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January 4, 2011

Mind Your Cs: Materials Standardization 101

Materials cost savings has proven to be a delicate proposition.  The need to meet or exceed long-term goals must balance with the handling of short-term problems.  As much as 40% of a hospital's budget goes to OR expenses, specifically, the cost of medical and surgical supplies.  Poorly managed materials can leave a significant impact on the budget.

To start identifying potential savings opportunities in your facility, remember the four C's: Classify, Create, Calculate, and Capture.
Classify Areas of Opportunity
In order to quickly have an effect on savings in your department, you need to first identify major areas of opportunity.  Begin by looking at large expense categories and work your way down.

Create Internal Value & Physician Buy-In
Creating internal value and fostering end user (physician) buy-in is crucial for any cost savings initiative.  To facilitate participation in implementation, it is important to engage all major stakeholders in the cost-savings process.

Calculate Potential Savings
Use internal and/or external resources to verify current usage and spending by category.  Begin discussion with and collect proposals from current and prospective vendors.  The next step will be to identify potential scenarios and quantify the potential financial impact of each and present the information to decision makers.

Capture Savings
Once you and your administrative team have decided to go forward with a materials cost savings initiative and have established internal buy-in, take advantage of the momentum and move forward with implementation as quickly as possible.  A longer wait increases the chance that the internal buy-in will diminish and resistance will increase.

For more information, read Materials Standardization 101, the third edition of Soyring's biweekly web column Dollars & Sense. 

If you missed any previous articles, be sure to check out the Dollars & Sense Archives for strategies and tips on how you can help your organization survive in the healthcare industry.

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