Supply chain costing US hospitals
A new study from consulting firm Navigant has found that US hospitals are spending $25.4 billion more than they should on the supply chain in 2018 – a 10.2% increase on 2017’s figure.
The firm examined 2,300 hospitals, finding that on average this works out at $11 million per hospital. Navigant says that, for this money, a hospital could pay the salaries of 160 registered nurses or 42 primary care physicians. They could even build two outpatient surgery centres with the money.
“Even with ongoing efforts to improve supply chain processes and product use, we aren’t seeing the needle move in the right direction as significant savings opportunities remain for many hospitals and health systems,” said Rob Austin, Director at Navigant. “At a time when operating margins continue to decline, we have found that hospital leadership not fully investing in their supply chain are missing chances to optimize the financial potential of their organisations.”
Navigant believes that hospitals should aim to focus on reducing pricing variations and the use of certain drugs in order to reduce supply chain costs. It believes that organisations need to not only implement actionable data to compare costs to patient outcomes, but also have the staff on hand to interpret this data.
High-performing supply chain departments were ones that enhanced collaboration between physicians, nurses, and other clinicians with supply chain, finance, and IT departments, as well as with the suppliers themselves.
“The key takeaway for health system executives is that investments in supply chain management pay off,” said Kevin Connor, Vice-President of Supply Chain Management at TriHealth. “Those systems with the highest-performing supply chains are combining data analytics, collaborative clinician engagement, and deep subject matter expertise to drive care delivery improvements to the benefit of the communities they serve.”