Supply chain inefficiencies leave $23B in potential savings on the table for hospitals

U.S. hospitals could lower annual supply expenses by about $23 billion in total by improving supply chain processes and adjusting product use, according to a recent report from Navigant.

For the report, Navigant analyzed 2015-2017 data on 2,331 hospital supply chains compiled by the data-provider Definitive Healthcare.

Researchers found hospitals could lower their supply chain budgets by an average of 17.8 percent to achieve $23 billion in total annual savings. This figure translates to $9.9 million per hospital, which is equivalent to the annual salaries for 150 registered nurses or the cost of 4,000 cardiac defibrillators.

Hospitals with high-performing supply chains consistently used evidence-based protocols and data analytics to eliminate variation in pricing, product use and clinical outcomes, according to the report.

"It's clear that some hospitals have the appropriate strategies and processes in place to efficiently manage supply chain budgets while maintaining high-quality outcomes," said Rob Austin, associate director at Navigant. "[T]he highest-performing providers are simultaneously able to decrease cost and improve quality, in part by reducing clinical variation. Lower-performing supply chain departments need to leverage these types of proven best practices to drive care delivery improvements."

More articles on supply chain:

US government issues security warnings for hospital syringe pumps susceptible to hacking
Cleveland Clinic's 5-step strategy to address rising drug prices
Economists' counterintuitive case for price-gouging during natural disasters: 4 things to know

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