Controlling Cost and Achieving Savings in an Inflationary Environment
Inflation continues to be on the rise in healthcare, just as it is in nearly every industry. In addition to rising costs for expenses such labor, energy, benefits, etc., increases in the cost of medical supplies has had a significant impact on hospitals. Due to a variety of factors, it simply costs more to manufacture, ship, and distribute supplies than ever before in our industry. As a result, many hospitals are facing significant financial challenges. Some facilities have had to lay off staff, while others have had to cut back on services. In some cases, hospitals have even had to close their doors altogether.
To combat inflation, healthcare supply chain leaders must be innovative and proactive. Done are the days of hospitals continuing with their usual buying behaviors while expecting to control costs or achieve savings. Hospital department leaders and physicians must become more aligned with these initiatives, and flexible with making necessary changes. This includes product standardization to negotiated, contracted products; as well as evaluating more sensitive categories, such as physician preference items and purchased services.
Supply chain leaders should take the lead on identifying opportunities by finding the highest spend off-contract categories, and working with subject matter experts to determine the best course of action. This could include standardization for pricing tier optimization, conversion to a more aggressively priced product, or taking spend categories out to bid with competitive vendors. When the financial viability of a hospital is on the line, there should be no spend categories that are off limits for discussion.
CHC can help! In addition to our tailored guidance and GPO account management for our member facilities, CHC has rolled out 22 category standardization initiatives on the national monthly supply chain calls over the last 18 months, measuring a total aggregate savings potential of ~$2.24 million. The most recent categories rolled out were Endomechanical Products (Ethicon), Fecal Management Systems (Convatec), & Equipment Drapes & Covers (Advance Medical Designs).
Reach out to your Corporate Director of Supply Chain with any questions or support