More on Supply Chain

"If healthcare were run like retail…" It isn't, nor can it be (part III)

Continuing from yesterday’s entry in which I address Regina Herzlinger’s article If healthcare were run like retail…, we come to point number 3:

“Small, disease-specific hospitals care for patients who don’t need all the services offered by medical centers.”

This point I find of utmost interest from one who believes healthcare ought to be run like retail. One of the successful strategies implemented by Walmart is the development of economies of scale to build efficiencies. Let’s imagine a world where each Walmart store—typically 51,000-224,000 square feet—stocks only specific, focused products—and limited amounts of each. No longer can you purchase toothpaste, art supplies and tires in one store, but rather you must travel further and enter scores of locations to satisfy your needs.

Healthcare facilities understand the criticality of efficiencies, particularly when the well-being of patients is on the line. That’s one of the main reasons why group purchasing organizations exist. They utilize economies of scale to lower hospitals’ supply chain costs.

The evolution of efficiency continues to develop in this new economy, as some organizations are finding it beneficial to combine ERs for consolidation of specific service lines and cooperative advances.

Does it make sense to restrict a patient’s availability of “diseased-specific hospitals”? Like Dr. Don Berwick, leader of the Institute for Healthcare Improvement, recently said in an article, great community hospitals that take quality seriously are typically a better choice for most conditions than a massive complex teaching hospital, which may be better reserved for rare operations.

(Tomorrow: “A national database contains the prices and outcomes for procedures at every hospital and clinic, so consumers can make informed choices.”)

This blog first appeared at Action for Better Healthcare. - Ed.

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