by
Gus Iversen, Editor in Chief | June 01, 2022
From the June 2022 issue of HealthCare Business News magazine
Prodigo also found that less than 45% of supply chain spend flows through items managed in the item master. This means that more than half of a hospital’s supplies expense is actively managed. As a result, less than 65% of purchases are tied to valid, active contracts. And less than 85% of purchased lines had the right contracted price — in fact, nearly 40% of items are being purchased at more than one price.
These trends will continue to negatively impact the bottom line of healthcare without the ability to manage the velocity and volume of supply chain data as well as influence end-user buying behavior to bring more spend under supply chain control.
HCB News: Are there challenges for evaluating specific operational performance against broad industry benchmarks?
MD: It’s an interesting question because the challenges result from both internal operating structures and external market factors. We all understand that the average cost of a patient care interaction has been increasing at a rapid rate for the past few years, which is putting pressure on health systems to ensure they are getting accurate reimbursement for services being incurred. Where the clinical enterprise is disconnected from the operational enterprise, it is a challenge aligning operational and financial performance objectives with patient outcome targets. Engagement and alignment with clinical stakeholders are common gaps that supply chain leaders need to fill.
Payer mix, based on the type of care provided as well as whether a patient is insured publicly or privately, or not at all, impacts revenue. So, when you look at broad industry benchmarks, there’s not a standard profile across every patient care episode, so this makes it difficult to compare benchmarks related to costs and reimbursement at an industry level.
At best, benchmarks are guidelines that help us improve decision-making by comparing our results against our peers. However, there are many variables that go into industry results, so we need to be careful how we compare our results against the broader industry.
HCB News: How might a larger IDN use benchmarking differently than a smaller individual hospital?
MD: I think the simple answer is the smaller the hospital, the harder it is for them to allocate dedicated resources to understand where their performance indicators are, relative to the industry. It’s common for a smaller hospital to have antiquated systems, leaving them very little visibility. Larger IDNs have the advantage of being able to invest more resources in people and technology to do the needed analysis, resulting in better information for better decision-making.
