The challenge: My team invested a lot of time and energy in selecting the contract that would save the hospital the most money. Now, am I realizing the savings I thought my organization would get? If not, why?

When you choose a new supplier based on projected savings, your job isn’t done. You have the daunting task of ensuring your organization receives the promised savings. Tracking that, however, is no easy task.

MediClick for Contracts & Analysis (C&A) tracks savings for you.

When you turn a project into a new contract, C&A takes your savings estimate, locks it down, and tracks your actual spending against the target once the new pricing takes effect. At any given time, you can go back to the project and see how you’re trending.

Let’s say you projected saving $200,000 by committing 80 percent market share to a single coronary stent manufacturer. The project is complete, the new terms are active, and C&A has updated the pricing in your ERP system. C&A helps track your savings by:

Auto-Calculating Your Project Savings

Since C&A is integrated with your ERP system, it uses the connector layer to pull item spend related to each project. So each coronary stent purchase on that contract – or another supplier’s stent that the new contract was supposed to replace – is used to calculate actual spend against your estimated $200,000 savings.

Showing Your Savings Trends

C&A shows you exactly how you’re trending against your project estimate. In our coronary stent example, you expected to save $200,000 over the next 12 months. But at the end of month one, you’ve only saved $5,000 on a pro-rated basis. You should have saved more than $16,000.

Not only does C&A shows that you’re behind in savings, it also lets you drill down into the specific items so you can see what’s responsible for the lag. It gives you the information you need to stay on top of your savings while the problem is happening, not when it’s too late to do anything about it.

Avoiding Opportunity Costs

It’s important to get off to a strong start with a project. There is an opportunity cost to missing your targets.  The sooner you know a project is behind, the sooner you can analyze the cause and capture additional opportunities.

Every dollar your people spend buying the more expensive stents from other suppliers, for example, is an example of a lost savings opportunity. This might indicate trouble converting from the old stents to the new. By being aware of it, you can determine whether you need to alter your conversion plan, address any issues with clinical acceptance, prevent rogue buying, enlist the help of department heads, etc.