Financial Case for Clinical Collaboration in Healthcare Supply Chain

Financial Case for Clinical Collaboration in Healthcare Supply Chain

A rapid shift toward payment bundles and value-based care models has put unprecedented pressure on healthcare supply chain leaders to bring value to their patients and organizations.

Rising material and device costs, ineffective IT for supply chain functioning and poor transparency are major roadblocks for procurement teams trying to keep pace. Top strategies being used to overcome these challenges include:

  • Reduction in clinical variation
  • Segmenting and addressing physician preference item (PPI) inefficiencies
  • Eliminating hidden costs in the supply chain (ie: inventory holding, mismanagement of supplies, and product expiration)
  • Enhancing supply chain IT

But perhaps the most effective and easy-to-implement solution is as simple as improving communication and flow of information between hospital’s internal stakeholders.

In honor of the Association for Healthcare Resource & Materials Management’s (AHRMM) annual National Healthcare Supply Chain Week, October 7- 13, 2018, the organization has released a call-to-action for today’s supply chain practitioners: “Healthcare supply chain is uniquely positioned to connect various stakeholders across the continuum of care – no other group interacts with every major stakeholder internally and externally. It is this unique role that allows the supply chain professional to identify connections to deliver value in order to reduce costs, deliver efficiencies, and improve the quality of care for patients and communities.”

A Study: The State of Total Joint Clinical Sourcing 2018

In August 2018, Curvo commissioned a survey of clinical supply chain and hospital executives in order to get a better, more objective look at how today’s supply chain and orthopedic service line leaders manage their biggest category of spending: Total Joints. The survey results revealed the traditional arms-length relationship between supply chain and orthopedic surgeons lingers in many of the nations top healthcare organizations — a structure which puts health systems at a significant financial disadvantage.

Key Findings

With less than half of respondents reporting that a member of their Supply Chain is involved in regular meetings with orthopedic service line and more than half unsure as to how clinical leaders view the supply chain’s role within the organization, it’s not surprising that true end-to-end supply chain collaboration is an ideal not yet realized for most hospitals.

Cost Savings Opportunity

Curvo’s market insights data shows general upward price pressure on components of 1.68%. Customer spend management activities show net price savings of 5-15% through sourcing and contracting and $500 – $1,000 per case in utilization-based savings opportunities.

This has a ripple effect that can result in near-immediate savings across the entire healthcare system. For specific examples of health systems that utilized a combination of clinical spend management technology and clinical collaboration to realize millions in savings, you can access Curvo’s library of case studies here.

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