Survey Shows Hospital Decision Makers Identify Supply Chain Effectiveness Among Top Priorities
Reimbursement is the biggest problem facing health systems today, followed closely by the increasingly the high cost of supplies, according to a new national survey of hospital executives commissioned by Cardinal Health.
Financial issues, drug shortages and efficiency of the organization follow as the next major concerns, the survey revealed.
The survey queried 150 hospital decision makers on supply chain issues. The results showed that the majority of respondents are taking some action to improve their supply chain, agreeing that it will reduce costs. However, few hospital decision makers are confident in their supply chains’ overall effectiveness today.
Only one-third of hospital decision makers rate the management of their hospital’s overall supply chain as very effective, according to the survey. Yet, two-thirds strongly agree that improving the effectiveness of their supply chain will reduce overall costs, increase revenue and lead to better quality of care.
In fact, 85 percent of respondents surveyed said their health systems are currently working to identify or implement new ways to reduce supply chain waste and related costs.
“This is an exciting time for healthcare supply chain management,” said Tony Vahedian, senior vice president and general manager for medical services and solutions at Cardinal Health. “We’re seeing executives take action to improve and demand more value from their supply chain. They recognize that maintaining the status quo in their systems is no longer sufficient due to the ever-increasing cost pressures in the industry. We believe hospital decision makers understand that the supply chain can be a strategic asset if the industry collaborates to improve its effectiveness and unlock data within it.”
Reducing costs is an urgent goal as hospitals shift to value-based health care. The supply chain, and the products it moves, is the second largest expense for healthcare providers. At an aggregated level, there is an estimated $5 billion of annual waste in high-value medical devices alone.
The current approach to supply chain management at most hospitals requires intensive staffing to handle multiple, often redundant systems that lack data sharing and transparency needed to prevent waste. Healthcare could benefit from advancements in supply chain technology already used widely in other industries that delivers analytics and insights to support transparent, data-driven decisions.
“Data and analytics can transform the healthcare supply chain into a strategic business asset, but solutions need to connect technology to everyday processes and make data visible,” said Vahedian. “These solutions exist today, but they are not being adopted at a large scale in health care. Consider the data providers currently can’t access and the insights that could be gained with this information in a shared platform for the entire supply chain to access.”
The survey revealed that primary obstacles to improving supply chain management include the lack of a full, end-to-end view of the supply chain from manufacturer to patient and low awareness of current technology, such as automated solutions that utilize high-frequency radio frequency identification (RFID) tags. According to the survey, only 15 percent of hospital decision makers strongly agree that they have a sufficiently broad view of their supply chain.