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SE_graphic_savingscircleAs healthcare continues its transition from volume-based to value-based reimbursements, supply chain optimization is becoming a core component in every hospital and healthcare organization’s business strategy. Under performance-based incentives, reimbursement rates will continue their decline, increasing the urgency for solutions that boost savings and efficiency across every institution.

What does that mean for the supply chain? According to the Association for Healthcare Resource & Materials Management (AHRMM), “The emerging model for healthcare delivery presents unprecedented opportunities for the supply chain profession to help achieve the objectives and meet the requirements of healthcare reform.” Strategies built around cost, quality and outcomes (CQO) are moving toward the center of today’s entire healthcare delivery model, and to succeed, says AHRMM, the supply chain must operate from that same CQO intersection.

There are many areas in the hospital supply chain where costs can be lowered by eliminating waste, rather than sacrificing quality. With supply chain expenditures representing a significant portion of every hospital’s total expense budget, finding ways to bring savings to the supply chain while still ensuring clinician access to the right products at the right time contributes greatly to CQO-related objectives.

To ensure lowest cost across all aspects of purchasing and materials management, supply chain professionals should to examine the performance of their current suppliers and consider alternatives that enable leaner operations from sourcing and purchasing to inventory management – and ultimately inventory optimization. For example, specialty distributors operating in niche spaces often provide faster, more dependable product delivery service, which boosts efficiency in the hospital supply chain and translates to lower costs by eliminating waste and excess.

If you’re a supply chain professional looking to make significant inroads with savings and cost control, start by identifying the many layers where savings opportunities exist in your supply chain. It’s important to evaluate whether or not you’re getting the highest total value with your current suppliers. Listed below are several ways the right distributor can bring savings to your supply chain.

1. Maximize transactional savings. Start with the obvious: product prices. Shop around to be sure you’re getting low mark-ups without hidden fees. It’s also important to consider the frequency of pricing errors, which add up quickly, so look for suppliers with good track records when it comes to pricing accuracy.   

2. Eliminate costly rework associated with backorders. When products go on backorder – the products your clinicians and surgeons need to provide quality, outcomes-driven care – the result for you and your organization is rework. Resourcing, reordering, rescheduling procedures…all of this is wasteful and places an unnecessary strain on labor costs. Are you getting the best possible next-day fill rate with your current distributors to eliminate costly rework? You might not be, so it’s important to assess your options.

Create the most reliable supply chain by partnering with distributors who empower you to ensure the right products go to the right places at all the right times. The right distribution model can enable you to make greater contributions to supply chain savings (see number three below) and even help protect reimbursements in the new value-based model (see number four).

3. Reduce inventory to lower carrying costs. “Managing and reducing product utilization and achieving high levels of standardization are the two tactics ranked most able to generate the greatest improvements,” according to AHRMM, after polling C-level hospital executives and supply chain leaders. Having a dependable source for just-in-time delivery enables lean inventory management for increased space and capacity, lower carrying costs and higher inventory turns. The better the next-day fill rate, the less you need to stockpile. For ongoing inventory reduction and PAR level optimization as usage changes over time, look for distributors who offer robust reporting along with data-driven inventory level and product standardization recommendations.

4. Contribute behind the scenes to patient satisfaction. Because 30% of value-based reimbursement is based on patient satisfaction, “The supply chain profession contributes to patient experiences through its management of non-labor spending and many other factors,” according to AHRMM. As a supply chain professional, you can contribute indirectly to patient satisfaction by making sure procedures aren’t delayed due to product procurement problems.

5. Automate for added time and labor savings. Wherever possible, look for ways to automate your processes. If you’re switching to a new distributor, make sure they are equipped to integrate into your existing procurement system for ease of use, data integrity and pricing file accuracy. Save time on placing orders by working with suppliers who offer simple EDI ordering.

To ensure the lowest cost across all aspects of purchasing and materials management, supply chain professionals should consider their options with specialty distributors like Suture Express. Because specialty distributors operate in niche spaces, we provide faster service and enable greater efficiency, which in turn lowers costs by eliminating waste and excess in the supply chain.

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