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Revamping the Healthcare Supply Chain

Healthcare providers are adopting a networked approach, both for procurement and distribution of supplies. Robert Colosino, vice president of business development with Tecsys, outlines the advantages and implications of that strategy.

The independent delivery network (IDN) lies at the heart of the modern-day healthcare system. It places hospitals, clinics and ambulatory care facilities under one umbrella. The original purpose, says Colosino, was to create more purchasing clout for the members. At the same time, IDNs allow doctors to perform their specialties at more than one location.

Healthcare in the U.S. is changing dramatically, Colosino says. The industry is moving toward more accountable care, with providers responsible for entire communities instead of one building.

The changes create new challenges in delivering quality service at a reasonable cost. Products account for the second-highest cost component of any health system, says Colosino. Providers need to begin thinking of themselves as “retailers” of healthcare. Some offer more than 30,000 products that must be brought to the bedside. That reality entails “tremendous complexities.”

In the past, smaller locations would buy large quantities of products to ensure a steady supply on hand. Items would get lost, lots would expire, and inventory costs would be driven to unacceptable levels.

Today, there’s a need for sophisticated inventory optimization. But the new way of doing business doesn’t necessarily ensure better service. Healthcare providers need to be able to identify which items are going to lead to the best patient outcomes, Colosino says.

The industry is drawing on best practices from other sectors such as retailing in order to become more effective supply chain organizations. “Health systems for many years didn’t feel they needed to be that,” says Colosino. “That’s changing.” Providers are setting up centralized distribution centers, combining shipments and doing a better job of managing deliveries.

“Taking control of the supply chain is beyond a trend,” says Colosino. “It’s becoming a norm.”

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