Healthcare supply chain professionals play a key role in helping organizations achieve not only financial goals but also goals related to the patient experience. Indeed, the supply chain has visibility across healthcare operations and is positioned to drive cost-saving initiatives that also keep the patient experience at top of mind. With that in mind, members of HBI’s Supply Chain Academy have been increasingly requesting research related to supply standardization, which can have financial benefits while also ensuring consistency across the organization.
That is the background behind HBI’s latest best practice report, Collaborating to Standardize Products and Reduce Variation, available online here for HBI members. This report reflects the fact that many organizations are applying standardization strategies since supply spend represents some of the highest costs of providing care. Not only is standardization financially beneficial, but it can also help provide clarity into how supply choice can impact patient outcomes. The following are highlights of the tactics explored in HBI’s report.
Reframing the Dialogue Between Supply Chain and Clinicians
To go after bigger savings, the supply chain has been putting significant effort into reducing costs for medical devices and physician preference items. This has proven difficult in some cases since historically clinicians have had complete control over which items they use and may push back when they believe their choices are being limited.
HBI has seen that organizations have had success in preventing this pushback by reframing the relationship between supply chain and clinicians. A first step is recognizing that both parties see patient care as central to their missions. The next step is to change the transactional paradigm in which clinicians order and supply chain fulfills. Instead, supply chain and clinicians must work collaboratively
throughout the procurement process, including value analysis, sourcing and contracting, and performance monitoring.
To understand how this might work in practice, HBI spoke to Gloria Graham, clinical materials specialist at Cincinnati Children’s Hospital Medical Center, who is a registered nurse and doctor of nursing practice. Graham suggests replacing the term “standardization” with “reducing product variation.” “Standardization” can be interpreted to suggest product choices are being made on the sole basis of cost. Also, true standardization is unfeasible but reducing variation is not.
A recent example at Cincinnati Children’s is the successful reduction of variation for nasal cannulas, which were being supplied by several vendors. Because physicians and clinicians are tactile and the feel of a product is important to them, the nasal cannula product options were physically presented to the relevant clinical stakeholders for inspection. During that meeting, the value analysis committee asked about the utilization of products and the similarities between those products. Once the nasal cannula options were narrowed according to clinical measures, the value analysis committee was able to discuss them in terms of cost.
“Justify and Standardize” Report Leads to Savings
When organizations begin looking at product standardization, they will find so many opportunities it is hard to know where to start. When this is the case, it is important to prioritize. Using the right reporting tools is important in terms of determining how to prioritize, and HBI’s research has found examples that supply chain leaders may be interested in using in their organizations.
As part of a product conversion project at Intermountain Healthcare, the team found that 24,000 items in their 100,000–line-item master were unique, meaning they were being used by only one facility or, in some cases, a single clinician. To gain visibility into those 24,000 items, the team developed what they call a “Justify and Standardize” report that is a matrix of which locations are using each item. By looking at that report, it was easy to see the unique items being used at a single location. An example of Intermountain’s Justify and Standardize report is available here for HBI members.
This report, along with other initiatives, helped Intermountain reduce purchase order lines and invoice lines, right-size its inventory, and lower costs based on higher utilization. Intermountain realized $1.5 million in savings, thanks in large part to its standardization initiatives.
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