Health system leaders are challenged with overcoming crushing financial pressures from every direction. Despite having many tried-and-true methods that have served them well in the past, health system executives today must look for different, winning strategies to reduce total costs.
Trimming expenses on supplies – once an effective means of cost reduction – isn’t good enough anymore. Leaders understand they must cast a wider net and dig deeper to unearth savings. They are looking to efficient staffing of physicians and physician extenders, or to improving quality outcomes to decrease pay-for-performance penalties on readmissions.
Cost savings still rule
Ultimately though, cost savings goals still rule as the top factor impacting the supply chain, according to heath system respondents to Premier’s Economic Outlook surveys since fall 2012.
In fact, 45 percent of supply chain and C-suite leaders who replied to the 2015 spring survey continue to cite cost savings goals as the number one way to cut spending.
The supply chain is an area where health systems have historically reduced costs through standardization, improved resource use and similar initiatives. Successful cost savings are then routinely passed on to other business lines to help identify and drive out unnecessary expense.
Figure 1: Factors with the greatest impact on supply chain in the next 12 months
Results from the spring 2015 survey show that, when searching for ways to reduce total costs, 63 percent of supply chain and C-suite respondents point to supply use as an easy win. They also continue to report cost-reduction initiatives in other areas:
- Resource use in purchased services (43 percent);
- Staffing and labor efficiency, nursing (43 percent);
- Length of stay (38 percent);
- Staffing and labor efficiency, outsourcing (30 percent);
- Staffing and labor efficiency, physicians (29 percent); and
- Level of care (27 percent).
In addition, many organizations in recent years have limited capital expense budgets to align with cost-savings goals and survive in the face of mounting financial constraints.
Physician buy-in, integration influence savings
Supply chain executives are using various strategies to improve efficiency and reduce costs. And physician engagement is the one they cite most often as instrumental in changing clinical and physician preference. Physician preference items, such as high-cost implants or devices, can inflate supply costs when value analysis does not align with product choice.
Getting physician buy-in to the supply chain process helps mitigate those issues.
Figure 2: Top two tactics to improve supply chain
Source: Premier online survey for Economic Outlook spring 2015 publication
Supply chain integration with clinical care, IT, and revenue capture is the second most-cited area for supply chain improvement, climbing in the spring 2015 survey to 34 percent of respondents, compared with 20 percent in the fall 2012 survey.
What is your health system doing to get creative in supply chain?
Share what’s worked – and maybe what hasn’t – in the comments below.