Study Finds Hospital Could Save About $10 Million A Year In Supply Chain

In most healthcare facilities, supply chain represents 30% of the hospital’s operating budget. This is only second to the cost of labor. With the significant portion of the budget going to supply chain, there are many opportunities for cost savings when supply chain is managed properly.

Below is an article from that details the importance of the supply chain manager and their involvement in the budget process as well as the analytics associated with the decisions made during strategic planning. After reading the article give us a call at SpendBridge so we can discuss the best way to manage your supply chain to maximize your facilities operating budget.

Source: | Re-Post SpendBridge 10/13/2017

Hospitals are spending about $10 million more a year in the supply chain than is necessary, according to a new Navigant study.

The study looked at 2,300 hospitals and their supply spend and found the providers could reduce their annual supply budgets by a total $23 billion, or about $10 million per year, per hospital, according to Alven Weil of Navigant. This is a savings of about 18 percent.

When supply chain represents 30 percent of hospital operations, ranking second only to labor in cost, 18 percent represents a significant amount of savings.

Pharmaceuticals, which are the single largest supply item, remain an elusive target for savings. Drugs represent 5 to 10 percent of the total 30 percent budget.

“You don’t have a lot of control over the pricing of drugs,” said Rob Austin, associate director of Navigant. “The way you can control pharmaceutical expense is through formularies.”

There’s also not a lot of wiggle room in commodity purchase prices for clinical supplies such as tongue dispensers, paper products or office supplies. Ninety-six percent of all health systems use a group purchasing organization and the prices are comparable and competitive.

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