If you know much about MediClick, you know that our company's slogan, Take Control, effectively represents what our products do for our customers. For me, on a personal level, Take Control also has another meaning.
Twelve years ago, at the age of 41, a routine physical revealed that I was diabetic. The diagnosis was, and still is, pretty simple: if your fasting blood glucose level is over 140, you're diabetic. In those days any adult (a category that I qualified for solely by virtue of my age) diagnosed with diabetes was automatically categorized as a Type II diabetic. Only later was my diagnosis correctly changed to Type I.
My experience with taking control of diabetes, while personal, does have a strong parallel with our use of the slogan in MediClick's software solutions. The parallel brings up some thought provoking points regarding healthcare supply management.
Before I go there, though, I hope you will indulge me in a brief story of my diabetes odyssey, at least the first leg of the trip. I also have found that many folks aren't very familiar with diabetes, even though it has become an epidemic in the US, and virtually everyone knows someone who has it. So I threw in a little education as well, which I hope you find interesting.
Unlike Type II, Type I diabetes is an auto-immune disease, which means that something, likely a genetic anomaly, mistakenly tells your immune system to kill off insulin-producing beta cells in the pancreas. Insulin, when secreted into the bloodstream, enables the body's cells to absorb glucose – the most basic form of the food we eat. Yes, think of glucose as "cell food." Without cell food your body begins to starve. Not good.
Early symptoms, sometimes realized only in retrospect, include weight loss (duh), energy loss, and frequent urination. Without insulin the glucose stays in your bloodstream until filtered out by the kidneys and sent downstream, so to speak.
Over time, the high levels of glucose in your blood cause the BIG problems, including blindness, kidney failure, and heart disease. When I learned I had diabetes, I felt like a "why me" victim. I didn't go into denial, but I certainly did not face up to my new reality and take control.
Even after tests indicated that my body was producing very little insulin, I tried to control my new illness by taking oral medications and lowering my carbohydrate intake. While this regimen often works for the Type II diabetic, it is completely ineffective for Type I. For Type I diabetes there is one treatment and only one: insulin injections. Even so, I persisted in avoiding or delaying the dreaded shots. I didn't take control.
Ultimately, I realized I needed to make a change. Although initially traumatic, it really only took a week or so of 6-8 finger pricks and 4-5 insulin shots per day to become fairly routine. And I felt better almost immediately, so I was rewarded for taking control. Good old immediate gratification. Today, healthy and happy at 54, I feel very fortunate that I made the decision to confront my disease and control it, rather than being a victim.
Seeing my diabetes saga as a supply chain allegory isn't so farfetched. Hospitals are facing financial crisis, in part due to causes beyond their control and in many cases due to forces unforeseen. It's unfortunate, even unfair; but the crisis has to be faced, analyzed, managed, and conquered.
Forgive the redundancy from previous blogs, but the healthcare supply chain is a hospital's second largest operational expense; the amount of inefficiency (more kindly put as "the opportunity for savings") is massive; attacking these inefficiencies, i.e. taking control, will put millions of dollars to the bottom line. No revenue strategy can have as profound an effect on profitability and do it so quickly.
After resolving to inject insulin, in two weeks my bench press went up 30% and I gained 15 pounds of good weight; I felt great! Not so different from the endorphins you'll enjoy when you help change your organization's bottom line from red to black.
I believe that taking control of your supply chain boils down to two things. The first is to establish and ensure continual pricing accuracy. The second, joined at the hip with the first, is to employ the processes and disciplines necessary to achieve pricing optimization.
Pricing accuracy establishes your organization as the consistent and reliable source of truth: you have the most current contract price as your item file price, and in turn as your purchase order price. Discrepancies are, by definition, errors of the other party.
Pricing optimization means that you have taken full advantage of every asset available to you – your GPO membership, your spend volumes, your market share commitments, your product standardization projects, your commitment to transparency / empathy with your suppliers, etc., to secure the very best pricing on the products you buy.
Simple to say, tough to do. But I strongly believe – and I have seen compelling evidence – that achieving pricing accuracy and pricing optimization is possible. If you determine to take control, if you allocate and, if necessary, supplement your people resources, and if you have the right software tools at your fingertips, you will do it. The good news is that the opportunities to save are virtually inexhaustible. The other good news is that the savings start quickly and will be augmented with each new step.
A colleague and former vice president of operations at a large IDN recently told me about jump starting his accuracy-optimization mission. He chose for his team a specific target for these new processes, biomedical equipment services, which had an annual spend of $8.4 million. To make a fascinating story very short, within 3 months, the new "take control" disciplines resulted in the reduction of overall annual spend by $1.2 million! Needless to say, the team got fired up, and the CFO and CEO were ardent fans. Your first victory doesn't have to be this dramatic to get the same results. And as recounted by my friend, the first victory leads to a succession of others.
Like beginning a lifelong regimen of insulin shots, taking control of your supply chain pricing is not easy. But it is doable. And increasingly, it is necessary.
Final word, don't forget that the rewards are great, not least among them a profound sense of personal achievement.
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