Why executives are adopting a more proactive, strategic view of supply chain

Hospitals are increasingly viewing supply chain as a core competency required to proactively reduce waste, lower costs and support high-quality patient care.

This content is sponsored by Cardinal Health.

As such, supply chain is taking a more strategic role in healthcare organizations, helping executives make informed decisions on clinical and operational processes to achieve increased cost savings. Rather than address issues as they occur, supply chain is being challenged to implement processes and systems to prevent inefficiencies and be more proactive and all-encompassing.   

Tapan Shah, director of marketing and product management for Concord, Mass.--based Cardinal Health™ WaveMark™ Supply Management & Workflow Solutions, joined 20 healthcare executives to discuss the elevated role of supply chain and their main priorities during an April 2 roundtable at the Becker's Hospital Review 10th Annual Meeting in Chicago.

Here are two main takeaways from the discussion:

1. More hospitals are recognizing the benefits for a clinically integrated supply chain. Most healthcare facilities are struggling to keep up with rising healthcare costs, and limiting product spend will only get them so far. Therefore, some hospitals seek to update their approach to cost savings by optimizing processes and minimizing the need for extra labor through a clinically integrated supply chain.

Inefficient clinical and operational processes create a large amount of labor waste for hospitals. In fact, eighty-four percent of procedural department managers said time spent looking for supplies hurts their daily productivity, according to a recent survey from Cardinal Health. Tracking down supplies or performing manual supply chain tasks burns valuable time for clinicians that could be spent at patients' bedsides.

This challenge highlights the reactive nature of traditional supply chain operations, fueled by inefficient processes and poor communication between clinical and supply chain teams. To achieve more effective workflows, hospitals must work to break down the silos between these stakeholders through a single, unified improvement effort.

"We need to think of things as a whole from beginning to end, instead of being reactive to issues as they arise," said the senior vice president of a large health system in the Midwest.

A clinically integrated supply chain that reaches across the entire hospital and touches point-of-care processes in real-time can help address inefficiencies and prevent future workflow issues. However, hospitals cannot remove silos unless clinical and supply chain teams engage in decision-making driven by data. Data capture and workflow solutions such as WaveMark can support these integration efforts.

Sharing supply chain data with physicians is helpful to win their buy-in on a process improvement efforts. The integration and operations officer at a large teaching hospital in the Midwest said his organization saw success in reducing orthopedic costs by presenting physicians with data on the cost of implants.

"Some used the same orthopedic implants at their practices for 25 years," he said. "We never thought we'd get them to move." However, once the physicians reviewed the data, they agreed to switch to a different implant and helped lower the hospital's orthopedic costs by nearly 10 percent.

Other benefits of a clinically integrated supply chain include reduced labor management expenses for unnecessary products, a higher availability of the right products needed for patient care and more time for clinicians to spend on direct patient care activities.

A clinically integrated supply chain also helps hospitals close the loop on patient outcomes. Hospitals can gain valuable insights into not only the actual cost of care from a financial perspective, but also the clinical value of products from a patient outcomes perspective.

2. The rise of healthcare consumerism is on every leader's mind. The internet gives patients access to an unprecedented amount of information on medical devices, implants and medications, which presents both challenges and opportunities for healthcare organizations.

As part of the rise in consumerism, more patients expect the newest technologies and devices they've researched online. In response, more healthcare organizations are merging or creating partnerships to make these new technologies available.

"The consumer is becoming savvier, more educated and engaged," said the COO of a large hospital in the Southwest. "This can create some need, especially from independent physicians in our community, to say, 'Hey, we want to do this here at your hospital, because patients are asking for it.' I think [independent physicians are] fearful of the potential loss of business in the higher competitive market."

This mindset is helpful for healthcare organizations looking to expand physician partnerships. That said, hospitals cannot provide every single product that patients want due to supply management restrictions. "No one wants to manage a million SKUs," the COO said.

Hospitals may also confront safety concerns as they merge and staff encounter new technologies. After a merger, healthcare organizations often standardize medical supplies and equipment across their facilities to trim costs. New physicians may be unfamiliar with some of the standardized products, which increases the risk of medical errors.

"You need to ensure physicians have knowledge on how to use each different product [after a merger]," said the former vice president of operations for a large nonprofit health system in the Midwest. This will prevent any accidental misuse of a product or technology that could compromise care quality and threaten patients' safety.


Supply chain is no longer just a cost-cutting advantage for hospitals. Today, more executives are turning to supply chain leaders for innovative initiatives to optimize hospital processes, break down silos and proactively address inefficiences. Ultimately, the healthcare organizations that identify the supply chain as a strategic asset will be most successful in reducing costs, improving care delivery and achieving better patient outcomes.


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