Inflation poses a significant challenge for industries across the board, and healthcare is no exception. Hospitals are particularly vulnerable due to their reliance on complex supply chains that deliver essential medical equipment, pharmaceuticals, and personal protective equipment. As inflation continues to drive up the cost of these items, healthcare supply chain and value analysis professionals are under pressure to maintain quality care while managing operational costs. Here are several strategies that can help hospitals combat inflation through improved supply chain management.
Embrace Data Analytics
One of the keys hospitals can use to counter rising costs is through data-driven decision-making. Advanced analytics allow hospitals to forecast demand more accurately, optimize inventory levels, and make more informed purchasing decisions.
Data-driven insights can also reveal inefficiencies in the supply chain, such as over-ordering or underutilized resources. By addressing these inefficiencies, hospitals can avoid waste and reduce the costs associated with excess inventory. In addition, optimizing the inventory of high-cost, low-use items can free up capital and reduce costs, ultimately softening the blow of inflation.
Diversify Suppliers and Strengthen Relationships
Inflation can exacerbate the risk of supply chain disruptions, as vendors may raise prices or experience delays due to their own increased costs. A single-source supply strategy, though efficient under normal circumstances, becomes risky during periods of economic instability. By diversifying their supplier base, hospitals can mitigate price hikes and ensure access to critical materials.
Balance Customization and Standardization
Our contracting aim is to standardize volume across both major and minor categories to secure the best pricing or tier level. This means we are limited to the options provided by the vendors in our contracting formularies.
However, customization is still possible by working within those boundaries to find lower-cost alternatives that meet customer needs with equal or better reliability. The strategy involves using value analysis to study the functional requirements of clinicians, eliminating waste, and identifying unnecessary features, thus fine-tuning products to reduce costs without sacrificing quality.
Focus on Value
In an inflationary environment, the cheapest option is not always the most cost-effective. Value-based procurement focuses on the total cost of ownership rather than the upfront purchase price of a product. For example, a more expensive medical device may have a longer lifespan, lower maintenance costs, or provide superior patient outcomes, ultimately leading to lower costs over time.
Hospitals should focus on suppliers who can demonstrate value in terms of quality, reliability, and long-term savings. Additionally, by adopting evidence-based evaluations of products and services, hospitals can avoid costly medical errors or complications, which can drive up costs and negatively impact patient outcomes.
Utilize Benchmarking Systems
Benchmarking the hundreds of categories of hospital supplies and purchased services will give you the greatest insight into your performance as compared to previous quarters and even other hospitals. For example, benchmarking can empower you with the knowledge on where you stand in categories such as suture cost per surgery case, balloon catheter per cath lab case, or IV set cost per patient day. This will allow you to see where you may be over-consuming or using feature-rich products.
A Proactive Approach to Inflation
The hospital supply chain is uniquely vulnerable to inflation, but proactive measures can help combat rising costs while maintaining high-quality patient care. Through embracing data analytics, diversifying suppliers, prioritizing customization, focusing on value, and utilizing benchmarking, hospitals can build more resilient and cost-efficient supply chains. While inflation remains a challenge, hospitals that adopt these strategies will be better equipped to weather economic pressures and continue delivering vital care to their communities.
Article by:
Danielle Miller, Healthcare Data Specialist, SVAH Solutions, and Managing Editor of Healthcare Value Analysis and Utilization Management Magazine
Articles you may like:
