Hospitals are leaving billions on the table when it comes to the U.S. supply chain, according to a new study from Navigant that found unnecessary supply chain spending reached $25.7 billion a year.
That’s up $2.7 billion, or 11.8%, from 2017, according to Navigant, which analyzed 2,127 hospitals for its study. Individual hospitals have a bigger opportunity for savings, with the average annual supply expense reduction opportunity rising 22.6% from 2017, to $12.1 million. That’s about the same as the average annual salaries of 168 registered nurses or 51 primary care physicians, according to Navigant. $12.1 million is also equivalent to the cost of 3,100 knee implants.s
However, higher supply chain costs don’t mean higher quality care, just as savings on supply chain spending doesn’t equate to lower quality care.
“Our analysis does not point to aggregate improvement in hospital supply chain performance, with high-performing supply chains widening the gap as others tread water or lose ground,” Rob Austin, director at Guidehouse, which owns Navigant, said in a statement.
The study also found savings opportunities were pretty much equal across hospital size, regional location and type of facility, such as whether it is urban or rural, for-profit or non-profit, system-based or standalone, and academic or non-academic.
“It’s incumbent upon providers and suppliers, including pharmaceutical and device manufacturers and distributors, to attack these continually rising expenses to improve supply chain efficiency for all stakeholders, including patients,” Austin said.
There are some best practices for high-performing supply chain departments to leverage cost and data. These include enhancing utilization to identify needed services, products and procedures; increasing standardization by partnering with data-driven physicians and using a standardize set of supplies; and integrating clinicians with supply chain, finance and IT departments
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."