By Tom Fox, Vice President, GE Healthcare Camden Group
Has your hospital or health system struggled to reduce your Non-Labor expenses to meet budget demands? Is your organization finding it difficult to sustain previous expense reduction and find new opportunities? Here are 5 tips to help get your Non-Labor expenses and your supply chain back on budget – and keep it there.
1. Preparation Is Key To Engaging Physicians
If your hospital requires a value-analysis of products and medications used by physicians and other clinicians, it is essential that you engage with them to gain support for supply chain change initiatives. Before meeting with physicians, it is important to be prepared and do your homework. This includes performing a thorough review of relevant literature, researching product information and examining evidence about the impact of new supplies and treatments on the patient. Furthermore, it is essential to engage physicians in discussion to determine the quality of the clinical evidence with a focus on the clinical outcomes. By preparing for your physician meetings and having a plan for an open dialogue, you can make the most of your time with them and in turn, they will be more likely to consider and support initiatives to reduce supply chain inefficiencies and costs.
2. Effectively Communicate Supply Chain Changes
When considering supply chain changes, remember to include all stakeholders in the process. Consider all departments impacted by the potential change and include representation in meetings where changes are proposed. All communication should include information that describes the proposed or effective changes in sufficient detail to ensure clarity. It is also advisable that you include:
1. “before” and “after” scenarios for either product or process changes;
2. a reason for the change;
3. the expected implementation date; and
4. the contact person to call if there is a question.
Taking these steps will support a smooth transition to new products or processes.
Furthermore, it is critical to communicate to users when a product is on “back order” or “out of stock” for any reason. This communication should provide information about the plans to provide an interim substitute as well as expected date for re-stocking of the regular item. By doing so, you can ensure users will be able to accommodate the interim products during the time of a “stock out.”
3. Don’t Assume Supply Chain Parity
With respect to large integrated delivery networks (IDNs), there is a general expectation that standardized supply contract prices are loaded into materials management information systems and followed properly for all locations within a multi-hospital healthcare system. However, a review of these prices across the enterprise will very often identify fairly significant differences in pricing that contractually should not occur. This is particularly prevalent in large IDNs that have gone through recent mergers and acquisitions that required the consolidation of multiple items masters. Identifying these opportunities requires a review of not only prices for each item number at each location across an enterprise, but also conducting a review of the item master to identify duplicate item numbers for the same product. By identifying and resolving these price discrepancies, health systems can gain considerable savings.
4. Battling Extreme Drug Pricing Increases
Hospitals and health systems are experiencing an unprecedented escalation in the cost of older, commonplace drugs with new price increases. In these instances, drug manufacturers are not recouping the research and development cost of bringing a drug to market, but rather capitalizing on drugs that have entrenched use with little or no competition. Therefore, it is important to not accept these price-gouging practices without first exploring every effort to limit the use of these agents only to cases with no viable alternatives and to compound, dispense and administer in dosage forms designed to minimize waste.
Limiting the utilization of these old drugs with the new costly price tags will require the assistance and cooperation of the affected clinical departments. Often the clinicians ordering these agents have no idea that these commonplace drugs are now today’s pharmacy budget busters and educating them on this new reality will likely align them with the goal to seek alternatives when appropriate.
5. Monitor Medication Dosage Guidelines
Hospitals can limit the financial impact of drug price increases by closely monitoring and, when needed, adjusting medication dosage guidelines. In addition to limiting the utilization of medications when possible, the pharmacy department should review the actual dose utilized per case and determine if there is an opportunity to dispense in an amount that will minimize waste. This can be accomplished through internal pharmacy department compounding or through partnerships with custom IV compounding companies or 503B manufacturers.
Mr. Fox is a Vice President with GE Healthcare Camden Group with more than twenty years of experience developing strategic vision with C-Suite executives, physicians, and department leaders to transform how healthcare organizations utilize their non-labor dollars. Mr. Fox works closely with clients across the country reduce non-labor costs and sustain those savings over the long-term. He works closely with clients to identify savings opportunities, obtain stakeholder support, and educate staff on utilization to maximize and sustain the savings. He may be reached at firstname.lastname@example.org.