By John Strong, co-founder and chief consulting officer, Access Strategy Partners Inc
November 2, 2021 – If you add up all the expenses that could be controlled by a healthcare provider’s supply chain, it amounts to over 40% of all expenses within a facility. In fact, it is rapidly approaching the cost of labor as a controllable expense. Unfortunately, many healthcare executives continue to allow decentralized control of expenses within their organization, leading to unnecessary costs as well as sub-optimal service.
A new study by Huron surveyed 306 healthcare executives from a variety of healthcare organizations. The authors note that the number six “Top Trend” impacting provider organizations in the next three to five years is “cost reduction/optimization.” 27% of respondents noted that the third largest “Current Challenge” is “supply chain transformation” and 34% reported a current initiative about “optimizing supply chain”.
The good news here is that because of the global pandemic this is probably the most attention supply chain has received by senior healthcare executives—ever. Coming in number nine in the survey of “Cost Savings Measures” is “Supply chain cost reductions.” In the future, this must mean looking beyond the price of products.
The price of goods and services has been the knee-jerk reaction going all the way back to the early 1980’s when DRGs were first launched. Now is the time for “cost” to move beyond the purchase price of goods and services by looking at process costs and outcomes. Well run and strategic supply chains are viewed by other industries as meaningful strategic assets.
What is the cure? For years now we have talked about using “better technology”, “value analysis” and “more training” for staff. All necessary, though they require a strategy first and tactics later…