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Finding Deeper Supply-Chain Savings

Rene Letourneau, for HealthLeaders Media, April 11, 2014
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Despite the emphasis on cutting costs, Torres says finding the cheapest product is not MLH's priority.

"The last thing we look at in our supply chain is cost," she says. "We look at safety—both for the patient and employees—and the quality of the product. It's interesting because you can get quality products that are sometimes less expensive and sometimes more expensive, but it all goes back to utilization. If you don't have waste and rework, the more expensive product may be more efficient in the end."

Torres says that because buying a less-expensive product doesn't help the bottom line if more of it has to be used, MLH keeps a close eye on the real cost of every new product to make sure the value is truly there.

"When we implement something new, we monitor it every month. We don't say, 'We are going to change gloves and that is going to save us $100,000,' and then never look at it. We can save money on the cost of something coming through the door, but if we are using five times as much of it because of a lack of quality, we are not saving money."

Data can sway physicians

Like many other provider organizations, MLH sees physician engagement as critical to success when it comes to removing cost from the supply chain. The system has clinician advisory groups in orthopedics and cardiology, two of the areas where the most money is spent on supplies and where some of the biggest opportunities for savings exist, Torres says.

"Year over year, part of that 5% we are taking out of our spend is usually capital equipment, ortho, and cardiology," she says. "We look at those areas every year, and we meet with the clinicians monthly. … We've had an orthopedic advisory group in place for six years, and one in cardiology that involves physicians and nurses who sit in a team atmosphere and talk about where the opportunities are."

It is also very important to be transparent with clinicians about cost containment initiatives and to provide solid data on pricing and outcomes, Torres notes.

"The first thing you go in with is data, but it has to be actionable, and it has to be accurate," she says. "The last thing you want to do is go to a group of physicians with inaccurate data. … Our clinicians don't want to use the most expensive thing. They want to use the product that has the best outcomes for their patients. They might be willing to compromise on some things and not on others."

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