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January 2, 2019

Reflections on the Supply Chain – Part III

This third article of our series about the healthcare supply chain talks about three common and harmful misconceptions that are preventing hospitals from achieving their cost-cutting and waste prevention goals. Here’s a quick snapshot of it.

First, many managers and their organizations argue that they will not, or cannot, implement an inventory management solution if it is not standardized across their entire hospital or IDN. Although standardization is very important, doing nothing (usually for many years) while waiting for an initiative to push through a barrage of other priorities that will work for everyone, is failing to stop the freefall that clinical areas, material management, and supply chain find themselves in when it comes to controlling costs. The failure to act and to contain costs and waste would never be tolerated in other industries. Hospitals can’t afford to tolerate it either.

Second, many hospitals claim that they can’t afford to implement a new inventory management system, but still they spend many millions of dollars each year on medical devices and supplies purchases, clinical technology, and other IT solutions such as EMR, billing, etc. Very little is spent on improving supply chain and inventory management processes, despite the high value of the goods managed and the abundant level of waste. Investing time and resources in a technology that reduces costs and risk exposure while providing an ROI should not be a hard decision. The same business case made in any other industry would result in a rush to seize the opportunity to be more effective and cost-efficient, especially when on-going hard savings are measurable and guaranteed.

Third, some hospitals complain that bringing on a new inventory management solution would entail “yet another” vendor, technology, program, system…to deal with that they just don’t have the energy for. Often, in an attempt to try to simplify and standardize, organizations will compromise and resort to an inferior inventory management piece of technology simply because it’s offered as part of a bigger solution package from, typically, a large vendor that purports to “do it all.” The problem is that often the companies that make these claims do not do it all well, nor in as simple or clear-cut a manner as hospitals want to believe. It is far better to have a best of breed solution from a different vendor that combines the technologies that are actually going to deliver what the vendor promises, rather than stick with the illusion that it’s simpler and better to deal with one vendor.

Here’s to a more cost-effective and efficient 2019!

 

January 2, 2019