From tackling product back orders to streamlining inventory management, health systems are taking targeted steps to resolve key supply chain bottlenecks.
Below are responses from seven supply chain leaders who were asked: What is one specific bottleneck your health system has addressed in supply chain operations over the past year and what measurable impact has it had?
Jim Francis. Chair of Supply Chain Management at Mayo Clinic (Rochester, Minn.): Post-COVID the industry continues to experience significant supply disruptions with back orders complicated by allocations placed by suppliers/distributors. The disruptions are a barrier to the provision of safe, high quality and efficient patient care. Significant additional resources (FTEs and financial) are required to manage the volumes and impact. The industry lacks technology to enable greater visibility to manage and remove these bottlenecks. Mayo Clinic supply chain management is collaborating with Concordance Healthcare to develop Surgence into a tool that enables greater provider supplier collaboration leading to continuous planning, forecasting and replenishment.
Sharon Fried. Vice President of Supply Chain at Hartford (Conn.) Healthcare: Expense management is a critical focus for Hartford HealthCare and our supply chain. All eyes are focused on material and supply shortages, as well as logistical expenses and managing all non-labor expenses in the organization while creating sustainable strategies. Under our clinical care redesign strategy, we created teams focused on transformation, utilization and standardization in partnership with our institutes and service lines.
Joshua Grulke. System Director for Supply Chain Operations at Allina Health (Minneapolis): In late 2023, product back orders continued to negatively impact most healthcare supply chains across the country. Allina Health’s supply chain team proactively addressed this challenge by using our Enterprise Resource Planning software’s “auto-substitute” process. While this worked in the short term, the organization desired a more robust approach for substituting alternative products.
In 2024, Allina Health enhanced two objectives within its supply chain resiliency program: 1) increase the percentage of our item master (list of all products) with pre-identified and clinically approved substitutes from 68% to 75%, and 2) double our auto-substitution product list from 700 to 1,400.
By March 2025, we had surpassed our objectives. We identified at least one product substitute for nearly 87% of our item master and reached nearly 1,600 items available for auto-substitution. Additionally, in early 2025, more than 19% of our requisition lines (a purchase order request) for goods procurement were able to be auto-substituted, thereby ensuring continuity of care for our patients. Completing this critical work allowed Allina Health to mitigate hundreds of daily back-ordered items, supporting our care teams as they provide expert patient care.
Cindy Gueltzow. Vice President of Supply Chain Services at Baptist Health System (Louisville, Ky.): Historically, healthcare facilities struggle to get capital funding to replace equipment that has reached its useful life. Most funding supports strategic growth, acquisitions and break/fix requests. There is a significant lack of planning to maintain “workhorse” equipment used every day to care for patients. (Beds, nurse call, anesthesia machines, ultrasounds, injectors, etc.)
- Prioritizing strategic growth without upgrading current equipment places even more stress on the existing equipment — resulting in more service failures.
- Acquiring more physician practices without upgrading current equipment will result in new physicians to request additional equipment — increasing costs of capital and service.
- Lead times on capital equipment can be quite long. Replacing capital equipment when it is broken beyond repair will result in revenue reductions, rescheduling of procedures/studies. Ultimately a patient may choose another healthcare provider for the care they require, which could be a permanent loss of revenue.
Supply chain developed a capital reserve budgeting process with long-ranging planning for five years for key revenue generating areas of service within the health system. This program has been in place for four years and has systematically replaced over $350 million in capital equipment. The committee members that create the long-range plan include an executive sponsor (executive leader), subject matter experts from each facility, cybersecurity, business continuity, IT, biomed and supply chain. All meetings are facilitated by supply chain leadership and data is managed by supply chain analysts. Utilization of modalities as well as cyber/business continuity risks are taken into consideration for prioritization. Proposed 36-month plans are approved by multiple executive committees as well as the chief operating officer and chief financial officer.
David Hamlet. Division Director of Supply Chain Operations at Sutter Health (Sacramento, Calif.):
- Enabling GTIN barcode scanning removed a barrier to supply and implant charting in Sutter’s interventional departments. It is no exaggeration to say that it changed the culture around this activity. Before, a busy nurse might search manually in the system for an item not already on a preference card, guess at the correct match, and potentially give up in frustration if a matching ERP item number didn’t pop up immediately. Within six months of GTIN scanning activation, charge capture rates increased and now clinical teams report immediately when an item will not scan properly (the root cause is usually that Boston Scientific or Stryker has a different code on each item than on the box of items — or that a sales rep brought in something unapproved).
- Supply chain, revenue cycle, EMR/Epic teams and surgery clinicians tend to stay in their lanes, interacting when there is a project or a problem, but otherwise staying quite busy with their own important work. In isolation, each of these teams can develop its own “urban legends” around system limitations and rules. This can have a big financial downside if, for example, data on supply and implant charge capture rates is not commonly available and understood across all the teams. We brought together an interprofessional team to look at the difference between what the IDN purchases and what lands on patient records. That group leveraged each other’s information to validate gross and net revenue opportunities, confirming a multimillion-dollar gap worth closing. Along the way, they found ways to use Epic better in the OR, corrected problems with ERP item tables, and improved overall understanding of what is or is not chargeable in different settings. Working across disciplines, they made it easier to document care accurately while also helping improve stewardship of the not-for-profit IDN’s resources.
Jason Luby. Vice President of Value Supply Chain Management at BJC Health System (St. Louis): In our distribution operations, we discovered our receiving processes were leading to delays moving inventory off the dock and into usable stock. Our original baseline showed that it was taking a little more than 24 hours to successfully receive and put away inventory. We knew we had an opportunity to improve that time and began researching options to improve it.
One of the key contributors was that several suppliers were shipping multiple cartons of product a day, on the same order, rather than consolidating them into larger, easier-to-manage orders. We collaborated with several critical suppliers to adjust our ordering pattern and their shipping pattern to a mutually beneficial pattern. In one instance, we decreased one supplier from 40 shipments a day down to just one.
Combining the supplier collaboration with internal process improvement efforts resulted in tremendous success removing this bottleneck. Currently, our average dock-to-stock time is well under four hours, and we have seen improvements in service, inventory turns and invoice discrepancies as a result.
Andrea Poulopoulos. Senior Vice President of Supply Chain at Corewell Health (Grand Rapids and Southfield, Mich.): Corewell Health has successfully addressed a significant bottleneck in its supply chain operations by creating and utilizing a non-acute playbook for opening and onboarding new facilities. The comprehensive approach has streamlined the order process for its clinical team members, making it easier to procure goods from the organization’s enterprise resource planning (ERP) system, coordinate orders with its consolidated service center (CSC), adhere to its product formulary, and ensure spend targets are achieved. By implementing these strategies, the organization has significantly reduced the time and effort needed to bring new facilities online, resulting in improved efficiency and cost savings. The measurable impact of these efforts includes a 50% reduction in onboarding time and a 75% decrease in supply management support post non-acute playbook implementation. The approach has both optimized operations as well as positioned Corwell Health’s non-acute facilities to provide higher-quality care to its patients and communities.
