Supply chain management is one of the biggest cost centers for healthcare providers. According to a Cardinal Health and SERMO Intelligence survey of 150 hospital decision-makers, it ranked as their second largest expense in 2015, behind only labor. By 2020, it could finally take the top spot, thanks to the convergence of trends including rising prices for overnight shipping, tighter operating margins, increased merger and acquisition activity, and an evolving regulatory landscape that rewards quality over volume.
While today’s healthcare supply chain challenges are far-reaching, many involve medical technology and equipment. The Cardinal Health/SERMO report estimated a $5 billion loss across the industry each year just from high-value medical devices. Moreover, the ongoing integration of electronic health record (EHR) systems, including specialized solutions for fields like orthopedics, adds another cog to the already-complex and unwieldy IT system machinery at many providers.
Addressing these challenges can seem daunting, but that’s where an experienced partner with deep lifecycle asset management expertise can make all the difference. Let’s look at a few of the biggest issues in more detail, as well as how to overcome them.
Supply shortages that impact quality of care
With quality moving to the forefront of how providers are evaluated and reimbursed, it’s imperative that they have everything necessary to deliver the best possible care. Unfortunately, they often do not.
A 2018 Cardinal Health survey found that 69 percent of hospitals reported delays due to shortages in their supply chains. In this context, it’s not surprising that many of the respondents also confirmed using expired or recalled products to fill in gaps.
Manual processes and lack of automation
Supply chain management has changed dramatically in recent years — at least in theory. New technologies including blockchain, robotic process automation, and the Internet of Things open up exciting possibilities, yet they’re frequently missing in action.
For example, numerous providers still rely on manual activities to manage their inventory. Modern radio frequency identification (RFID) systems are in use by less than 1 in 6 hospitals, whereas almost 80 percent of them depend upon manual inventory management, per Cardinal Health’s findings.
Blind spots in health IT systems
As development and operations teams have increasingly bought into the DevOps movement, a lot of organizations have made progress in eliminating the informational silos that prevent cross-company collaboration. Such silos are still prominent in healthcare, however.
Exchanging health data is often difficult and devices like the venerable fax machine remain in widespread use (faxes account for up to 75 percent of all medical communications), in part because digital sharing creates complications between competing health systems and platforms. These inefficiencies can lead to delays, poor-quality care, and additional costs.
Specialized EHR software, enterprise resource planning functionality, RFID, and computerized provider order entry all provide promising roads forward. A more integrated and modernized healthcare IT environment can more easily ensure predictable, cost-effective supply chain operations.
The costs of running a supply chain go beyond what providers pay for products. They will also incur expenses related to holding and distributing inventory, providing special deliveries, and generally ensuring that clinicians have what they need to care for patients.
A lean supply chain can help. The lean design emphasizes having the right supplies, at the right location, at the right time, at the most economical cost. Some providers have trimmed their supply chain costs by six to seven figures as a result of adopting lean methodology.
How LaSalle can help
LaSalle assists healthcare organizations in navigating challenges in their supply chains with single-source solutions for the acquisition, financing, maintenance, and disposal of critical equipment. Plus, we provide cloud-based tools, such as LAMP, for easily tracking assets details across all sites.
To learn more, visit our technology refresh page or contact our team directly.
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