Changes and Challenges in the Healthcare Supply Chains

A supply chain is a network of exchange points that a product must go through before it ends up in your hands. Supply chains typically involve producers, manufacturers, transporters, distributors, and vendors.

The healthcare supply chain is unique in comparison to the supply chains of other industries. In the healthcare industry, the consumer is the patient, and the product is improved health. The consumer wants the best product at the most affordable price possible.

A wounded patient in the emergency room does not think about the physician's preferences in supplies and equipment. Instead, the patient is thinking about affordable healthcare.

The reimbursement element of healthcare and the changing expectations of the patient creates challenges that drive constant improvement. Supply chain management sits at the heart of these changes and plays a strategic role in the affordability of quality healthcare.

Challenges that Face the Healthcare Supply Chain

  1. Overnight Shipping

The importance of overnight shipping to the healthcare industry can never be understated. Sometimes, unexpected situations arise, and it is upon hospitals to address these situations no matter the cost.

While one or two orders may not significantly impact the provider's bottom line, regular occurrences can be catastrophic. For example, it costs $100 to ship a 50-pound package overnight within 150 miles. The costs escalate for heavier items and farther distances.

With better inventory systems, suppliers can reduce the occurrences of product shortages. Such changes can also help reduce or eliminate overnight shipping costs, improve par level management, and adapt to changing consumer volumes. 

While there may still be emergency items that require overnight shipment, such trips will be less frequent.

  1. Hidden Costs

When buying an item from any industry, we often consider two cost factors: the item and shipping costs. In the healthcare industry, there is the challenge of hidden costs like distribution expenses. 

Suppliers and inventory managers have to consider hidden costs in their budgets. You also have to be aware of losses that may occur from unavoidable circumstances like product expirations, excess supplies, and managing contract challenges. You need to consider product standards and purchase variance.

With the help of technology, you can address this challenge. By utilizing the right software, medical supply providers can price their products to include all the costs associated with moving and holding the items.

  1. Medical Device Shortages

The medical industry comes with a lot of unpredictability and uncertainty. Medical Device shortages are characteristic of the unpredictable nature of this industry, specifically backorders. Such a need poses a significant inconvenience within the supply chain.

A shortage can cause a supplier to source alternative drugs that may be more expensive or maintain a backup inventory. All this leads to added costs and increases the chances of product expiry.

With the right software, you can install a system that notifies you when you need to restock. An early response system can help you avoid shortages and effectively manage inventory.

  1. Data Shortages

Data helps improve the efficiency and effectiveness of operations in every industry. Tracking the right data can reveal what you may be missing while also providing a bird's eye view of your operations. 

Hospitals can benefit from advanced modeling systems and real-time reporting. While facilities pride themselves on utilizing the latest and most advanced products for patient care, many allow their internal technology to fall by the wayside. Healthcare providers using these antiquated and outdated systems miss out on data that could be informing supply chain decisions. 

However, this challenge does not end once an appropriate data collection method is in place. The real value in this technology lies in using this data to optimize your supply chain.

  1. Lack of Integration

We continue to see the consolidation of healthcare practices, facilities, and hospitals. Mergers and acquisitions are common among health systems. Despite this, the supply chains within these merging organizations often remain separate.

By strategically integrating these supply chains, organizations can address inefficiencies that arise when operating multiple purchasing channels. Without proper adjustments, supply chains may have some trouble being cost-effective.

  1. Physician Preferences

Different healthcare professionals and physicians have specific preferences for the products that they use. Most institutions and organizations will permit physicians to request the products that they prefer over other manufacturers. Allowing healthcare professionals to use their preferred tools can result in unforeseen cost implications.

The fact is not that the products will guarantee a better outcome for the patient or that physicians do not care about product costs. Communicating the cost variance with physicians may open the door to explore the utilization of different products that offer the same outcomes but at a lower price. 

How Surgical Product Solutions Can Help

Surgical Product Solutions (SPS) provides healthcare organizations with a sustainable way to navigate the healthcare supply chain's challenges. We offer single-source solutions for the acquisition, maintenance, and liquidation of surgical supplies. 

Our solutions serve the entire spectrum of healthcare facilities – from large health systems to small surgical centers. At each level, our services are personalized to fit our customers' needs.
Visit our home page or contact us to find solutions that can help your organization overcome supply chain challenges.

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