The Supply Chain Matters blog provides additional perspectives concerning our industry-specific coverage of pharmaceutical, drug, healthcare and hospital services focused supply and customer demand networks.
This week, a released survey of hospital leaders brings forward rather insightful findings along with opportunities for making supply chain management an important and positive enabler for enhanced hospital patient services and overall financial results.
A survey conducted by Sage Growth Partners on behalf of Syft®, a provider of inventory control and end-to-end supply chain cost management software and services brought forward important insights. The survey of 100 hospital leaders involved in supply chain management (SCM) was conducted to evaluate how SCM is prioritized, managed, and leveraged as a strategic business function.
Of course, we would insert our own moniker, whether supply chain capability does matter.
The takeaway of this survey was that 87 percent of hospital leaders believe supply chain management can improve margins by more than one percent, and 86 percent believe it can improve patient care quality. Despite this clear return on investment, almost half of respondents admitted to using manual processes like spreadsheets that do not have the ability to perform sophisticated or proactive analyses.
According to the press release, nearly all respondents (98 percent) indicated that better SCM can improve hospital margins: 52 percent indicated that better SCM can increase margins by 1-3 percent, and 35 percent believe it can increase margins by more than 3 percent. Over half (63 percent) say there is clear ROI for supply chain analytics and the large majority (97 percent) believe supply chain analytics can positively impact their organizations’ costs. Other areas where supply chain analytics is perceived to have positive impact included: value-based care, quality, staff satisfaction/retention, patient outcomes and regulatory adherence.
Despite these viewpoints, this survey pointed to two in five of respondents indicating that they do not analyze their supply chains at all, and three-quarters of respondents report using their SCM processes for basic analytic functions such as tracking inventory or consolidating suppliers.
A further common theme that we have highlighted in prior Supply Chain Matters healthcare supply chain focused commentaries are the rather expensive materials and supplies required in operating room and surgical areas.
One of the findings in the Sage Growth-Syft sponsored survey was that surgeon allegiances to vendors/supplies being cited as the top barrier to reducing supply chain waste in the OR. Other barriers included: clinical staff lacking time to consider supplies pre- and post-procedure, missing the right technology or workflows, and staff resistance to change.
Interesting enough, just over two years ago we highlighted a Hospital Supply Chain survey conducted by Cardinal Health which also homed in on this same service area.
Overall, survey responses from the 2017 Cardinal sponsored survey indicated a fair to poor rating among 52 percent of respondents for having the right product when needed, a generally fair to poor rating for the ability to keep track of recalled products or tracking product expirations, and predominant fair to poor rating for the ability to manage inventory volumes.
That survey pointed to 57 percent of physicians indicating they did not have the right products needed during a planned procedure. It further highlighted that nearly 20 percent of front-line caregiver time was consumed by supply chain expediting or follow-up which usually escalated up to service line and other administrator added tasks.
Supply Chain Matters Perspective
Our views related to healthcare supply and demand networks consistently has pointed to built-in stakeholder misalignments.
While we hope and trust that hospital level supply chain management practices would have improved, there still appears to be specific areas for added progress. We view two prime obstacles as being recruitment of experienced supply chain management planning and inventory management support along with more advanced technology to be able to better analyze and identify opportunities for more efficiencies, less inventory with better patient outcomes.
Frontline care givers should not be having to constantly manage supply and inventory tasks and similarly, hospital procurement staff and front-line administrators should not have to be allocating time to constant supply and demand alignment exceptions. Technology is indeed a proven help in addressing and overcoming these needs, but the technology requires skilled and experienced people.
The broader problem rests in stakeholder misalignments across the broader healthcare supply and patient demand network, where higher prices for drugs, supplies and specialty devices conflict with PBM’s and health insurer interests to appease the needs for required lower healthcare costs while grapping an additional piece of the profit pie. Existence of a limited number of nationwide distributors that have significant scale, buyer and product influence adds to misalignments.
It is no wonder that recent announcements that Amazon and select influential employers will likely make their presence into healthcare supply and demand networks has been perceived as a significant threat and wake-up siren.
Beyond the big picture, the data continues to point to growing recognition that effective supply chain management practices can indeed provide service and financial benefits for hospitals, the front-line of critical and life-saving care.
© Copyright 2019, The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.