Becker's Hospital Review

Executive Briefing: The Supply Chain as a Strategic Asset 69 Sponsored by: The Supply Chain's Role in Making or Breaking Hospitals' Margins, Competitive Edge By Ellie Rizzo A cians in product and vendor decisions," he says. "Practices and s hospitals seek to protect their margins in an era of deproducts hinge around clinician input. Because clinicians' prefcreasing reimbursement and other pressures on their erences are driven by patient care, they often have passionate bottom lines, there is one area of spending that is ripe views when it comes to supplies. However, many hospital supply for savings: the supply chain. While roughly half of a hospital's chain departments have underinvested in staff who engage and spend is labor, the other half is spent on non-labor expenses, lead clinicians in these critical discussions. Support and leadersuch as supplies and purchased services. Manual and inefficient ship of clinician committees that provide input on which supplies, supply chain management processes can hurt not only a hospiservices and equipment will be purtal's financial performance, but also its chased — and from whom — is one of overall competitiveness in an increasthe core services MedAssets provides." ingly challenging industry. Conversely, a well-run, well-led supply chain can be "Manual and inefficient Not consolidating vendors an immense strategic asset to hospitals Another common misstep in supply competing for a place in the market. supply chain management chain management is purchasing simifrom many different vendors. "Healthcare has lagged behind other processes can hurt not only lar items the highest quality products at Securing industries in implementing technology best price through vendor consolidation and processes within the supply chain a hospital's financial is critical for supply chains. that could elevate it to a strategic asset for profitability and wellbeing," says performance, but also its In value analysis with clinicians, hosDavid Klumpe, senior vice president of pitals should focus on opportunities to supply chain services at MedAssets. overall competitiveness increase savings opportunities through "Reimbursement changes in the last ten utilization initiatives that also help conin an increasingly years have brought the strategic nature solidate vendors, which leads to better, of the hospital supply chain into focus, more efficient inventory management. challenging industry." because declining reimbursements and By employing a clinically integrated value-based purchasing have placed sourcing process, MedAssets helps neimmense pressure on hospital operatgotiate contracts on behalf of providers ing margins." while incorporating clinician input on what they want out of supplies at the forefront, says Mr. Klumpe. It's critical to employ a Because hospitals typically have not invested in the technology clinically integrated sourcing process with clinician input on supand processes within their supply chain, it can be difficult for plies at the forefront of all decisions. them to effectively reconcile processes of supply chain management. Even with a clear focus on what must be accomplished; Poor contract compliance there remain obstacles to creating a well-managed, cost-saving A third point of contention, according to Bejan Shamsy, vice presisupply chain. dent of MedAssets' procure-to-pay solutions, is that hospitals may not be realizing their full contract savings potential. Contracts repCommon supply chain pitfalls resent potential savings, but these savings can only be realized Underinvestment in clinician engagement if contracts are effectively implemented and operationalized into According to Mr. Klumpe, one of the biggest obstacles at the front the supply-chain process. Often hospitals don't know with cerend of the supply chain can be getting physicians and other clinitainty if they are getting the correct contracted price at the point of cians involved in efforts to reduce costs. "It's vital to engage clini-

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