From the July 2015 issue of HealthCare Business News magazine
To contain supply costs, health systems are increasingly relying on aggressive sourcing tactics to negotiate steep supply discounts.While discounts can have a big impact, they are moot if the terms of the contract are not met. According to MedAssets, even the most efficient health systems have contract compliance rates of only 67 percent.
For that reason, increasing contract compliance rates is among the most significant ways health systems can contain costs and improve control over the supply chain. The average IDN is leaving millions of dollars in volume discounts and rebates on the table due to lack of contract compliance. Disparate data and manual methods have historically made it difficult for health systems to effectively manage compliance, but technology is improving and times have changed, and turning negotiated discounts into actual savings has gotten easier.
If you’re still feeling overwhelmed by the idea of tackling poor compliance rates, here are six reasons why now is the time for health system leaders to jump in with both feet.
1. Your Data Doesn’t Have to be Perfect
A common complaint or excuse is that the process of cleansing content in order to properly manage compliance is daunting and will take too long. It’s a valid concern. GS1 reports that the health care supply chain spends 24 to 30 percent of administration time every day on data cleansing and corrections. But there’s good news. Data doesn’t have to be perfectly clean and normalized on day one to implement a new content management system that will help you better manage compliance. There are technologies available today with advanced/ enhanced search capabilities that can compensate for imperfections. These content management technologies will allow your requestors to find products at compliant prices upon integration, despite poor data.
2. Realize Big Returns
An effective content management system will quickly pay for itself. Some health systems can save as much as 12 percent on supplies – equating to millions of dollars – by improving contract compliance. Look for tools that allow you to influence compliant purchases at the point of sale. That means requestors will only see contracted items when they go to make a purchase. Another thing that will impact your ROI is the user experience with your e-procurement system. If your system isn’t user friendly, people won’t use it and you won’t make much progress in improving your compliance rates. Features like effective search capabilities, product photos and robust product descriptions are key.
