INDUSTRY INFORMATION
What drives Supply Chain costs in healthcare facilities?
T
o identify the top cost drivers in your healthcare facility should be obvious once you run the numbers. Not surprisingly, a global, supply chain-straining pandemic tends to usher certain elements higher up the list at the expense of others that linger.
Healthcare Purchasing News an- nually surveys its readers about a variety of topics and one of the questions posed each year since 2017 involves perceived top cost drivers. See chart 1. HPN Senior Editor Rick Dana Barlow reached out to Amazon Business for comment on the results and what they might say about the industry. Bill Kopitke, Amazon Business’ Head of Healthcare, briefly shared his interpretations.
HPN: What surprised you the most about the responses and the trending over the four-year period and why? KOPITKE: It is a little surprising to fi nd the high percent of organi- zations [that] recognize the nega- tive cost impact when supplies have inventory shortage. Prior to the pandemic, we began to focus more on our role as an important source for backordered supplies. We realized healthcare providers conducting the same practices for sourcing supplies were not effective to secure scarce supplies. What issues may be missing
from this list about which the healthcare supply chain should be concerned and why? We fi nd the process for when employees outside of the sup- ply chain department need to make their own purchases to be inefficient, distracting and ultimately costly for organiza- tions. This involves hundreds
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to thousands of employees when make orders through “Specials,” “X-types,” P-cards, or cash with reimbursement all have their faults with process. When you aggregate the experience
for each employee, the cost is signifi cant! Yet, it doesn’t show on this graph or other studies. Amazon Business continues to drive awareness on non-contracted spend. HPN
What are among Supply Chain’s top cost drivers? 2017
2018 Inventory shortages – due to supplier issues Medical/surgical supply pricing Branded product/Physician preference item demands Freight/shipping issues Working with bad/erroneous data (actual or suspected) Product/service contract terms Drug pricing Product recalls Lack of control over sales rep access to organization
Lack of industry-wide, if not organization-wide supply data standards
Lack of professional relationship with clinicians – physicians/surgeons and nurses
Inventory shortages – due to Supply Chain management issues
Outsourcing vs. insourcing Other
15.7% 15.8%
10.9% 7.4%
3.5% 3.3%
9.2% 20.9% 24.0% 0% 10% 20% 30% 40% 50% 60% 70% 80% Source Guide 2021 • HEALTHCARE PURCHASING NEWS •
hpnonline.com 12.5%
18.3% 19.2%
10.0% 9.1%
23.5%
3.0% 2.9%
7.4% 8.4%
42.2% 42.5%
39.2% 35.0% 35.0% 29.2% 37.4% 26.7% 25.8% 28.7% 28.3%
34.3% 35.1%
28.6% 32.2% 38.3% 43.2% 40.6% 41.3% 40.9% 52.6% 39.6% 60.1%
24.8% 25.3%
2019 2020 40.9% 45.1% 59.1% 55.7% 65.8% 59.2% 62.2%
54.8% 55.8%
50.0% 56.5% 66.9%
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