A Hard Look at Soft Costs: 3 Hidden Ways to Save

As hospitals and health systems look for every opportunity to save, the supply chain is a growing focus and product pricing is a natural target. But beyond these hard costs, there are other savings opportunities that are often overlooked.

These “soft” costs can have a significant impact on both your facility’s bottom line and ability to deliver quality care. What are they—and more importantly, what can supply chain professionals do to reduce them? Here are three soft costs that you can evaluate today.

1. Inefficient supply chain processes

Manual processes for ordering, storing and replenishing supplies are time-consuming and inconsistent causing wasted staff time and money.

According to a 2016 Cardinal Health survey of clinicians, supply chain decision makers and hospital administrators, nearly 20% of a physician and nurse’s work week is spent on supply chain management. 65% of respondents would trade this time to be with their patients.¹

Clinicians performing nonclinical tasks—such as manually counting inventory, locating supplies or monitoring usage and expiration—creates frustration and takes time away from providing patient care.² According to a 2017 Cardinal Health survey, 83% of respondents still rely on manual counting in some part of their supply chain, and 51% complain of too many manual solutions.³

To complicate things further, each staff member may take an individual approach to managing supplies manually. That variability leads to lower productivity and decreased satisfaction, which can cascade into serious consequences such as absenteeism and higher staff turnover. With the nurse shortage approaching one million by 2022,⁴ providers need every opportunity to reverse this staffing trend. When clinicians are able to focus less on supplies and more on patient care, there’s a greater opportunity for satisfaction, as well as increased reimbursement for the facility.⁵

While variation in processes is one cause of inefficiency, variation in supplies is another—as clinicians have to choose from multiple versions of the same item. Combine an overabundance of supplies with a wide range of complex procedures, and the lack of standardization takes up a significant amount of clinicians’ time, energy and attention.

2. Lack of data transparency

Data analytics can help identify key trends and opportunities to reduce variation, improve efficiency and save money. But accessing this data can be difficult if it’s housed in multiple systems. On the other hand, automating data capture and analysis can reduce the time clinicians need to spend restocking unused products, which can improve procedure room turnover time and case throughput.⁶

3. Inaccurate charge capture

A lack of reliable data also prevents facilities from accurately charging for every procedure. In fact, it leads to more than $1.8 billion in revenue leakage, an average of 7% for every facility.⁷ Trying to capture charge data manually only exacerbates the problem by hindering efficiency and making it difficult to optimize workflow. Many providers hire nurses solely to review charts and charges to ensure accuracy. Wouldn’t those resources be better allocated to improving patient care?

Impacts

An inefficient supply chain affects more than staff productivity and satisfaction. It can also harm the reputation of the facility itself. Just as important, searching for missing items may influence the patients’ perception that nurses don’t have enough time for them.⁸ What is the cost of a compromised reputation?

Better supply management leads to better quality of care. Replacing manual with automated processes can reduce supply chain soft costs by generating accurate data that makes the case for standardizing both products and processes. The health of both patient and provider can improve as a result.

¹Cardinal Health Supply Chain Survey, Oct. 19 - Nov. 4, 2016.
²Healthcare Purchasing News.
³Cardinal Health Operating Room Supply Chain Survey, Nov. 2 – 15, 2017.
⁴HIDA 2017 Acute Care Market Report.
⁵Healthcare Purchasing News.
⁶Healthcare Purchasing News.
⁷Global Healthcare Exchange.
⁸Healthcare Purchasing News.