A Healthy Healthcare Supply Chain Could Save Lives

by | Aug 17, 2023 | Manufacturing & Supply Chain

Reading Time: 5 minutes

One of the most complex industries when it comes to supply chain management is healthcare. Some of those complexities were brought to the public’s attention as a result of the pandemic. It was widely known that some healthcare organizations ran out of personal protective equipment (PPE), and some hospitals reacted by either overpaying for supplies, not getting supplies that met the usual standards of quality, or both overpaying and getting less quality.

There are a number of aspects to consider when looking at the supply chain from a healthcare point of view, and data is used in all of it. It is especially important now, as healthcare organizations are looking to cut costs where they can. They are examining their supply chains for opportunities, and they’re using data to help.

Healthcare supply chains

One of the unique aspects of the supply chain in healthcare that sets it apart from other industries is the possible number of stakeholders within one facility. Consider a hospital where various practitioners might all get their supplies from the same source. Some of those doctors might prefer different medical tools than others. In many cases, doctors save up their tools so they are available when they need them and to make sure other people don’t get into their stock. For the people making the orders, this can lead to difficulty keeping track of inventory.

Someone is accommodating all of those individual requests, though, and trying to balance them with the expenses of the facility overall. Those purchases could be coming from many different suppliers, and they can cover everything from PPE and lab supplies to life-saving devices such as ventilators and respirators. Unlike during the pandemic when some facilities adjusted their buying practices and bought lesser-quality equipment because that’s all they could find, there are usually strict vetting processes that also must be considered before a purchase.

Among the many other considerations with the healthcare supply chain are medications. Some medications are easily available and transportable, while others need to be shipped and stored at certain temperatures. All of that needs to be taken into account in what could amount to life-or-death situations.

Data’s role

Many healthcare operators began approaching the supply chain in a more strategic way after the pandemic opened their eyes to where there could be problems they had not encountered before. One of the most effective ways data can help is by allowing more visibility into inventory, considering there are so many materials and supplies to keep track of. Some health systems have developed data-sharing partnerships with manufacturers to keep an early eye on inventory availability.

In addition to tracking inventory levels, the data can provide insight into costs across the board. Tools might not be expensive in and of themselves, but where they are coming from could be adding to the cost. Organizations can make decisions based on what the data tells them about the supply chain. Maybe the item can be brought in from somewhere else that is most cost-effective, or maybe it is something that they can do without. Sometimes a simple assessment of the most essential tools is all the data that is needed to find out that some supplies are unnecessary.

Solutions from the data

Communication is a big part of helping make a healthcare supply chain run smoothly. Physicians knowing what supplies are available and where they are located is important when they are treating patients. The reverse is true when it comes to supply chain management. The people making the decisions about what to order should have a sense of how those items are being used. It is impossible to include all stakeholders in every decision when there are so many people involved, but some communication is better than none.

Doctors aren’t required to know how their preferred products affect an organization’s bottom line – they just know what they like to use. Allina Health, a healthcare system in Minnesota and Wisconsin, has taken a step to improve communication and help doctors understand how what they do fits into the bigger picture. The health system has put supply chain specialists in procedure settings such as labs or the operating room to give physicians data about supply costs, how much of what they ordered they are actually using, and what peers use, along with possible cost savings for those other options.

It remains to be seen how being fed the data affects physicians’ behaviors, but there are countless opportunities for using data to make healthcare supply chains more efficient. Some organizations have used the data to diversify their supply chains and work with more local companies or to make their supply chains more sustainable.

One of the many complexities that makes the healthcare industry unique is the fact that on the one hand, some of the vetting of supplies that has to be done involves meeting strict regulatory guidelines. On the other hand, it is one of the few industries that can regularly benefit from reimbursement opportunities. As such, part of the work that needs to be done by healthcare supply chain experts is making sure whatever changes are made do not impact reimbursements that can change an organization’s bottom line. That’s another area where data can make a huge difference.

John Sucich
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