You Can’t Manage What You Can’t Measure

According to the 2017 HealthLeaders Media Cost and Revenue Strategies Survey, healthcare executives who embrace determining the true cost of providing care at their organizations find themselves in a better position to offer transparency, which they see as a competitive differentiator.

One of the largest obstacles to revenue growth is our industry’s inability to determine the true cost of care delivery. The HealthLeaders’ survey bears this out. Respondents say that the biggest barrier to achieving sustainable cost reductions is the lack of data on the true cost of care (58%).

This lack of data/insight is something we’ve seen in our own work with organizations on the intra-company logistics front. We get it. The healthcare finance system is not designed to calculate transportation costs. The result: most organizations don’t know the true cost of transporting items throughout their system. Lacking that measurement means they have no way of knowing how to manage those costs or improve their operations.

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New Survey Links Supply Chain Management to Better Quality and Patient Care

Historically, supply chain management has struggled to get the attention it merits. Over the years, it has been increasing in importance and a recent industry survey supports this increased focus.

The survey highlights opportunities for improvement and modernization in supply chain management. Most importantly, in my opinion, it found that outdated and manual healthcare supply chain management processes detract from care delivery. Frontline clinicians said that they spend a full two hours per 12 hour shift managing inventory issues. Nearly two-thirds of those frontline clinicians said they wish they could trade the time they spend managing supply chain for more patient care time.

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What a Waste – Up to $1 Trillion Annually is Wasted in Healthcare

As healthcare reform transitions from an abstract idea to a foregone conclusion, healthcare leaders are focused on uncovering inefficiencies in their systems.  Instead of merely slashing reimbursements or providing less care, we have a clear opportunity to do more — and provide the right care — with less waste and less spending. I recently read Mark Graban and Rob Harding’s article Cut Costs by Reducing Redundant or Inefficient Activity, in Hospitals & Health Networks, and agree with them that there is even more hidden waste to cut.

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