Utilization Management

Are You Flying Blind Or Do You Know Where You Stand?

Robert T. Yokl

We are often asked how a healthcare supply chain organization can get better than just good. Our answer is always to employ key performance indicators (KPIs) to quantify, qualify, and measure your supply chain performance over time. This way your supply chain team has goals to shoot for, milestones to meet, and insights into their operations. On an operational level, KPIs provide a window into your supply chain operations (i.e., expenses, service quality, logistics, etc.) to determine whether or not your supply chain is on track or needs improvement.

Most progressive healthcare organizations are applying KPIs (or quantifiable measurements of performance over time for a specific purpose) to highlight aspects of their financial, employee, productivity, and customer performance, such as, average treatment cost, claim denial rate, bed occupancy rate, etc., to create a culture of success. It should be clear that without KPIs your healthcare organization is flying blind! Yes, we could make this same statement about supply chain management in most hospitals, systems, and IDNs.

Over $200K in savings discovered through comparative KPIs

Are You Avoiding Blind Spots In Your Supply Chain?

This same KPI success methodology employed by your healthcare organization in other areas of your operations can be applied to supply chain management to avoid blind spots. For you see, with KPIs you are measuring your success versus just setting targets, objectives, or even comparing yourself to peers for even greater success. KPIs can be financial, operational, or functional, and deemed mission critical for your supply chain operations. For instance, on a recent client meeting we were asked to establish “Suture Product KPIs” for their hospital (Figure 1), which resulted in the supply chain and perioperative department being able for the first time to know where they stand on their sutures beyond just price and standardization. This data enabled them to justify a thorough value analysis review to weed out inefficiencies, eliminate waste, and enhance their storage and ordering processes. How else would they know they had over $200K in savings available to them without comparative KPIs?

Refocusing Your Cost Reduction Efforts Could Be Easier and Better Than You Think

Now that your price cost reduction efforts have been stalled due to inflation, stagnation, and vendor push back, saving money is still necessary for your healthcare organization’s survival to continue to reduce your labor and non-labor costs. The only question is how to do it. The answer is always to employ key performance indicators to measure, monitor, and manage your performance. That’s why refocusing your cost reduction efforts could be easier than you think!

FINDING THE NEXT LEVEL OF BIG SAVINGS DOESN

T HAVE TO BE DIFFICULT WITH THE RIGHT SYSTEM TO DO THE HEAVY LIFTING FOR YOU!

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