More than half of hospital leaders see supply chain improvement as path to higher margins
- Hospitals increasingly see supply chain management as a way to reduce waste and control expenses, with more than half (52%) of executives in a new survey saying it can grow margins by at least 1% to 3%.
- Nearly all of the 100 healthcare C-suite and supply chain leaders said SCM is a medium (33%) or high (65%) operational investment priority, but only 13% claim it as their highest priority, according to the survey conducted by Sage Growth Partners for SCM vendor Syft (formerly Management Health Solutions).
- At the same time, many leaders admit to using outdated processes. To track supply margins by surgical procedure, 46% use in-processes such as manual data entry or spreadsheets that can't perform predictive analyses or break out data by case or surgeon.
Supply chain improvement offers the potential for significant savings for cash-strapped hospitals. According to a recent Navigant Consulting analysis, U.S. hospitals could save as much as $25.4 billion annually by streamlining their supply chains and eliminating unnecessary costs. That translates to a 17.7% average drop in supply expenses, or about $11 million per hospital per year.
But data analytics is key. The highest-performing hospitals leveraged actionable data to tie costs to patient outcomes.
To battle rising costs and improve supply chain controls, some hospitals are ditching distributors and contracting directly with manufacturers. Others, like Mercy Health, are forming partnerships to standardize inefficient systems.
The survey reveals an array of SCM approaches being used in hospitals, from in-house solutions (39%) and EHRs (16%) to third-party tools (19%) and outside consultants (7%). Roughly a fifth (19%) don't do any supply chain analysis.
And while 86% of respondents believe more robust SCM would enhance quality of care, 27% say their organization has not used SCM data analytics to define areas for improvement.
Where analytics are performed, it is mainly for basic functions such as tracking inventory (76%) and consolidating suppliers (71%), the report notes. Just over half (57%) of respondents reported using advanced functions to evaluate case cost in the operating room and fewer still use it for managing expired supplies (50%) or surgeon supply variance (42%).
In the OR, only 36% of organizations have an advanced technology for tracking margins per case. Slightly more (37%) use Excel or Microsoft tools, while 27% either use other low-tech methods, don't know whether they track margins or admit that they don't.
Still, 63% see a direct return on investment for supply chain analytics and 97% say it can help reduce overall costs of operation.
The biggest barrier to reducing supply chain waste in the OR is surgeon loyalty to specific vendors or suppliers, followed by lack of clinicians' time to assess supplies before and after the procedure, not having the right technology or workflows and staff resistance to change.