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    The best-kept, value-based secret is in your hospital supplies

    The seismic shift from fee-for-service to value-based healthcare has placed outcomes and costs front-and-center for all stakeholders in the continuum. Healthcare providers and managed care executives face continuous challenges including increasing costs, risk mitigation, reimbursement reductions and an ever-growing population of patients requiring care.

    TrittTritt

    Can your supply chain and medical product purchasing programs affect the value-based healthcare equation where value equals outcomes divided by costs in a positive way? Absolutely. Savings of 20% to 50% plus improvements in clinical utility and quality of healthcare consumables are possible through global sourcing. For most large hospitals and integrated delivery networks (IDNs), those rates translate into millions of dollars in potential annual savings.

    Relationships with traditional suppliers and distributors of hospital medical products are convenient, but come at a cost. As much as 30% of the medical products IDNs, hospitals and large group practices purchase are not manufactured by the companies that market and sell them.

    As a result, as much as 50% of the cost a provider pays for many disposable products can be related to the middlemen who take profit, but add no value with little or no transparency about the cost or the conditions in which the products were produced. Quality and design decisions are made far away from the patient experience.

    “It is amazing how expensive it is to get relatively low-cost products to the right places in healthcare,” Connor says.

    A veteran of the manufacturing industry, Connor knew there were millions of dollars waiting to be saved through his healthcare supply chain and purchasing program if he could find transparent, capable partners committed to unlocking them.

    Until recently, knowledge of global sourcing strategies and tactics existed far outside of the expertise of most healthcare executives. How do you enter the complex world of global trade, supply chain and logistics in order to efficiently mine the savings and quality improvements available by sourcing medical supplies directly?

    When Jim Connor joined Westchester Medical Center Health Network, a $1.62 billion network in New York’s Hudson Valley, as vice president of Supply Chain Operations in 2008, he discovered the following:

    • 11,000+ SKUs in the purchasing ledger
    • Complete absence of a purchasing “item master”
    • Payments of $100 to ship one $60 item
    • Absence of extrapolated acquisition costs and distributors unwilling to provide them

    “It is amazing how expensive it is to get relatively low-cost products to the right places in healthcare,” Connor says.

    A veteran of the manufacturing industry, Connor knew there were millions of dollars waiting to be saved through his healthcare supply chain and purchasing program if he could find transparent, capable partners committed to unlocking them.

    Next: Top factors to consider when launching a global outsourcing program

     

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