MINDING THE STORE: Hospital Supply Chain

Transcription

1 Health Care Industry White Paper AUXILIO Solutions Team MINDING THE STORE: Hospital Supply Chain Executives Should Think Print to Drive Down Costs and Inefficiencies October 2012

2 Hospital Supply Chain Leadership and Strategies Drive Savings Today, supply chain leaders are facing unprecedented challenges to reduce costs and improve quality in business processes, product purchases and service contracts. Business is no longer usual in the health care industry. Supply chain leaders are at the strategy table with CEOs, CFOs and CIOs, collaborating on ways to drive out waste and inefficiencies. Increased competition, reduced reimbursements from Medicare and Medicaid and a tepid economy have created and sustained this challenging environment for all health care providers. According to a recent report issued by Standard and Poor, analysts said the health care sector s performance is expected to decline in 2013 and 2014 as the industry continues to face weak demand and pressure on revenue from public and private payers. i As a result, hospitals will be tasked to reduce 15 25% of their operating costs in response to declining reimbursements. To succeed in the new world order of health care, hospital executives must aggressively pursue strategies that minimize costs and streamline operations. Given that the cost of supplies and services is second only to the cost of labor for hospitals and represents around 42% percent of its operating budget ii, reducing supply costs, whether low cost commodity items such as paper or high cost physician preference devices, is a high priority for hospitals and health systems. The average hospital is procuring 20,000 to 30,000 products. Compound that by multiple hospitals in a health system and supply management quickly adds up to a mammoth and costly procurement, workflow and logistical exercise. Hospitals that are focused on driving costs out of the supply chain and keeping them out for sustained savings are shifting their view of supply chain management from transactional to strategic. Supply Chain leaders are clearly raising the bar around overall supply chain performance. However, the reality today is that supply chain/purchasing departments lack the time and resources to analyze and evaluate the entire supply chain. Historically, the responsibility of buying equipment and supplies and dealing with maintenance contracts, including print related devices, service AUXILIO Managed Print Services Page 2

3 and supplies, was left up to individual hospital department personnel who were not likely cognoscente of a hospital s business reduction strategies. Fortunately, supply chain leaders are beginning to redesign these fragmented practices while facing these challenges head on and turning them into significant opportunities to improve performance while reducing costs. One significant target that serves to optimize a hospital s supply chain initiatives and capture savings is reducing all print related expenses. PAPER PREVALENCE IN HOSPITALS Industry analysts concur that unnecessary printing is responsible for millions of dollars in health care waste each and every year. Based on the research of 35 U.S. hospitals of varying in size (between 500 beds and 3,300 beds), the total volume over one year will add up to approximately 916 million images either copied, printed, faxed or scanned. iii If all the spending on every document t made is rolled up, the total annual expense is likely to be in the seven digit range. As a result, Print Management is more frequently identified as the low hanging fruit to reduce paper volume and therefore costs, and is a growing source of opportunity for supply chain leaders to investigate. THOUGHT LEADING HOSPITALS TURN TO MANAGED PRINT SERVICES Take a moment to reflect upon your own hospital s print environment, which includes the production of all document images either by printing, copying, scanning or faxing. If you answer yes to any of the following five simple questions, there is a significant savings opportunity waiting to be realized: 1. My hospital has outdated and malfunctioning print equipment occupying valuable space 2. My hospital has highly paid IT staff performing print device break/fix 3. My hospital has no centralized print infrastructure cost center 4. My hospital deals with multiple print equipment vendors 5. My hospital s cost of document production is unknown 6. My hospital does not have a strategy in place for reducing overall volume AUXILIO Managed Print Services Page 3

4 Due to the fragmented approach to this spend category, many hospitals have trouble documenting the total number of print devices in their entire fleet, their location, maintenance schedules, contracts, operating costs, or volume of paper produced. Moreover, the majority of hospitals cannot and do not effectively track the periodic costs of their document output. In this day and age, forward thinking hospitals are adopting Managed Print Services (MPS) programs, which is a proven effective strategy to streamline a hospital s print environment in order to control costs, maximize efficiencies, reduce volume and integrate technology and devices to ensure maximum interoperability. MANUFACTURER NEUTRAL MPS HAS ALL THE BENEFITS AND THENSOME The growing trend of MPS as an important strategy for supply chain leaders comes as no surprise as its fundamental priority is to maintain control of all equipment, supplies, services and costs of the process of producing a document. A MPS provider that is manufacturer independent provides all this value and goes a step beyond as it has the power to negotiate contracts based on the precise needs of the hospital, without any equipment or vendor bias. Moreover, the burden of buying or leasing the equipment for a hospital falls into the hands of the MPS provider, not the care organization. In addition, the experienced MPS provider will utilize its purchasing power to negotiate the contracts that are in the best interest of the hospital. Finally, through customized, streamlined and seamless integration of services at predictable fixed rates, a pure play MPS company will assume all expenses related to the production of a document including services, supplies, equipment, finance charges and labor, meaning one invoice as opposed to hundreds. This, in turn, saves hospitals and hospital systems millions of dollars over the term of its contract. AUXILIO Managed Print Services Page 4

5 As purchasing practices at hospitals and health systems continue to evolve, the supply chain continues to be a target for large non labor cost savings. Try as they might, healthcare organizations are awash in printed documents such as clinical forms, training materials, educational pamphlets, procedural guidelines, dietary instructions, physician directories, regulatory and legal output, patient discharge documents, etc. Actively managing this printed volume of documents through a vendor independent MPS program can reduce spending by upwards of 30%, improve operational efficiencies and lead to overall improved business health for your health care organization. Simon Vermooten, MBA Six Sigma Business Process Professional Executive Vice President of Solutions svermooten@auxilioinc.com Mr. Vermooten has over 25 years of experience in key positions with global copy and print manufacturers and service companies. He has an MBA in Global Management. AUXILIO, Inc. Corporate Headquarters La Alameda Suite 100 Mission Viejo, CA Phone: Fax: i Evans, Melanie (August 17, 2012). Not for profits 'stable' despite tough times, S&P says. Modern Healthcare. ii Guerin Calvert, Margaret E and Israilevich, Guillermo (March 2011). Assessment of Cost Trends and Price Differences for U.S. Hospitals. Compass Lexecon. iii Persistent Paper: The Myth of Going Paperless AMIA All rights reserved. AUXILIO Managed Print Services Page 5