Utilization Management: If Not Now, When?
I can’t tell you how many times I hear from supply chain professionals who have utilization management on their radar screen, but they have other initiatives they are working on (e.g. new MMIS installation, data cleansing initiative, regional GPO formation, etc.) that are taking precedence. Then six months or a year goes by and these same individuals have found other projects or tasks that are again taking priority again over utilization management. So my question is “if not now, when?
When does it make good sense to save money on the waste and inefficiency in your supply streams that are eating away at your hospital’s profit margins? When is a good time to stop the leaks in your dike that are negating all of the price savings you have been working so hard to achieve? When is it the right time to develop multiple savings sources vs. just one –- price — to guarantee that your well won’t run dry?
One of our clients made this leap forward about three years ago when they decided to make utilization management one of their primary targets for savings each and every year. They are now discovering that their utilization savings are almost equal to their price savings (in the millions) annually. If they would have decided that the timing wasn’t right for this change in “mindset”, a change from price only to utilization, they would have lost this opportunity to increase their savings yield by more than 84%.
Last week, I talked about the advent of Medicare’s “Value-Based Purchasing Perspective Payment System” that is going to wipe out 7.25% of your hospital’s profits over a five year period starting in October of 2012. If you don’t develop new savings sources (e.g. utilization management) how then are you going to meet this new, even bigger, challenge head-on? The question then is not “if” your hospital will attack your utilization misalignments, but “when” There is no other right answer to this question.
Filed Under: savingsblog • Utilization Management
