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Report shows that US Hospitals could be saving $25.4B in Supply Chain Costs

News   •   Nov 08, 2018 17:25 CET

A recent report by Navigant showed that Hospitals and Health Care systems in the United States have the opportunity for savings of up to 25.4B USD in supply chain costs.

“The analysis of 2,300 hospitals indicated that hospitals and health systems are not moving the needle in the right direction when it comes to streamlining healthcare supply chain processes and product use, researchers stated” (LaPointe 2018).

What is the cause of this gap in spending within supply chain activities, and the act of leaving so much money on the table?

There are two main causes for the missed savings, and they’re both caused by human decision-making.

Physician preferred devices

One of the main challenges healthcare organizations are facing are trying to cut costs, while keeping physician preferred devices on-premise.

“Providers may prefer specific devices, drugs, and other items to deliver care safely. However, these preferred items can drive up supply chain costs if they are more expensive than other items that can deliver similar or even better clinical outcomes” (LaPointe 2018).

High-value devices are costly and rarely used, but are considered a necessary work tool in certain circumstances. In order to eradicate this costly misallocated-spend, hospitals need to try and engage their physician pool with these issues before they arise.

One of the key ways for ensuring that these kinds of issues aren’t created in spending on materials is that there needs to be a more comprehensive understanding of the supply chain data and spend.

Lacking Supply Chain visibility

The second cause for misplaced spend in hospitals and health care systems could be caused by a lack of supply chain technology.

“Those health systems with the highest performing supply chains are combining data analytics, collaborative clinician engagement, and deep subject matter expertise to drive care delivery improvements to the benefit of the communities they serve,” Kevin Connor, VP of Supply Chain Management at TriHealth.

Improving within supply chain analytics could address areas where many organizations are lacking insight, such as variation and waste.

To learn read more about this report, see Navigant’s report here: