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Using data analytics to guide purchasing decisions

November 24, 2020
From the November 2020 issue of HealthCare Business News magazine

By Valerie Dimond

Standardizing products and services, improving efficiencies, and reducing costs are common goals among healthcare organizations, yet getting there appears somewhat slow, with unnecessary hospital supply chain spending accounting for almost $26 billion a year, according to a 2019 Guidehouse analysis of more than 2,100 hospitals — a near 12% increase from 2017.


To reverse the trend, high-performing supply chains rely on advanced data analytics to generate the variety of robust, accurate data needed to succeed. Even the C-suite is invested, with 73% of those surveyed earlier this year by Sage Growth Partners naming data/analytics as their No. 1 health IT investment over the next one to two years.

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Beyond the item master
Advanced data analytics enables supply chain to transform the item master—that critical composite of factors impacting cost, quality and outcomes—which used to be little more than a perplexing tangle of misinformation, instead of the essential purchasing source it was meant to be.

Ian O’Malley
“Having an item master that has incorrect units of measure can wreak havoc on a team trying to run utilization reports or spend analysis,” said Ian O’Malley, director of strategic sourcing at University of Chicago Medicine (UChicago Medicine), whose department eventually implemented an advanced analytics tool from Vizient. “If we look back prior to this item master cleanse, it’s almost disingenuous to call what we were able to do true analytics. In most cases we were able to do just spend analysis by manufacturer and cost center. Without [analytics], a suture used in a case can come across as box costs and skew the data, making it untrustworthy. The issues continue downstream and also affect revenue cycle management; so this quickly became an organizational imperative to correct these issues. Once corrected, we could begin to build confidence in the analytics and reporting we desperately needed.”

Another step needed to gain greater visibility was to link the item master to UChicago Medicine’s EMR so that clinical staff could document everything they used during patient care — not just the usual implants and chargeable supplies. “We absolutely had areas that needed more attention than others due to the amount of SKUs being used, which required targeted contracting efforts, but also a reinforcement of existing policies around products being used that aren’t contracted for and loaded in our item master,” said O’Malley, noting that this gave supply chain leverage to take meaningful action.

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