Benefits of Market Baskets for Tracking Product Pricing & Monitoring Spend
Cloe Talamini – Senior Healthcare Business Analyst, Pharmacy Specialist, BroadJump
As a supply chain professional, you’re always looking for new ways to monitor and control spend – from bundled pricing to product changes and more – but these tactics can be difficult to control and frustrating for the physicians and pharmacy teams that are partial to certain items. Rather than switching products, why not take control over the products your team is already purchasing?
This is where the term market basket comes in. Generally speaking, a market basket is a fixed list of items, in given proportions, used to track the progress of inflation in an economy or specific market. In the world of healthcare, market baskets can be used to group items with similar characteristics – whether that be your top spend items, products related to a particular procedure, products used in a specific department, items purchased from a certain manufacturer, or any combination you choose. When market baskets are created with spend analytics tools that compare pricing against your peers, you get a clear view into how pricing for these particular products is performing. Plus, this is an easy way to quickly monitor the categories that are important to your facility.
Track multiple items, over multiple categories, from multiple manufacturers
The beauty of market baskets is the ability to group and track products based on any categorization you please. This means you can group multiple items over different categories and manufacturers to oversee all of your top items at once. For example, if you wanted to monitor items related to Cardiac Resynchronization Therapy (CRT/CRM), you could add all products related to this therapy and label your basket ‘CRT’ to easily access later on. You can also group items together by the products used in common ICD-10 or diagnosis-related group (DRG) procedure codes. If you want to monitor all of your orthopedic materials, or break them down by joint – knees, shoulders, spine, ankles, wrists – you can do that, too.
This kind of flexibility enables you to identify all available savings opportunities across every aspect of your spend. To get the most from your basket, you should utilize spend analytics applications that take your information and compare it to pricing amongst your peers. Applications that show exact pricing, including the minimum, average and maximum price by unit of measure offer complete visibility into the market and necessary leverage when negotiating with suppliers. This kind of insight allows you to see exactly how your most important purchases are performing. Once your market basket is created, you can save these templates to easily and quickly look back on your baskets on a daily, weekly, or monthly basis – whatever schedule best suits your needs.
You can also use market basket groupings to monitor different departments of your organization. Let’s say you want to track spend for items specific to your operating room. The items used in the OR can vary greatly from the items used in the emergency room. Market baskets can help you easily identify how these products are impacting your overall spend, and break that down by the different areas that make up your health system.
Beyond Medical/Surgical – Into Pharmacy
The use of market baskets also extends further than your medical-surgical items and into your pharmacy supply chain. Creating a market basket for the pharmaceutical side of your organization allows you to monitor your facility’s standard formulary, the predetermined list of medications clinicians can prescribe to their patients.
Market baskets are beneficial in the pharmaceutical area in two crucial ways: limiting waste and monitoring drug price. Monitoring your healthcare organization’s standard formulary can limit or reduce waste by identifying and helping you manage extra inventory, therefore saving you money. You can also use market baskets to oversee your formulary to discover savings opportunities or monitor price inflation. This allows you to track price changes to determine if you need to switch manufacturers. For example, you can monitor your high-dollar items, like chemotherapy-related drugs on your GPO contract. You can also create baskets to track generic antibiotic trends, to compare IV solutions by manufacturers, or to monitor and segment drop ship-only item opportunities in the market. With constant drug shortages, volatile pricing and changing formularies, the pharmacy supply chain is difficult to manage – but compiling the data you need to make informed decisions into one place can alleviate your workload.
Market baskets are an easy way to simplify your expense management and always stay on top of your spend. Additionally, market baskets are helpful when you’re preparing to place a new order, so you know what fair, competitive pricing is for the products you need. Whether you’re tracking medical-surgical items for a common procedure, general expense for a department or high-spend drugs, market baskets make it easy to track the information you want to see in one place. When combined with market-based spend analytics, these groupings are also a valuable tool for showing your suppliers what you should be paying for your products.