Most hospitals facing supply shortages, hefty price increases, Kaufman Hall says

Ninety-nine percent of U.S. hospitals and health systems surveyed by healthcare consultant Kaufman Hall in 2021 reported challenges in supply procurement, including shortages of key items and significant price increases. 

Kaufman Hall reported in its 2021 State of Healthcare Performance Improvement Report, released Oct. 18, that 80 percent or more of health systems had supply shortages, saw significant price increases and had to build up inventories of key items. 

The report included survey responses form 73 hospital and health system leaders from urban, suburban and rural areas. 

Among the respondents, 78 percent said they needed to find new vendors for supplies during the pandemic. Most said their group purchasing organization or preferred vendors were at least somewhat effective in helping to get critical supplies, with just 11 percent saying they were not. 

One respondent that reported its GPO was ineffective said its organization was put on a supply allocation system that didn't meet the hospitals' changing needs during the pandemic, and the GPO seemed to be giving more attention to larger clients. 

But changing GPOs is hard due to contractual obligations that are difficult to undo, according to Kaufman Hall, so very few respondents said their relationship with their GPO or preferred vendor changed as a result of its performance during the pandemic. 

Kaufman Hall made several recommendations for hospitals and health systems that want to improve their supply chains, including:

  1. Identifying historically challenging supplies and developing acceptable substitutes. 
  2. Diversifying suppliers and partnering with several alternative suppliers. 
  3. Focusing on inventory management and using technology to gain early insight into supply chain issues. 
  4. Gathering supply chain data and building supply demand models per category or supply items, as well as sharing this data with vendors and requesting the same visibility from them. 
  5. Managing vendors and thoroughly vetting all vendors. 

Find Kaufman Hall's full report here


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