NY hospitals centralize supply chain management, saving $137M
- NYC Health and Hospitals has instituted a system-wide standardization plan, which involved closing eight decentralized and independent purchasing offices to create a single supply chain headquarters operating 22 facilities and a $7 billion budget, Health Care Finance reported last week.
- The procurement department will now ensure the same supplies for every location; standard pricing on every item; contracting allowed only at the main location, and the involvement of nursing and clinicians on purchasing decisions.
- The new plan aims to save the organization $137 million but will require standardization of good supplies, equipment and a focus on outcomes. In addition, the hospitals will focus on accurate inventory amounts, accepting neither overages nor shortages of product.
Inventory disorganization within hospital supply chains often leads to enormous waste and lost profits, in addition to exhausted staff and ill-used products that can jeopardize patient health, according to recent reports. For this reason, however, supply chain initiatives imposing order on chaos can have a high payout for healthcare organizations.
One such strategy was recently highlighted in an economic analysis by a former Federal Trade Commission chairman, which argued group purchasing organizations (GPOs) help establish that much-needed order. A GPO can aid a hospital system of any size by offering the lowest prices on medications and equipment. With increased access to data, Modern Healthcare reports, GPOs can better analyze contracting choices to predict healthcare needs and avert crises.
When it comes to data, more is typically better. Joining a GPO can help healthcare organizations achieve these data benefits without overtasking their own staff. In turn, as the New York City case shows, hospitals can turn their efforts to other internal inefficiencies, such as inventory mismanagement. Data-driven, partner-supported supply chain management seems to be the future of the profession; healthcare need not be an exception.
- Health Care Finance Sustainable supply chain management, and how it can save millions
- Supply Chain Dive Survey: Hospital supply chain practices are outdated
- Supply Chain Dive Group purchasing saves healthcare supply chains up to 18% of costs
- Modern Healthcare The New GPO Landscape and its Impacts on Healthcare
Follow Jennifer McKevitt on Twitter