With an emphasis on resilience, many healthcare organizations have increased their focus on supply chain transformation and view it as a strategic imperative. In fact, 60% of healthcare providers say they need to completely overhaul or update their clinical sourcing and supply management, according to the IDC report “Evolving Healthcare: Turning Disruption into Innovation.”
“The days of going with the lowest-cost vendor are over,” shares one chief supply chain officer. “I can’t risk not having supplies as a Level 1 trauma center. That’s a different mindset for working with suppliers and how we partner with them.”
Organizations that previously adopted a “just in time” strategy of purchasing only what they knew they were going to use and prioritizing the lowest unit cost have realized that such a strategy is no longer working.
As per-patient hospital supply prices have increased in recent years and outpaced the broader inflation rate, according to the American Hospital Association, pressure has been put on organizations to “do more with less” while trying to provide affordable and high-quality patient care.
Organizations are now realizing that they need to shift to a strategy that balances cost, quality, and outcomes. Supply chain management can be a strategic function, supporting the shift to value-based care. But it must dovetail with finance, clinical operations, and other functions. This strategy requires unified technology, automation, and data-driven purchasing decisions.
Below, we share three ways technology can transform supply chain management into a strategic enabler.
1. Integrate Supply Chain Management With Enterprise Finance and Other Key Functions
The healthcare supply chain can never reach its strategic potential if it’s buried in an organization’s basement, so to speak. Effective supply chain operations go hand in hand with efficiencies and strategic alignment—contracts and purchasing practices that are in tune with financial planning, HR, and clinical demands. Organizations need a mindset shift to ensure they’re balancing costs, quality, and outcomes. Prioritizing physician preference over standardization when the clinical outcomes are the same can no longer be a common practice. Letting outcomes data drive supply purchasing is essential.
For supply chain management to boost productivity and drive operational objectives that support quality care, organizations need a 360-degree view that brings together key functions. This requires a single cloud-based system enabling real-time visibility into supply chain data and performance. Contrast this view with antiquated systems and workflows that involve “too much paper, too many manual processes, and too much data sitting in silos—all of which causes complexity as leaders struggle to get a handle on cash flow,” says Tina Murphy, president and CEO of Global Healthcare Exchange (GHX).
In search of cross-functional collaboration via a single source of truth that ensures data transparency, consistency, and accuracy, nearly 70% of hospitals and healthcare systems expect to adopt a cloud-based approach to supply chain management by 2026. And nearly half (45%) have already done so, according to a September 2023 GHX survey of healthcare leaders.
Technology is no supply chain panacea. Ultimately, strategic value and agility flow from strong relationships across the C-suite. When one chief supply chain officer started in her role at a large health system, she reported to one of the medical center’s two hospital presidents. Then the organization decided to take a corporate view of more functions, including supply chain, bringing the officer into regular meetings with financial and managed care leaders. The officer shares that the collaboration has “given me insight into strategic areas across the organization and how they all feed into overarching goals.” She adds, “You just can’t function in silos, and that includes supply chain.”