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How to Reduce Supply Chain Waste in Your Hospital

Supply Chain

Discover tips for reducing equipment costs and supply chain waste in your hospital. Learn how your supply chain team can improve clinical outcomes and the overall patient experience.

The Growing Need for Hospitals to Reduce Supply Chain Waste

Supply chain now accounts for about 40% of the average hospital’s total operating budget. As health care reform has pushed many hospitals to tighten the belt, this increase in supply chain costs hasn’t gone unnoticed. Hospital CEOs and CFOs have started to place a higher priority on uncovering supply chain efficiencies that can immediately demonstrate a return to the bottom line.

Supply chain leaders understand that this offers them an opportunity to add increased value to their hospital. Instead of just negotiating prices and managing vendors, this is a chance for them to make meaningful contributions to profitability, patient care, and growth. So, they start looking for new, innovative ways to optimize their spend and recover wasted operational expense. But the truth is, they don’t know where to start.

Despite overwhelming amounts of data now available to them, many supply chain leaders do not have the time to uncover, sift through and leverage the information they need to take advantage of untapped cost-savings opportunities. For example, supply chain leaders are often on the receiving end of requests to buy or rent more medical equipment. These requests are typically unaccompanied by critical, actionable supporting data that measures the total cost of equipment inventory and the impact on internal team workflows. Also, requests for new equipment and rentals frequently come with a sense of urgency. This urgency results in the issuance of P.O.s, even though the equipment ordered is, often, already sitting in a hospital closet, hallway or down in clinical engineering awaiting maintenance or repair.

85 percent of hospital execs say reducing supply chain waste and related costs topped their strategic priorities.
                                                                                                                                                                *Source: Cardinal Health

Why is My Hospital Generating so Much Waste?

It’s a reasonable question. Part of the answer is because, in many hospitals, there are several disconnects in the equipment management process. Caregivers not only have their patient care responsibilities, but they are starting to spend more and more time on non-core tasks that take them away from their patients. Healthcare Technology Management staff are often underwater and playing catch up on the service to their growing inventory of software-enabled devices. Or they are busy searching for equipment in need of maintenance or repair. Both areas find themselves working independently – consumed by their day-to-day objectives – ultimately contributing to inefficient, repetitive hospital workflows.

As a result, valuable information never makes it into the decision-making process of many supply chain leaders. This issue not only shortchanges a supply chain team of the data needed for accurate capital planning, but it can prevent them from contributing to other hospital growth opportunities.

Most supply chain teams we work with and have spoken to are aware of this issue, and they’re working hard to resolve it. We’re seeing more and more hospitals making a significant improvement in this area. Success is nearly always driven by one thing in these cases — connecting the gaps in equipment management workflows and getting the right information into the hands of the supply chain team.

Of course, this “fix” is easier said than done. To help, we’ve summarized four of the best practices that we’ve seen with our customers across the U.S. in a tip sheet that you can view here.

4 tips to elevate supply chain in your hospital

Interested in more? Visit our Resource Center for additional resources.

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