Cost-to-Serve: Four Steps to Get Started

• Stacey Breeden, Director, Business Development - Supplier Sales

Most providers and suppliers recognize that Cost-to-Serve in healthcare is high but the day-to-day challenges in supply chain seem so overwhelming, they don’t know how to begin to address them. Here are four key steps from healthcare supply chain leaders to get you started.

1) Identify Your Collaborators 

“Look for those trading partners that are proactive and think outside the box,” said Régine Honoré Villain, Chief Supply Chain Officer at Medical University of South Carolina (MUSC). “Both parties need to be willing to get out of the trenches and push the boundaries of what’s possible. There’s not a lot of trading partners willing to do this today, but you are likely to find a few who are ready to start that dialog."

2) Engage Clinical Staff 

According to Dale Locklair, SVP of the Planning & Facilities Management Group at McLeod Health, supply chain teams have to serve as “good sales people” when working to secure clinical staff support for Cost-to-Serve initiatives, and in communicating how supply chain improvements will benefit the organizations as a whole and ultimately the patients.

3) Start the Conversation 

David Reed, VP Healthcare Business Solutions and VP Operations at Cook Medical, and his team set up a Healthcare Business Solutions team to collaborate with customers on ways to improve efficiency and reduce costs in the supply chain. The team sits down with customers and discusses where in their organizations they need Cook’s products and what are the optimal ordering frequency and inventory levels to meet clinician needs without adding unnecessary costs or generating waste.

 4) Build Trust 

“Suppliers need us in order to sell their products and we as healthcare providers need their products in order to care for our patients, so there’s opportunity and risk on both sides,” said Villain. “Once we get that established, let’s agree to have a frank and open conversation around how we are making life more difficult than it needs to be, with the understanding that we will support one another."

For more insights and tips on reducing Cost-to-Serve, read the GHX white paper: Reducing Cost-to-Serve in Healthcare 

Stacey Breeden

Director, Business Development - Supplier Sales