufacturers can optimize their margins that can and will bloat you supply budgets. I just read the other day of one IDN supply chain director who is questioning why there are still hundreds of sales representatives floating around his hospitals when there should be no reason to do so, except in his mind to up sell the products now under his GPO contracts.
Now we should know from our statistical courses that this phenomenon (18% matches) is mathematically impossible. We should be seeing a bell shaped curve, where 80% of our hospitals are buying the same products as their peers. So what should we be doing about this?
One answer is to tightly control your vendor access to your department heads and managers: All vendors must submit all of their new product offerings to your value analysis teams first before they are ever permitted access to your department heads and managers.
While many of your department heads and managers will be upset by this policy it is the only rational way I know of for a healthcare organization to ultimately control the spiraling cost of new product introductions.
If you let your vendors continue to roam the halls of your hospital, you are leaving the door wide open for even more escalating supply cost increases for your hospital, system or IDN that aren’t desired, needed or warranted in this new healthcare economy.
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 of my savings solutions and ideas that work, you might want to check out my weekly blog articles at the Journal of Healthcare Contracting online where I have been asked to be a guest blogger starting in September 2010.
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