At the Margins

Three assumptions that blind you to savings opportunities in clinical supply spend


Even if you excel at cost management, there’s still room for improvement. Hospitals getting top-quartile pricing can find additional savings of 12-22%—but they must do so without hurting clinical quality, physician satisfaction, or long-term savings potential.

Only physicians and suppliers know how to make just the right changes, but are you asking them to help you find the biggest opportunities or just assuming?


We’ve identified three insidious assumptions that can obscure a complete view of potential improvement.



1. Assuming you know what suppliers can offer

Ineffective savings strategies force hospitals to guess at suppliers’ best offers. A capitated price is a guess-at-the-best; an untested decision to move to a dual- or single-source scenario is another. 

Our members have invalidated these guesses by finding another 12% savings below a capitated price or by boosting savings as suppliers are added to the award. Suppliers continue to surprise our members with their creative offers—offers that you don’t see when you approach them with the presumed solution.

Benchmarks can offer some guidance, but they can’t tell you what your suppliers will offer for your unique requirements and for their unique business case at hand.



2. Assuming you know what your physicians will accept

I often hear: “They’ll never change.” Let's break that sentiment down: instead of a discussion about switching brands for all physicians at once, have a conversation about the changes that an individual physician might consider:

  • Would he or she maintain their insistence on the product attributes that improve patient outcomes? I certainly hope so.
  • Would he or she change suppliers when they have a preference unrelated to patient outcomes? Maybe, when they weigh the cost impact.
  • Would he or she change suppliers when they judge other suppliers’ products and service to be wholly-equivalent? Almost always yes.

Only your physicians can tell you which changes are feasible for each of them. So again, don’t guess.



3. Assuming that you're done when the contract is signed

Up to 40% of predicted savings are lost post-contract, but an even bigger opportunity lurks in your ongoing supplier relationship.

Suppliers are very sensitive to failed commitments on your part, and have told us that they watch their hospital partners closely for clues to the value of their next contract, and even grade hospital partners' performance as customers.

On the positive side, suppliers are also willing to continue to improve value post-contract, making changes to better serve you at lower cost. Don’t overlook these large opportunities for sustainable value creation in strategic partnerships.

Let go of these three assumptions and gain a complete, current, and customized view of the opportunity available to you. It’s bigger than you think.

Reduce Your Clinical Supply Costs

To learn more about how Spend Performance Solutions can help you take advantage of opportunities for clinical supply savings, contact Campbell Robinson at robinsonca@advisory.com.

What is the true value of surgical supplier commitment?

Join us on December 12 to learn why being committed to a single supplier doesn’t always mean better cost and outcomes.

Register for the Webconference



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