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Supply Chain Can Reduce Rising Healthcare Costs

By CME on Sep 30, 2014 1:12:59 PM

ID-100178716Healthcare facility supplies and equipment continue to be one of the leading expenses per patient discharge.  Lowering rising expenditures is driving procurement managers and buyers, administrators, and equipment planners/purchasers to utilize supply chain management to reduce rising healthcare costs for their medical organization.

Supply chain management principles can help you maintain efficiency while reducing your expenditures as much as 15% (Gartner Research), lowering your margin of error.  HIT Consultant.net cites reasons for integrating supply chain into your purchasing strategy, stating, “The supply chain is . . . key to creating better end-to-end visibility about all of the products, devices and supplies used in healthcare.”

Reducing waste and lowering the margin of error

Large, academic, and regional healthcare facilities can’t afford to waste supplies, and expired, lost/wasted products are an avoidable expense.  Utilizing supply chain management, you will more easily capture data about your supply levels and use, giving you at-a-glance information about what is needed, how much, and when inventory should be re-supplied.  This will reduce financial loss due to wasted or expired supplies.

It’s predicted that by 2022, medical supply costs for healthcare organizations will exceed labor costs (Strategic Marketplace Initiatives).  According to Becker’s, “Community hospitals may have to make significant changes in some processes to create efficiencies and reduce cost.  Reducing waste may be particularly important for community hospitals compared with larger hospitals because they typically have less capital resources, meaning less room for error....”

The first step in your purchasing and procurement process is data entry at the end-user level.  Errors and incorrectly entered information within manual processes are a given, but you can reduce them by automating purchase orders, invoices, and requisitions.  With supply chain e-commerce software you might explore process integration solutions*.

Information management and sharing

Accountability using technology infrastructure within healthcare organizations is now necessary for hospitals and medical facilities, as they strive to better manage their business requirements.  Using supply chain, you can capture purchasing and inventory data efficiently, helping you meet regulatory and compliance requirements.

“Paper trails” may soon be extinct.  For example, one online knowledge base can begin with and follow-through-to-discharge a single patient’s product and equipment use; this information can then automatically be broken down and distributed to other databases.

Another example of information management using supply chain management is a process that captures by-department supplies and product purchasing, use, and cost.  You can use that data to make more informed decisions for vendor or group purchasing organization (GPO) contracts.

Regional healthcare facilities need the supply chain advantage

There has been concern about the future of community hospitals as demand for better services and increased profits become critical to healthcare organizations.  Supply chain offers the technology linkage that allows smaller sites to more efficiently track and share information.

If you are part of a regional or community hospital organization, you know that it takes longer for technology solutions to trickle down from your “parent” and/or academic medical center.  “Scalable solutions” are technology processes and procedures that are used on a larger scale that can be adapted to smaller organizations.

Providing the best possible healthcare and saving money is your industry's goal.  Supply chain management practices will benefit your patients and your organization.

With over 30 years of providing medical products and equipment service to the healthcare industry, CME is the only full-service, direct-to-site distributor.  If you’re planning a renovation or new facility build, contact us.  Our mission is to work with you and for you, offering project planning assistance and procurement cost-effective solutions.

*CME does not endorse nor recommend any particular e-commerce procurement company or software. 

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Image courtesy of: Stuart Miles/ Freedigitalphoto.net

Topics: Supply Chain Management, Healthcare costs

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