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Reducing Healthcare Costs Using Supply Chain Practices

Supply chain professionals may find their services are in demand in the healthcare industry.

By University Alliance
Healthcare Costs Linked to Supply Chain

The majority of goods and services used in the healthcare industry depend on various mechanisms to move the product or service to the end-consumer. A typical supply chain includes procurement, packaging, shipping, warehousing and distribution. The supply chain can vary from business to business, and from product to product, but all tend to follow the same series of events, and every event adds to the final cost.

The healthcare industry remains under constant pressure to lower costs. This pressure may increase further as millions of Americans take advantage of changes in the health insurance industry, driven in part by the federal Affordable Care Act and a growing appreciation for preventative medicine and wellness.

Many factors in the healthcare supply chain can inflate prices without adding extra value. Since these supply chains exist at the global, national, regional and state levels, as well as within a facility, using data to identify ways to make the chain more efficient can result in significant cost savings to the facility and the consumer.

Data Capture, Data Compatibility and Automated Processes

Data captured for business requirements can be used in a number of ways. The use of handheld bar code scanners can make the process faster and easier, while reducing the potential for human error. For example, medications can be scanned prior to delivery to double-check prescriptions and expiration dates, and incoming packages can be scanned for verification to make sure the quantity and product match the order.

Data can be used to automatically update inventories and patient records, or to monitor perishables to make sure they are used or reordered prior to expiration. Many facilities are implementing RFID tag systems on a wireless network. These tags communicate automatically with the network and can report battery status, track movement of equipment, and provide other valuable information wirelessly and in real time.

To be efficient, captured data must be compatible among networks. New global data standards seek to ensure that data can be used by all of the networks in the global healthcare market. Adoption of data standards and high-performance bar codes can eliminate the problem of incompatible data among healthcare networks, no matter where they are physically located. As more networks are able to communicate using compatible data, more automated processes become possible. Healthcare management professionals should strive to identify manual processes that might benefit from automation.

Regional Healthcare Considerations

Regional healthcare facilities require a certain amount of flexibility when it comes to data sharing. Patients may move from one area to another within the same region during their treatment or therapy. When this happens, patient records should be shared automatically within the regional network. Regardless of differences among facilities, all members of a regional healthcare network can gain efficiency by using compatible data and automated data delivery.

Selecting Superior Suppliers and Forging Efficient Trade Relationships

Locating efficient trade partners can also result in cost savings. When a local manufacturer can supply a product that has been traditionally sourced elsewhere, shipping charges may be minimized and the need to warehouse excess inventory can often be eliminated or greatly reduced. Finding suppliers willing to bundle deliverables may be beneficial when the bundling provides advantages to the consumer. Efficient trade relationships may also include end-of-life management for products that create hazardous waste after they have been used.

Reducing Waste and Excess Product

Packaging that produces excess waste or unused product should be avoided. Examples include topical lotions that are supplied in packages that contain too much or too little product, which may result in the user discarding excess product or acquiring additional packages when only a small amount was needed. Not only is this wasteful, it also puts an unnecessary burden on waste management, since all of the containers and packaging must be sent to a disposal center. Disposing of waste in a healthcare environment can be more costly than standard waste removal.

Since supply chain costs can represent one of the largest and fastest-growing expenses for healthcare providers, professionals with training in healthcare management and supply chain management may find their services are in demand. Individuals with healthcare management experience may enhance their career options with additional training in supply chain management and logistics.

Category: Supply Chain Management