Why Healthcare Supply Chain Management Is Due for an Overhaul

The healthcare industry is constantly in a state of change. In particular, the shift from service-based to value-based reimbursement puts pressure on healthcare organizations to innovate, increase efficiency, and control costs—all without impacting the quality of care.

One area that can have a big impact on costs and efficiency is supply chain management. According to Premier’s C-Suite Survey, 65 percent of healthcare C-suite leaders intend to increase their efforts to control the cost of care management. The same survey reveals that 53 percent of them will increase their efforts to integrate data from disparate sources and/or make investments in analytics, and 50 percent will increase their efforts to improve interoperability of existing health technology. All of these factors impact operating costs and margins.

Unfortunately, the traditional supply chain process has been painstakingly complex to manage, let alone optimize. While many organizations have made significant strides in improving their day-to-day processes, there are opportunities to create additional savings without compromising quality, particularly in areas around clinical preference items. In most organizations, clinical utilization and supply chain information lives in separate silos with data residing in multiple systems and databases, giving little insight into true supply usage.

Below are three ways healthcare organizations can make strides towards better, more efficient supply chain management.

Improve Technology and Processes

The supply chain process in healthcare is critical to delivering quality patient care. Unfortunately, many healthcare organizations still operate on legacy systems. According to the Cardinal Health Hospital Supply Chain Survey, nearly one-third of respondents haven’t implemented a new inventory management system in at least six years, and another 25 percent don’t know if it’s ever been done. In fact, 78 percent are manually counting inventory in some parts of their supply chain and only 17 percent have implemented an automated technology system to track products and inventory in real time.

Improving supply chain processes will allow clinicians to spend less time looking for and managing inventory, and more time with patients.

Healthcare leaders who want to strategically transform their healthcare organizations need to embrace a system that can track inventory and measure cost performance. And that same system needs to be able to adapt and recommend opportunities for additional optimization and cost reduction. The right solution should be able to combine procurement, inventory, financials, human capital management, planning, and analytics in a single system to provide an automated and seamless process for purchasing, tracking, and replenishing the items and services you need to support patient care.

Encourage Organization-Wide Collaboration

The supply chain touches almost every department within a healthcare organization, and almost every employee interacts with the supply chain in some way. Improving supply chain processes will allow clinicians to spend less time looking for and managing inventory, and more time with patients.

Aside from just revamping the supply chain process, healthcare leaders need to build a culture around cost savings, aligning all staff and stakeholders towards the same goals. Most healthcare providers have already embraced the concept of clinical value analysis or standardization committees to review how each patient interaction is delivered, to determine the ideal way to provide care with the right balance of outcomes, quality, and cost. Supply chain leaders play a key role in providing details on what products are being utilized, how much they cost, and suitable alternatives.

The systems used for supply chain management today are often built on old, inflexible technology that cannot link directly to critical applications necessary for full visibility and informed decision-making.

As supply chain management shifts to more strategic initiatives such as cost analysis, the skillset required of supply chain professionals is changing as well. Both analytical and collaborative skills become more critical for supply chain staff, particularly as they play a lead role in driving standardization. Using technology to support the full hire-to-retire lifecycle of the workforce allows organizations to recruit and retain the right talent—individuals who drive the operational objectives that support care quality and outcomes.

Unify Data for Standardization

As healthcare supply chain departments focus more on value analysis and category management, analytics and access to data are critical to success. The systems used for supply chain management today are often built on old, inflexible technology that cannot link directly to the financial, planning, HR, analytics, and other critical applications necessary for full visibility and informed decision-making. Healthcare organizations adopting a strategic, analytical approach to supply chain management need a standardized system that combines procurement, inventory, and financials, and complements that with clinical utilization data to understand what is being used and what it costs. Most importantly, the approach needs to be repeatable, to allow for more categories to be analyzed and to track results.

With the right strategy and technology to support it, you can transform your supply chain process into an efficient, informed, and cost-containing operation that helps deliver care while supporting the business. That way, as the industry evolves, your healthcare organization can evolve with it.