Supplies

From HMCwiki

Supplies are the single fastest growing category of cost excess for hospitals. One of the most substantial obstacles in supply cost improvement is the high number of inter-departmental boundaries that need to be crossed in order to accomplish cost savings. Effective supply chain management is further undermined by physician preference.

There are several primary cost management paths in supply cost management: Improving pricing and managing utilization are the two big ones. Beyond these, traditional materials management techniques for controlling inventory and the cash consumed by supplies is important as well. Key topics for these factors include Vendor Management, Contract Management, Inventory Control.

Pricing

Pricing has been attacked for years by increasing the negotiating leverage of buyers. Consolidation of purchasing through Group Purchasing Organizations is one example of this. Most healthcare organizations have been pursuing this path for a long time, particularly since it is "pain free" in that it does not require layoffs or hard decisions, just collaboration. More subtle forms of improving negotiating leverage are supply standardization and supply capitation.

Utilization

Utilization also has important facets to it as well, including Demand Matching, Contract Management, and Physician Compliance. These involve clinical decision making and, as such, they are process intense and require physician involvement.

Gainsharing

Physician gainsharing refers to sharing cost savings with physicians resulting from improved supply utilization and standardization. Historically, hospitals had been prohibited from gain sharing by Stark Laws. However, in February of 2005, the OIG (Office of Inspector General) approved five gain sharing plans with characteristics of transparency and demonstrated results that certain levels of utilization (number of opened drapes in OR) or product standardization (Stent A vs Stent B) did not adversely impact patient outcomes. However, caution must be exerted when using gain sharing, because even if the OIG approves your gain sharing plan, that does not mean that you won't get sued for violation Stark and other Anti-kickback laws.

Additional information on gain sharing regulations.

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