By maximizing the capabilities of supply chain resources, hospitals and health systems are better positioned to advance the quality of care, while containing costs. To make the most of your supply chain’s strategic potential, start by focusing on these three areas of opportunity.
1. Logistics solutions
Healthcare mergers and acquisitions continue at record speed, and a significant consequence is growing complexity as a wide variety of individual sites of care consolidate under a single IDN umbrella. To help address some of the challenge, many IDNs have centralized their freight spend, a practice that has proven to cut overhead expenses in half and reduce total operating costs by 5 to 10%.1
Just as health systems are doing with other expenses, centralizing freight purchasing only makes sense:
- Total visibility across your entire spend: using comprehensive data analytics to create deep insights into every way you ship: inbound, outbound, large freight and same-day couriers.
- Control over every shipment: 1) put centralized processes and systems in place to drive program compliance; 2) use mode optimization to select the best delivery option for each shipment and 3) streamline delivery routes to avoid duplicating efforts and optimize the use of both time and resources.
- New efficiency and savings: The more deliveries you manage inside your freight management program, the more opportunities you have to save. Remember, negotiating good rates from carriers alone won’t optimize savings if there are hidden gaps in your cost containment strategy. Centralizing your freight spend can uncover and close these gaps.
2. Procedural kitting solutions
As the drive for value-based care continues, hospitals and health systems are looking for proven best practices to improve clinical outcomes, enhance safety and control costs. One proven strategy is product standardization, which yields new efficiencies as well as cost savings.
For example, using common products and components in surgical kits empowers the provider to leverage volume purchasing power and potentially earn more advantageous rebate tiers. Standardization also decreases SKU count, minimizes waste and reduces inventory on the shelf.
Based on the proven best practices followed by many healthcare providers across the country, take these three steps to establish your own standardization strategy:
- Set your formulary: Use distribution purchase data to identify common products for standardizing across your hospital or health system.
- Update your preference cards: They need continual maintenance as physicians enter and leave your facility. Which products are needed for a given procedure, based on matching physician preference to your formulary?
- Build custom surgical packs: How many items from your preference card can you build into your pack? The aim is to include as many as possible, to minimize the need to pull items off the shelf.
3. Inventory management solutions
An optimized supply chain can drive more effective patient care at the lowest operational cost. Clinicians and supply chain professionals alike gain the freedom to focus on what matters most: putting patients first, increasing efficiency and gaining new insights to enhance processes and ultimately, the patient experience.
The key is data-driven automated inventory management, which helps ensure the right products are in the right place at the right time, while keeping unwanted products away from patients. This approach can help you avoid unnecessary supply costs in several ways:
- Eliminate excess inventory
- Avoid product expirations
- Improve charge capture
- Minimize clinical labor allocation for supply management
- Reveal hidden purchasing opportunities
- Prevent excessive freight spend
Supply chain can take an even greater role in helping hospitals and health systems achieve their strategic cost and quality goals. These three strategies can help supply chain professionals lead the way.
To optimize your supply chain, explore these resources, insights and services.
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1Charles River Associates. “Hospital Merger Benefits: Views from Hospital Leaders and Econometric Analysis.” 2017.