2017 saw a rapid shift toward value-based care models which meant increasing pressure on healthcare supply chain leaders to align with clinical outcome goals, motivate staff and adjust to changes in clinic processes and policies – all while keeping physicians happy.

Rising material and device costs, ineffective IT for supply chain functioning and poor transparency are major roadblocks for procurement teams trying to keep pace. The following are some of the most likely areas of concern for supply chain management personnel in 2018 – and how to implement improvements:

The Reduction of Clinical Variation

Going forward, supply chain managers will look to minimize the amount of variation in supply areas with high per-item cost and high aggregate spend. Doing so can help to lower total costs over time.

Clinical variation is often a cultural issue in an organization, but once physicians, administrators, and key staff are on board, removing variation can make a dramatic difference. Physicians must agree to standardized supplies and care paths to create greater efficiencies. Creating incentives can help fuel adoption across the organization.

Manage Provider Preference Item Inefficiencies

Quite a few healthcare organizations use a provider preference system to help manage their supply chain. However, this can cause significant cost variation without better outcomes.

A 2014 Health Affairs survey found that hospital staff incorrectly estimate supply costs as much as 79% of the time. A study from Milbank Quarterly showed physician preference items make up over 60% of supply chain spending in healthcare.

Reducing item variation and standardizing provider preference items can streamline the supply chain and reduce costs. However, this must be done in a way that makes sense. Examples of possible inefficiencies are choosing more expensive items that don’t improve patient outcomes and bulk orders of items only used by a few clinicians.

All decisions in this area should first be focused on better patient care quality; however, cost and delivery efficiency should be a strong second. Implementing cost scorecards can help with tracking and refining your organization’s efforts over time.

Addressing Hidden Costs in the Healthcare Supply Chain

Beyond product price, the healthcare supply chain has a number of hidden costs. For example, inventory holding, managing supplies, and product distribution all add to the total spend associated with the supply chain. Expired products accrue a loss.

A better understanding of these aspects of the supply chain can not only inspire methods of reducing cost; it can also illustrate ways to improve staff efficiency and the patient experience. Awareness of both product costs and “hidden” costs can assist with building a truly efficient supply chain. This will improve both the clinician and patient experience while increasing the organization’s bottom line.

Enhancements to Supply Chain IT to Improve Cost and Usage Transparency

Another common inefficiency in healthcare supply chains is related to unsophisticated IT systems and implementation. This reduces the transparency in terms of both costs and utilization. This lack of sophistication prevents healthcare staff from accessing supply chain data.

Key information becomes fragmented and inaccessible. Staff members are then unable to make accurate decisions, resulting in erroneous and/or wasteful spending. Implementing better health IT systems can help tremendously with data tracking and sharing in supply chain management. This will bring a better understanding of the cost of patient care.

Enterprise resource planning technologies can integrate the management of key business functions. Computerized provider order entry (CPOE) and RFID product tracking technology can make healthcare supply chain management exponentially more efficient. Waste can be eliminated while process variations are reduced.

Automation Has Never Been Easier

With claims reimbursement rates falling and a move toward performance-driven payments, improving the supply chain management process in healthcare can help to prepare healthcare organizations for the transition. Platforms for modern clinical spend management will allow teams to:

  • Quickly prioritize savings projects
  • Manage a project with multiple team members
  • Create an RFP and accept bids electronically
  • Model multiple bid scenarios in real time
  • Run reports and get push notifications of price creep
  • Compare costs with benchmarks and cross-reference intelligence.  All in one place.