Three high-impact areas of opportunity to empower your supply chain

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By maximizing the capabilities of supply chain resources, hospitals and health systems are better positioned to advance the quality of care while simultaneously 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 as individual sites of care consolidate under a single IDN umbrella is greater complexity. To help address this challenge, many IDNs have centralized their freight spend. This practice has been proven to cut overhead expenses in half and reduce total operating costs by 5 to 10%.1

Further benefits include total visibility across your entire spend. Using comprehensive data analytics can create deep insights into every way you ship, whether it be inbound, outbound, large freight or same-day couriers. You’ll also have more control over every shipment since you can put centralized processes and systems in place to drive program compliance. You can also use mode optimization to select the best delivery option for each shipment and streamline delivery routes to avoid duplicating efforts.

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

Product standardization can yield new efficiencies as well as cost savings. Purchasing commonly used surgical products in 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. Take these three steps to establish your own standardization strategy:

  1. Set your formulary: Use distribution purchase data to identify common products to standardize across your hospital or health system.
  2. Update your preference cards: Preference cards need continual maintenance as physicians enter and leave your facility.
  3. Build custom surgical packs: How many items from your preference cards can you build into your packs? Include as many as possible to minimize the need to pull items off the shelf.

3. Inventory management solutions

Data-driven, automated inventory management helps ensure the right products are in the right place at the right time, while also keeping expired 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

An optimized supply chain can support patient care as clinicians and supply chain professionals alike can focus on gaining new insights and putting patients first.

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.

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