The role of supply expense management within hospitals, systems, and IDNs has shifted and grown in importance over the last 20 years. This is because third party payers have increased their quality initiatives while at the same time decreasing their reimbursement. The only answer to this challenge is for healthcare organizations to keep chipping away at their expenses.
20% Expense Reduction is the Benchmark
Even with the election of a new President and Congress, healthcare costs too will be the target of the Trump administration, since hospitals, doctors, and drug costs are a big chunk of the U.S. Federal budget and deficit. Worst yet, healthcare insurance premiums are increasing greater than wages. This is a crisis that isn’t going away soon.
That’s why leading healthcare experts are predicting that a 20% expense reduction is required by hospitals, systems, and IDNs to move the needle on their expenses. This is the only rational approach for the survival of healthcare organizations.
Supply Chain Management Needs to Lead the Charge
Since substantial hospital expenses (up to 45%) fall under the supply chain manager’s spire of influence it should be his or her responsibility to rein in these costs, not just medical/surgical costs. However, this mission can’t be accomplished unless the supply chain takes a broader view of their hospital, system, or IDN’s supply expenses.
This is because very few department or division heads are keeping their sharp eye on supply expenses, especially if they are spread out throughout a healthcare organization like telecom, waste management, and blood product expenses. In addition, department and division heads could be dealing with their favorite vendors, not the lowest cost qualified vendors. This is where supply chain can make a big difference!
Supply Chain Has Now Been Given a Seat at the Table
The frequent listing on a healthcare organization’s chart of vice president (or equivalent) of supply chain gives notice to the fact that supply chain management is now at the table to weigh in on decisions that affect the entire organization. This is the time for supply chain professionals to step up to this challenge with enthusiasm, not fear. Billions of dollars in supply expenses can be saved by supply chain managers when they see the strategic importance that supply chain contributes to their healthcare organization. It’s now time for supply chain to shine!