The business of health care is going through a dramatic transformation. In just the past three years, hospital costs have outpaced revenues by 3%, and operating margins have decreased by 39% from 2015-2017. Something has to change, and as the second largest expense area in most hospitals, supply chain is a prime candidate.

The good news is, realizing savings from hospital supply chain doesn’t have to be painful. According to Navigant, hospitals can save an estimated $25 billion —about 18% per facility — simply by standardizing products and clinical practices. So, how do hospitals make changes that matter? In a word, data. Accurate, actionable analytics are the key to many of the most important changes necessary to build an efficient, effective supply chain.

Automate activity: There’s a lot of manual work in an ER. Nurses spend as much as three hours of their shift entering serial numbers and expiration dates. That paperwork takes time away from patient care, and it still doesn’t always capture charges or note whether products are expired or under recall. A system that allows nurses to simply scan products — including trunk and consignment stock — as they arrive in the OR eliminates tedious paperwork, improves documentation, and allows hospitals to capture the approximately 30% of charges they currently miss.

Reduce variances: You probably wouldn’t buy a different brand of soap or toothpaste for every member of your family, yet hospital supply rooms are filled with multiple varieties of a single product. That lack of standardization leads to waste, and waste costs hospitals money. Reducing those variances requires data that helps you understand who’s using what. Once hospitals have a clear picture of how products are used, they can start to standardize supply utilization and orders, and reduce costs.

Reduce reliance on preference cards: Preference cards are a significant source of product variance in operating and procedure rooms. Clinicians set preferences based on past experience or worst-case scenarios, but the results don’t always match up with what’s  actually used during a given procedure. With the right supply chain solution, hospitals can ge a comprehensive picture of actual item use by clinician, by procedure, and by department. That data can help make preference cards more accurate, or even eliminate the need for them altogether.

Eliminate the data divide: One of the most important steps in making supply chain changes is getting everyone on board. Supply chain staff and clinicians each typically have their own ideas about what should be ordered, how much, and when. Those ideas are rarely based on hard statistics, though, and the gap between what each side believes is necessary is what we call the data divide. The only way to bridge that divide is with actionable analytics. When everybody has data they can believe in, hospitals can base supply decisions on actual use.

When hospitals take control of their supply chain, the changes can be dramatic. Hospitals improve margins and comply better with contracts; vendors get paid faster and avoid conflicts with hospitals; and patients experience better outcomes.  Changes like that will be increasingly necessary as healthcare continues to evolve.

For more information about this article, email sheintze@jumptech.com.