More on Supply Chain

Nearly all hospital leaders say supply chain optimization improves margins, survey shows

Supply chain management is a medium or high priority yet just 13 percent say it's a top investment priority.

Jeff Lagasse, Associate Editor

Ask a hospital leader if supply chain optimization improves margins, and you're likely to get "yes" as an an answer. In fact, according to a new survey from Sage Growth Partners, almost all of them -- 98 percent -- say improving the revenue cycle can lead to improved finances.

Of those, 52 percent said better supply chain management could potentially boost margins between 1 and 3 percent. And 3t percent say it could improve margins 3 percent or more.

The 100 C-suite and supply chain leaders surveyed also said better supply chain management can potentially result in better clinical care.

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The findings come as most healthcare organizations use manual tools and unsophisticated technological approaches to manage supply expenses and inventory, which could be resulting in millions of dollars in lost revenue.

Almost every respondent said supply chain management is a medium or high priority -- 33 and 65 percent, respectively -- yet just 13 percent named it as their top operational investment priority.

A strong majority, 86 percent, said supply chain management would improve care quality, yet 27 percent said their hospital has not yet used supply chain management data analytics to identify ways to improve quality.

About 63 percent said there's clear ROI for supply chain analytics, with 97 percent claiming such analytics can positive impact their organization's costs. Other areas in which respondents think analytics can have a positive impact include value-based care (67 percent); quality (60 percent); staff satisfaction/retention (45 percent); patient outcomes (43 percent); and regulatory adherence (37 percent).


Organizations are using an array of different supply chain management approaches, including in-house solutions (39 percent), their EHR (16 percent), a third-party solution (19 percent), and outside consultants (7 percent). Two in five don't analyze their supply chain at all.

Three-quarters of respondents report using their supply chain management solutions for basic analytic functions such as tracking inventory (76 percent) or consolidating suppliers (71 percent).


Increasingly, organizations are looking at their physician preference items as a potential avenue for cost savings. By standardizing physician preference items, they could realize some of those savings in their supply chains.

It's an approach that has certainly worked for Kentucky- and Indiana-based Baptist Health, which centralized its supply chain operations in 2013 and as since gone on to standardize PPIs in such a way as to save a little more than $12 million just on supply chain products in 2017.

Twitter: @JELagasse

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