Hospitals could save $25.4B annually in supply chain costs, study finds

Hospitals cumulatively spend $25.4 billion more than necessary each year on supply chain expenses, according to a Navigant study.

The study of 2,300 U.S. hospitals found facilities could save an average of 17.7 percent or $11 million annually per hospital on supply chain products and related operations, processes and procedures if they performed in the top 25 percent of hospitals nationwide for supply chain budget efficiency. This represents an opportunity for hospitals to cumulatively save $25.4 billion each year, up 10 percent from $23 billion in 2017.

The study also found that lower supply spending is not associated with lower quality at the top hospitals for supply chain budget efficiency.

Top hospitals for supply chain budget efficiency saw an average performance score of 5.3 for hospital-acquired conditions in 2018. That compares to 5.5 for all other hospitals, which means there were more hospital-acquired conditions at these facilities.

The average value-based purchasing total performance score among top hospitals for supply chain efficiency was 36.8 in 2018, compared to 36.1 for other hospitals. This means top hospitals for supply chain efficiency scored higher for care provided to Medicare patients.

Overall, the study found hospitals have equal savings opportunities in supply chain, regardless of size, location and for-profit or nonprofit status.

"The key takeaway for health system executives is that investments in supply chain management pay off," Kevin Connor, vice president of Supply Chain Management at TriHealth, said in a statement.

Read more about the study here.


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