5 Opportunities to Increase Supply Chain Savings

As the second largest cost for hospitals, supply chain presents significant opportunities for cost savings. Todd Ebert, president and CEO of Amerinet, a group purchasing organization, outlines five strategies for materials managers to get the most value at the lowest price.

1. Think strategically about the supply chain. "The supply chain is and should be a strategic component of the overall strategy of the organization," Mr. Ebert says. Being such a large portion of hospital budgets, materials managers should approach the supply chain's role in ways that support and align with the goals of the larger organization.

Critical questions to help achieve this alignment include asking how the supply chain supports providing quality care and cost reduction, whether new technologies are adoptable to support goals and what the overall image of success looks like. This requires getting all leaders across the organization on board with organizational and supply chain goals.

"[Materials managers] have to get buy-in and support from administration and clinicians," Mr. Ebert says. "What can they do to help their organization achieve their cost reduction goals and their quality goals through an appropriate use of the supply chain?"

2. Challenge the status quo. Hospitals often look inward to find best practices that have been historically implemented in healthcare, but Mr. Ebert says organizations should look to other industries outside of healthcare. "They feel very comfortable with how they have done it [in the past]. We encourage our organizations to look at things differently," Mr. Ebert says.

He suggests looking to industries that have adopted the Toyota Production System or Lean manufacturing, such as automotive, electronics and steel and aluminum manufacturing and distribution. "A number of supply chain leaders now in healthcare have come from industries outside of healthcare. Don't hesitate to look at what the other guys are doing."
3. Think beyond standard products and purchased services. "There are a number of products and purchased services acquired by healthcare organizations that are purchased outside of the supply chain process," Mr. Ebert says. "They don't go through a robust supply chain process." Paying attention to what the GPO has on contract can help materials managers understand what exactly they are paying for instead of simply signing the contract and acquiring the goods. Additionally, there may be beneficial products and services an organization's GPO can provide that are beyond the standard supply chain, including things like IT software, telecommunications services and equipment, temporary employment services, courier services and more.

4. Use available data in decision making. Evaluating purchases and seeing where a hospital may have product duplications comes from good data collection. This is especially applicable to physician preference items. Mr. Ebert says member organizations have seen upwards of 24 percent savings after looking at data benchmarks, crunching the numbers and identifying areas to reduce variability. "Good data drives good decisions," he says.

5. Challenge GPOs and contractors. GPOs provide their services to healthcare organizations, but it's partly up to the organization to hold GPOs accountable in helping achieve cost reduction goals. Organizations should question GPOs and press them to deliver their best strategies.

"We suggest our customers be all over us," Mr. Ebert says. "Help us develop the strategy and give us some responsibility to deliver."

More Articles on Hospital Supply Chain:

11 Ways GPOs Can Help Mitigate Drug Shortages
Navigating the Saline Solution Shortage: 4 Things to Know
How Detergent Pods Can Save Healthcare


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