Having this data helped Alamance Regional Medical Center realize nearly $2 million in savings the first year and nearly $1.3 million has been saved each year for the past three years.
From transactional to strategic
While the immediate savings of a spend analysis are welcome, there’s more that can be done with this data than many healthcare providers may realize—a strategic component. Healthcare executives aren’t inclined to think of supply chain as part of their corporate strategic plan; however, if a facility is considering launching a new service line as part of its strategic plan, then having the current spend for a similar service line is vital.
Hospitals and health systems need to run comparisons on cost and use other transactional spend analysis data to achieve their strategic goals and realize savings from the outset of an initiative. Piedmont Healthcare of Atlanta has, in the past two years, transformed its basic spend analysis into a strategic guide used to help attain top objectives.
Ed Lovern, chief administrative officer, and Joe Colonna, vice president of supply chain for the not-for-profit system, explain that prior to 2008, Piedmont Healthcare’s approach to spend analysis was more episodic than strategic.
“There was a sense with the leadership team that we weren’t getting what we needed out of the supply chain,” says Lovern. “Occasionally they would see data, and it would concern them, but it was tough to reconcile … There was really a sense that we had a lack of ability to manage this area well.”