We all talk about healthcare costs. But are we ready to change?

By John Fruend

We recently interviewed several customers, industry thought leaders and John Freund, the CEO of Jump Technologies, to get their opinions on the biggest issue in healthcare. The answer from everyone?  Cost. No surprise on the one hand – from both a business perspective (how much it costs to run a hospital business) and a personal perspective (how much it costs each of us for our healthcare insurance), the cost of healthcare is a topic everyone is ready to discuss.

But the topic that looms large is how we will create change that actually reduces costs.  In a conversation with John Freund, he commented about what JumpTech is doing together with hospitals to help implement cost-reducing strategies:

“Cost is absolutely the number one issue in healthcare. JumpTech has reduced supply chain and inventory costs for customers in a number of industries over the last 15 years, and a few years ago when we looked at healthcare – and talked with some key business leaders – we decided we can help by working with hospitals to drive a lot of cost out of the healthcare system.

“There are a few key cost drivers that could be changed quickly to start creating benefit. First, hospitals are spending too much money on IT. Second – and this one is more challenging – in some areas, hospitals aren’t managing inventory as well as they might.  This isn’t because of a lack of effort, but because of a lack of proper tools.

“So we want to start by asking hospitals to consider the ‘cloud.’ When you look at costs from an IT perspective, there’s a huge amount of money that an IT organization spends managing servers, managing upgrades to software on the servers, paying software vendors for those upgrades, and sometimes paying consultants to come in and manage those large-scale projects. We’ve seen mobile supply chain applications come into a hospital and take thousands of hours of consulting time to get up and running, costing hundreds of thousands of dollars.  But if we look to cloud-based solutions, we’ve seen hospitals get up and running with an inventory management system in a week or two, in some cases even in a few days, depending on the size of the facility and the sophistication of it.

“Next, consider whether you have the proper tools, allowing you to gain visibility to your inventory and take control of it. Holding hospitals back today are often antiquated inventory management processes, based on methods and tools that don’t meet current needs. If a hospital is still experiencing stock-outs, overstocking or haven’t seen a measureable reduction in inventory costs, this is probably true for them. My suggestion to supply chain leaders is to work with clinicians to create the right approach for each given area of the hospital. For example, your ED may need a completely different approach than the OR. Then, make sure the solution you select supports the approach you design and adopt, whether it’s a limited access system using cabinets, PAR-level management, or a 2Bin “grab and go” approach. It’s vitally important the solution you select has reporting tools that go beyond simply offering up data. A smart system provides a rules-based recommendation engine that lets a user input variables into a report and receive recommendations for actions based on the data. Here’s a quick suggestion – look for a system that lets you to enter a time period for velocity, an inventory ordering method, and the desired days of supply and safety stock into an item velocity report. A smart system will recommend new PAR level settings, for example, and allow a user to reset PAR level for one or more products quickly and easily.

“There’s a lot hospitals can do today to reduce costs.  While there are very complex legacy systems in place, and you can make a good start simplifying systems and processes to reduce complexity.  Look at some of the new options available today and take advantage of some of the more agile, cloud-based solutions that offer many of the cost savings and beneficial changes that hospitals are looking for.  Most important – get started. It’s not too late to reduce costs and you can bring better performance and results to your hospital in 2015.”