Hospitals, which can be very costly to operate and remain perpetually cash-starved, can generate some significant savings by using various forms of newer available digital technologies to automate their supply chains.
But while hospitals see a more automated and commerce-enabled supply chain as a priority, many are not committing the time, money and other resources in order to make that happen, says a new survey of 100 hospital executives from healthcare supply chain services provider Syft Corp.
A digitally enhanced supply chain system could help a typical hospital cut supply-related costs by nearly 18%, or $11 million annually, through better order management, inventory control and related processes, the Syft report says. For a hospital with $900 million in annual revenue, a 1% gain in that hospital’s operating margin, or the revenues and costs related to patient care, can range from $5 million to $27 million, it says.
52% of hospital executives who responded to the survey say they place a priority on developing a better supply chain that improves their organization’s operating margin by at least 1% is a priority. But many hospitals still use paper, manual processes and outdated technology to operate a supply chain.
Proative analysis by case or surgeon
For example, 46% of hospitals use internal programs based on manual or spreadsheet processes, the survey found. As a result, those hospitals can’t perform more sophisticated or proactive analyses or drill down by case or surgeon, Syft says. 9% of hospitals in the survey do not track operating margins and 8% said they weren’t aware if or how margins are tracked, Syft says.
“Like information technology, managing the supply chain was historically relegated to the basement—largely regarded as an expense rather than as a strategic business imperative that can positively impact margins,” the Syft report says. “But as CEOs’ chief concern shifted from driving more revenue in 2017 to cutting costs in 2018, and as supply chain costs begin surpassing labor costs by 2020, healthcare executives can no longer afford to ignore opportunities to optimize supply chain management.”
Other report findings include:
- 98% of survey respondents say supply management is a moderate-to-high priority, but only 65% and 13%, respectively, see it as a high or highest priority.
- 66% say reducing waste/costs is their greatest pressure point for better automating and commerce-enabling their supply chain and 97% say supply chain analytics can positively impact costs.
- 73% of hospitals have used supply chain analytics to find ways to improve quality, but 39% use internally designed software. 18% don’t analyze their supply chain at all, while 16% use their electronic health records system.
- Only 46% of hospitals say they operate their supply chain very well, compared with 29% moderately well, 20% extremely well, 3% slightly well and 2% not well at all.
- The top barriers to reducing supply chain waste in the operating room, which account for 66% of the difficulties, are physician and staff resistance to change and lack of time and the right technology.
“While the large majority of survey respondents believe SCM can improve costs and care quality, fewer say they’re actually deploying advanced supply chain analytics to take advantage of that potential impact, which presents a major missed opportunity,” says Syft CEO Todd Plesko. “Hospital leaders are going to need to use every tool in their toolbox to succeed, and they will need to turn the supply chain into a strategic business lever—not only to save money, but to improve clinician satisfaction, patient outcomes, and the care patients receive.”
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