The best way to lower hospital spending is to leverage data to refine processes, cut costs and improve results. But where to start? It can seem overwhelming at first. However, taking these actions is crucial to optimizing supply chain strategy.
There are many different ways to use benchmark data, including medical equipment, commodities, pharmacy and even the resource of blood. However, medical devices and specifically physician preference items (PPI) are among the areas most ripe for cost savings.
With PPI Costs Surging, Managing Business Information is More Crucial Than Ever
The increase in supply expenses are outpacing all other costs in the healthcare field, including wages and benefits. The proliferation of very expensive medical devices is driving this surge in costs. With over half of both cardiac and orthopedic procedures using implantable devices, PPI account for as much as 60% of medical and surgical spending as compared with around 40% just a decade ago.
There are efforts being made to contain this surge in PPI costs, but with limited success. Siloed pricing and utilization data are to blame, as well as generally poor pricing transparency. It’s challenging for supply chain managers to drill down to reliable and actionable data.
Cataloging Key Data is the First Step to Leveraging It
A robust business intelligence system and workforce productivity index can offer key dashboard metrics. This allows staff and management to make good decisions each day related to staff performance, scheduling, and other insights. Trends, problems, and opportunities can all be identified and acted upon. Identifying process changes and training needs and taking appropriate action can result in significant cost savings over time.
Supply expense per patient per day or supply expense per adjusted admission are other key examples. The ability to drill down into the expense drivers in these areas can be extremely valuable to a hospital’s bottom line. Insights into operational measurements can also allow the supply chain to be streamlined and optimized. However, this requires a standardization of data coding including unique SKUs and storage across all departments. An intelligent data analysis system is the first step.
Next, big data should be leveraged to analyze large amounts of data and facilitate predictive analytics. Both clinical and financial processes should be regularly evaluated to help improve outcomes. A measured and strategic approach can help make this endeavor less daunting. Assessing each area one by one and determining what supplies are involved in the most successful results can help with weeding out less successful products and vendors.
Is Your Organization Tapped Into the Power of Price and Market Data?
It will take time for large organizations to make these assessments across all categories, but the applications are well worth the effort. When an organization’s data is accounted for and leveraged, improved performance and reduced costs are possible across all aspects. An intelligent system acts as a neural network that learns and relearns as the data, parameters and performance statistics change and evolve.
Business intelligence tools that assist with aggregating and analyzing supply cost data, as well as market intelligence from a range of sources, can pinpoint opportunities that are ripe for cost saving actions.
Streamlined Solutions Are Available
If you’re ready to harness price and market data to move your sourcing strategy to new levels of efficiency and cost savings, check out our free, open price benchmarking app iQO Explorer. With data from over $14BIL in annual purchases from over 450 US hospitals – you’ll have the insights you need and never have to pay for benchmarking again.