When the Low Hanging Fruit Has Been Picked, What’s Next? Value!

New reimbursement models have forced hospitals and health systems to go after all of the low hanging expenses they can. But cost-cutting alone—stuff and staff—will not produce the total savings needed. A recent article in HealthLeaders points out that successful healthcare organizations are taking a much closer look at their supply chain in order to create strategic savings opportunities.

In the article, Steve Cashton, director of purchasing and contracting at Boston-based Beth Israel Deaconess Medical Center (BIDMC), a teaching hospital of Harvard Medical School, says, “You really can’t cut your way to success by reducing staff so we started looking at where we can improve our margins with the supply chain.”

In three years, BIDMC has cut about $25 million from its supply-chain spend. They’ve done so by creating six clinical quality value analysis teams in the areas of support services. Cashton notes that while the teams are looking for ways to cut expenses, they are also always concerned about quality. “The reason we called it clinical quality value analysis is we didn’t want it to be a finance-driven process.”

Cashton’s point really resonates. Without a strategic lens, cost savings alone cannot move the needle toward quality care at a lower price. BIDMC has been successful because of their strategy of evaluating quality and value. At MedSpeed we believe that a strategic approach that looks at value delivered is how health systems will find true long-term savings without sacrificing quality.

(Next in “Driving Results,” I’ll look further into this HealthLeaders article focusing on why the cheapest choice is not typically the right one.)

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