The use of information systems in healthcare has accelerated dramatically over the past decade. Just seven years ago, most physicians had yet to meet the Centers for Medical and Medicaid Services’ (CMS’s) meaningful use standards for electronic health records (EHRs). Today, over 95% have satisfied the requirements.
It’s not just EHRs that have shaken up healthcare. Many hospitals are using complex data-analytics tools, artificial intelligence, and clinical surveillance platforms to enhance patient care and improve efficiencies.
Still, one major hospital function is decades behind in applying technology to optimize performance: supply-chain management.
Considering that supply-chain optimization can save hospitals millions due to improved operational efficiency and inventory management, this is a glaring omission. Benefits of a more automated, streamlined, and data-driven approach to supply-chain management include:
- Improved performance with value-based healthcare initiatives,
- Business intelligence that creates the opportunity to adopt an evidence-based approach to standardizing perioperative case costs,
- Enhanced capabilities to comply with regulatory standards related to tracking implantable devices and expired products, and
- Increased clinician time spent on direct patient care.
Sixty-four percent of hospitals still use paper and Excel-based systems to track and monitor inventory, and nearly 20% of hospitals aren’t tracking any metrics at all, according to a 2019 survey of 100 hospital executives and supply-chain leaders by Sage Growth Partners, a healthcare consulting firm.
This is both inefficient and a significant waste of money. A report released last November by Navigant Consulting found that tightening control over the supply chain and identifying waste could help reduce expenses by an average of 17.4%, or $12.1 million annually, per hospital. Importantly, the analysis also found that a decrease in supply spending doesn’t translate to lower quality care.
If your hospital is ready to make supply chain optimization a priority in 2020, here are some of the first steps to take:
- Use AI and advanced data analytics. As noted, nearly 20% of hospitals don’t analyze their supply chains and many are still tracking inventory manually. This means they are missing out on sophisticated data analytics capabilities that reveal savings opportunities. A McKinsey study found that using AI to enhance supply-chain management could cut forecasting errors by 20% to 50%.
- Focus on supply standardization. Standardizing supplies across all categories increases negotiating power with suppliers, reduces inventory and decreases variability. A single supply-chain management platform can provide real-time insights across the entire healthcare enterprise that facilitate standardization. Supply-chain management tools can help hospitals quickly and easily run reports to identify supply standardization opportunities.
- Identify physician preference item (PPI) savings opportunities. The operating room accounts for many of hospitals’ highest supply costs, particularly due to PPIs. Hospitals can increase physician acceptance of lower-cost items by identifying when these items are associated with similar or better patient outcomes. Hospitals can use supply chain management solutions to create cost-variance analysis reports that show how different PPIs affect patient outcomes and length-of-stay metrics.
- Gain an enterprise-wide view. Value-based models (VBMs), such as bundled payments, require hospitals to find cost-savings opportunities across full episodes of patient care, such as all services and supplies associated with a hip or knee replacement. For that level of insight, hospitals need supply-chain management tools that provide an enterprise-wide look at usage and costs. In fact, nearly two-thirds of hospital leaders say supply-chain analytics can positively impact VBM success, and more than 40% say a single platform with an intuitive dashboard and analytics suite has the most potential to positively impact business operations.
- Implement easy-to-use point-of-care technologies. Tools such as smart wands, radio-frequency identification (RFID), smart cabinets, point-of-care technologies, and barcode systems can automate supply usage and improve efficiency. This saves staff time that can be redeployed to patient care activities, and reduces errors and waste that occur due to expired or recalled products.
- Select a platform that proactively manages supply challenges. Interoperability is essential for a supply-chain management platform to seamlessly exchange information with other technologies such as the EHR, enterprise resource planning (ERP), operating room information system (ORIS), and materials management information system (MMIS). Having a platform that can bring together these systems to create meaningful insights quickly will translate to significant savings.
Get your new year off to a great start by optimizing your hospital’s supply chain. Use advanced supply-chain management tools that take advantage of AI’s growing power, and your hospital will reap big dividends for years to come.
Brion Bailey is chief commercial officer at Syft, a provider of supply-chain management services to hospitals.