25 Sep, 2017

How Does Supply Chain Management Play a Role in Healthcare?


The supply chain is extremely important in the healthcare sector because It involves dealing with resources and goods that help providers ultimately deliver patient care to consumers.

“The supply chain represents close to a third of the average hospital’s overall operating expense, and it’s predicted to surpass labor as a hospital’s greatest expense by 2020. Opportunities exist for all organizations, even top performers, to improve supply chain efficiencies while continuing to offer the highest levels of care to the communities we serve.”  Supply chain Digital reports. 

According to a recent report revealed by Healthcare Finance, hospitals are spending way more money than they need to in order to keep up with the supply chain. $10 million a year more, to be exact.

Before we dive into this recent study, first, let’s take a look at what the supply chain does, and why it plays such an important role.

Supply Chain 101

The healthcare supply chain refers to the resources, supplies, goods, and services that go from provider to patient. This can involve any type of medical item that is used by doctors.

If you think about it, providers need a lot of tools to treat patients. We can be talking about anything from medications, to pens and paper. The supply management is how doctors gain access to these tools. It essentially is the reason why providers can do their jobs.

Supply chain management deals with making sure that inventory is stocked and providers have the tools they need. But, that is not all it does. It is the core of the operations. It is making sure that customers are receiving valuable products at a decent cost.

However, managing supply chain can be complex because it involves a variety of different factors.

“To complete the process, physical goods and information about medical products and services usually go through a number of independent stakeholders, including manufacturers, insurance companies, hospitals, providers, group purchasing organizations, and several regulatory agencies.” Revcycle Intelligence reports. 

It all starts with medical product manufacturers, which, you guessed it, deals with items to be produced and sent to be distributed. The products are then sent to the organization in order for patients to receive necessary care from the items.

Providers are always looking for new ways to save money when it comes to the supply chain. According to the study discussed earlier, hospitals can save a lot more money by managing supply chains correctly.

The study surveyed 2,300 hospitals in order to find different ways hospitals can reduce spending on supply chains. The goal was to reduce budgets by $10 million per year, which would result in saving about 18%.

So, how can hospitals achieve this goal?

Use Data & Automation

Data helps leaders make informed and quality decisions. Making the right decisions when it comes to the supply chain can ultimately improve the patient experience and save costs.

“Top performers consistently leverage evidence-based protocols and data analytics to reduce variation in pricing, product use, and clinical outcomes.” Supply chain Digital reports. 

Data can help hospitals put together strategies based on what products were most effective and what weren’t. By looking at history through data patterns, hospitals can put themselves in a position to succeed while managing the supply chain.

Using data and automation also helps with monitoring the supply chain which can result in fewer errors and more success within processes.

Using different technologies like sensors, monitors and other devices can assists providers while using data. They play a large role in the transformation of supply chain management. It can create more organization among managing products, which can save time.

“With more accurate data on hand, pharmaceutical manufacturers can cut their own costs by considering taking advantage of discounted markets or even donating a product. Theoretically, these savings could be passed down the line and reduce wasted spending for the healthcare system as a whole.” Revcycle Intelligence reports.


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