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3 Ways Supply Chain Can Reduce Healthcare Costs

March 1, 2017 No Comments

Featured blog by Lewis Robinson, business consultant specializing in social media marketing

business 300x150 3 Ways Supply Chain Can Reduce Healthcare Costs
The Affordable Care Act and other reforms have been driving healthcare administrators to look for new ways to reduce costs, which can be a challenge while still preserving the quality of care. One of the key cost-efficiency measures that the healthcare industry tends to overlook is supply chain management. Billions of dollars are lost annually due to waste, poor inventory control, and inefficient delivery. Staff can often forget that healthcare is a business like any other, and accurate, dependable logistics is important. Here are some ways that healthcare organizations can better manage supply chains to control rising costs.

1. Automation

Software solutions for more efficient inventory management are widely used in even smaller businesses, but oddly omitted from even many large hospitals. This is where they’re needed most to provide better care. Large healthcare facilities might have thousands of medications to maintain, and some of them quite expensive. There are also constant needs for ordinary supplies like bed sheets, robes, gloves, cleaning supplies, and much more. Add in maintenance for costly medical equipment and you a very disparate inventory list that has to be maintained to provide quality care. A centralized system, as either an online or in-house system, allows staff to establish safe levels, alerts, and automatic re-ordering of each and every SKU in the system.

Barcode scanners, RFID chips, and other auto-ID systems can ensure that every new item received or dispensed is immediately reflected in inventory. This is far more time-saving and accurate than written records.

2. Reducing Waste

Up to 45 percent of medical operating costs come from supplies. Eliminating as much physical waste as possible also means eliminating wasted time and resources that only amplify the expenses. Gathering and analyzing supply chain data can provide valuable insights that give providers and vendors a better picture on what’s being used, and where and when it’s used. Tracking this will help to identify patterns for lost, wasted, and expired products that are costing money but providing no value.

Neither health care facilities nor patients can afford to absorb those costs. But by identifying where and when waste is occurring, administrators and supervisors can ensure accountability from their employees and take measures to see that wasteful practices are corrected. According to Gartner Research, supply chain savings of only five percent can lead to a two-percent increase in profits.

3. Capturing Data

In order for all of this to take place, it requires that efficient data collection methods be in place. A comprehensive technical infrastructure is required to support this. Different tools and a little extra effort in providing information to a digital format can have far reaching consequences. For example, a digital record of every pill, procedure, device, and person involved in a patient’s diagnosis, treatment, and recovery can be instantly made available to billing, administration, the patient’s medical files, and supply chain management systems.

That includes digital resource. A growing cost involves the demand for medical imaging, which exists in computer memory as digital files. This has led to the expansion of PACS (picture archiving and communication system). The global market for these systems is expected to reach $5.4 billion this year. As Novarad’s PACS system page states, a good imaging solution must weigh the impact on both digital systems and the unique clinical workflow for each facility.

Healthcare around the world is faced with rising costs, and patients with rising insurance premiums. As populations age, healthcare is becoming a multifaceted industry that includes smaller and more specializes clinics providing competition. There’s also a greater need for sharing information over networks. Supply chains are one of those areas where diligence and proper planning can save significantly on operating costs and help medical institutions to remain profitable while actually improving the quality of care.

Author Bio


Lewis Robinson is a business consultant specializing in social media marketing, CRM, and sales.  He’s begun multiple corporations and currently freelances as a writer and business consultant.



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