For the past several years as advisors to hospitals we have had many discussions on the topic of product standardization in healthcare. Through these discussions we have heard wide ranging views on this from physicians, nurses, clinical support staff, supply chain managers, financial, and other administrative leaders. For many, this issue of standardization becomes a lightning rod for energized debate about the merits and wisdom of controlling medical practice and the necessity of tightly managing medical expenses. However, we have realized a crucial point. The term ‘standardization’ has different meanings to different people.
Within the healthcare supply chain management field, we often use the term ‘product standardization’ when we actually mean ‘product rationalization’. Rationalization is the process of limiting the number of products that are used in order to focus more on the products that deliver the most value. This is an important endeavor designed to maximize the value from the choice and use of medical products. Yet in some organizations, the product standardization process is simply endorsing the use of a particular product within the healthcare system based on its market suitability – and doing nothing to limit product proliferation. And it is not “merely” about limiting SKUs – but about supplier base reduction, operational efficiencies, and trust gained as we limit the number of companies with which we do business.
Product standardization is simply the process of developing and implementing acceptability standards based on the consensus of all stakeholders. Ultimately, it is the test of market suitability for a product. We have many examples of such usage of standardization including the infamous, “Good Housekeeping Seal of Approval”. This just means that a product is technically acceptable for use as intended. The FDA does this; medical professional associations do this; as do manufacturers.
But what is more important is the effort to manage the proliferation of similar products that may yield varying medical outcomes. Endemic in medicine, however, is the acceptance of a clinician’s personal preference for a particular product (and manufacturer) that may differ from the consensus of his or her colleagues. Too often such preference, while not justified, is tolerated. Supply chain managers point out that such proliferation leads to quality issues. Excessive products in use lead to:
- added complexity in supply chain and clinical services,
- more product use errors,
- reduced contract leverage
- reduced service levels from suppliers
- additional cost for sourcing, ordering, and storing.
Through the efforts of value analysis teams and other similar programs, leading hospital systems limit product proliferation.
Some thoughts for you to consider – Make sure that your efforts in this area are not simply product standardization but extend to product rationalization. Find out what type of standardization your hospital practices – simple or rationalization? Consider what you can do to improve healthcare quality through product rationalization. Take a look at how the industry leaders are managing this. Examine how you can adopt these best practices.