The COVID-19 pandemic continues to be front and center, eating up most of the news cycle as well as your team’s capacity. In many healthcare supply chains, massive efforts remain focused on the procurement of COVID-19 supplies and equipment. Electives have been completely offline across the country, with some states only clearing limited procedures this week.
Previously, we posed the question: What If Now Is The Best Time To Address Savings In Electives? Today, we look ahead. Elective procedures are starting to come back online. We don’t know when all states will resume operations, but the timeline is fast approaching.
When electives come back online, will you be ready? Here is your step-by-step plan for when procedures do resume:
Step 1: Take Stock of Elective-Related Contracts
The first thing to do when electives come back online is to take stock of related contracts. While we advise going on the offensive and renegotiating these now, this simply isn’t a possibility for every team. Health systems in hotbed areas, such as major metropolitan cities, need to continue focusing on COVID-19.
When elective procedures in your state are given approval to resume, it’s time to prioritize any unattended elective-related contracts. At a minimum, renew all contracts so you don’t revert to list price.
At Curvo, we’ve seen many hospitals fall off contract for certain items during the pandemic because their team simply couldn’t focus on it. The impact on profitability compounds each month that it goes unaddressed. Supply chain teams that stay on top of price creep will be ahead because they can resolve these issues within 30 days. While many consider this cost avoidance, we also see hospitals that receive a credit back from vendors that can result in substantial realized savings.
Step 2: Rebuild the Savings Pipeline
Consider that supply chain is, in many ways, similar to sales. Both departments include an opportunity, a process, and a funnel. They both take work identifying opportunities, as well as work closing deals. The key differentiator is that while sales is chasing positive sales figures, supply chain is chasing savings. Both are true gains that benefit the respective organization.
This pandemic is causing significant impacts throughout the healthcare industry and the broader economy. It’s safe to say that your savings pipeline will face significant disruption, thanks to COVID-19. According to Baker McKenzie, it could take 12 months for manufacturer output to recover to 2019 levels. For healthcare supply chains, this equals immense pressure to make up the profitability gap with savings.
After the pandemic, you’ll need to focus on rebuilding your organization’s savings pipeline and taking strides to make up the profitability gap.
Step 3: Look for Price Parity Opportunities Across Facilities
If your organization has multiple facilities or has recently acquired another hospital or health system, your next step is to look for price parity opportunities. These are instances where one facility is getting a better price than another. Once COVID-19 passes, it’s time to realign these disparate contracts into one master contract with optimal pricing.
Step 4: Investigate Opportunities for Repricing Events
The next step is to investigate opportunities for repricing. While some health systems are under more stringent GPO compliance requirements, many have the flexibility to negotiate savings on a local level. PPI offers one of the greatest opportunities to drive savings. Local contract price negotiations might be the key to bridging the profitability gap as electives come back online.
A solution like Lookup by Curvo can help accomplish this as it gives an unbiased view of price performance. Curvo is offering free access to Lookup until July 31st, 2020.
We all know that GPO benchmarks are limited to GPO contracts, which creates a nice pricing echo chamber. Supply Chain needs an unbiased view now more than ever. With legacy systems, simply getting access to this kind of data is laborious. Executing repricing events can take weeks or months. But with Curvo, you can accomplish more than 20 repricing events in a single day.
Step 5: Develop or Reevaluate Your Work Plan
Your work plan (or sourcing plan) is the soul of your savings pipeline – to the point that the terms can almost be used interchangeably. It’s a concrete, comprehensive documentation of the steps your organization engages in to develop and execute savings initiatives.
If you had a work plan prior to COVID-19, the final step is to reevaluate that plan to see where it stands after COVID-19. You may have lost or added vendors, for example, and you may have gotten off your regular contract analysis schedule.
Some healthcare supply chain teams in hospitals and hospital systems don’t have a functioning work plan developed. If that’s the case for you, the post-COVID rebuilding phase is the time to create a functioning work plan. It’s time to move from chasing savings on the fly to taking a calculated approach.
At Curvo, it’s our goal to help customers move from a contract calendar approach to a proactive approach that responds to market opportunity and utilization changes. While it’s important to take stock and evaluate the contract calendar, it’s equally critical to invest in solutions that allow healthcare supply chain teams to respond to market opportunities. Now more than ever, the teams that can adjust to respond quickly to market opportunities will be the most fiscally viable.
Work With A Clinical Spend Management Partner
Both during and after COVID-19, you need a clinical spend management software partner that delivers. Curvo delivers the data insights and powerful automation you need to execute a plan like the one described above. Ready to learn more? Schedule a demo today.