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 2, 2009
Robert T. Yokl
President & Chief Value Strategist
RAPID FIRE SAVINGS RESULTS: Purchase Service Benchmarking
Greetings,
Yes, I know that most healthcare organizations are getting the best pricing from their GPO or custom contracts for all of their purchase service contracts, but are they getting the best utilization (or in-use) cost too?
There is a BIG difference between the price you are paying at the pump and the total life cycle cost you are actually paying on your purchase service contracts! For example, we have routinely seen competitive prices being paid for our client’s transcription services, but then when we benchmark them against their peers we have been able to document as much 31% utilization improvement is possible in these same services.
This isn’t an accident! We have observed this same trend with every purchase service contract a hospital outsources from legal services to waste management. We have found NO exceptions to this new immutable rule that we have discovered; price savings account for ONLY 51% to 68% of your total life cycle cost on any purchase service contract. The balance of your purchase service contract savings are in your in-use cost! That’s where 79% of your new savings reside!
That’s not all! These purchase service savings are also much easier to achieve since there are: (i) less customers to convince that change is required, (ii) your executive management is almost always on your side to make the required change since they can see that the savings will immediately go to their bottom line, and (iii) it doesn’t take a lot of time to makes these savings happen.
So if you are looking for RAPID FIRE SAVINGS RESULTS, this is one of the big areas of your supply chain operations (purchase service contracts) that you need to refocus your savings efforts in order to attack your utilization (or in-use cost), not price alone. In doing so -- based on our empirical data over the last 9 years -- you can save as much as 26% on your total service spend in 12 months or less. And that’s not small change!
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
1-800-220-4274
P.S. New and better performance “begins and ends with training”, so you might want to consider our “Advanced 2-Day Value Analysis Training” Program to move your Value Analysis Teams to the next level of performance.
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