Healthcare Supply Chain Management


Minimizing healthcare costs has become the new motto for hospitals and physician practices. The healthcare industry is witnessing a sharp spike in prices for almost all products and services. This alarmingly high spike in expenditures is disrupting the availability of products being marketed to the masses.


Many healthcare organizations have started examining their billing and services section of the revenue cycle, while the majority have begun to focus on their healthcare supply chain management. The industry's supply chain is a vital driver of cost expenditures and is, therefore, attracting maximum attention from stakeholders. Nearly all hospitals still use outdated tools to manage their inventory and supply chain activities, which makes supply chain costs the number-one expenditure for hospitals and healthcare systems.


During the last decade, supply chain management has emerged as a crucial competitive advantage for companies in various industry verticals. In standard terms, a supply chain can be defined as the physical and informational resource necessary to deliver goods or services to an end user efficiently. As an extended term, the supply chain includes all activities associated with manufacturing, including extracting raw materials, processing, storing and transportation.


In the healthcare industry, the supply chain is typically a highly fragmented and complicated process. Promoting efficient supply chains in the healthcare industry can help physicians, practices and hospitals design a comprehensive, cost-effective plan across their organizations. The  Global Healthcare Supply Chain Management Market is predicted to garner a revenue of US$3.67 billion by 2027, growing at a CAGR of 7.6 percent, according to the latest analysis by Emergen Research.


What is Healthcare Supply Chain Management?

Healthcare supply chain management covers the procurement of materials, the tracking of supplies, and the supplying of products and services to patients and providers. The primary purpose of the supply chain is to provide products promptly to fulfil providers' needs. The supply chain is the holistic flow of products between suppliers and customers and it efficiently delivers products at a low cost.


Supply chain management faces a myriad of challenges, such as stockpiling supplies, the requirement for specific products in inventory, out-of-stock issues, and product expirations that subsequently contribute to costly delivery, an unexpected surge in inventory expenses and pilferage. These issues, combined with others, lead to a costly budget for suppliers. The healthcare management supply chain is responsible for stocking and managing organizations' inventory.


The starting point of the healthcare supply chain is the medical product manufacturer, at which items are produced and sent to distribution centers. Depending on the product, hospitals either purchase inventory directly from the manufacturer or distributor, or a purchasing contract is formulated on behalf of the hospital. Stocking essential supplies in inventory ensures that providers have timely access to these products, and that patients have unrestricted access to life-saving equipment.


Similar to industrial supply chains, the healthcare supply chain comprises multiple independent agents, such as insurance companies, doctors, hospitals, regulatory agencies and employers. Agencies such as the U.S. Food and Drug Administration, as well as healthcare payers such as Medicare and other private insurance companies, are involved in healthcare supply chain management.


Automation of Healthcare Supply Chain Management

Software automates manual tasks carried out repetitively by healthcare organizations, in order to achieve an enhanced supply chain system. Such automation enables the streamlining of inventory and a reduction in waste, allows timely and accurate data-based decision-making, and lowers the costs of supply, labor and operations.


Two types of supply chain management technologies are available to choose from: enterprise resource planning (ERP) systems and so-called "best-of-breed" or niche healthcare inventory and supply chain systems. ERPs are often not the first choice for healthcare settings because such solutions are widely deployed across a broad spectrum of industry verticals, and healthcare expertise is scarce. The second type, niche solutions, are more flexible and affordable, and are equipped with more profound industry knowledge that enables accurate healthcare-directed solutions.


These systems are more inclined to zero in on particular areas, such as interventional medicine, surgery and other disciplines that contribute to 60 to 70 percent of a hospital's total supply chain costs. Different automated tools can also help organizations improve price transparency, such as computerized order-entry systems to streamline a physician's orders, or radio frequency identification (RFID) technology that can provide volumes of data from a product's barcode.


How RFID Is Enhancing the Healthcare Supply Chain

RFID technology is considered the next big wave of the future, and novel and innovative applications of this technology emerge daily in the healthcare industry, from iPads and asset tracking to hygiene solutions. RFID is an identification and data-collection technology that leverages radio waves to sort, locate and control materials, patients and assets with minimal to no human intervention.


RFID is typically combined with other technologies, such as mobile devices, Bluetooth and sensors, for varied purposes. Passive RFID tags allow for seamless patient identification, while drug-authentication and active RFID tags enable the efficient tracking of products. The technology is exceeding the expectations of being solely an asset tracker and is rapidly evolving to improve patient care.


There are several key benefits to employing RFID for healthcare supply chain management. RFID-assisted bracelets enable physicians to quickly access patients' files, resulting in faster treatment and enhanced traceability of prescribed drugs. It ensures that the right patient receives the correct dosage of the proper drug, thereby maintaining the "Five Rights" of medication administration.


In addition, RFID can facilitate the collecting of accurate data during clinical trials, then deliver that information straight into hospitals' databases. The technology, combined with error-prevention systems, can enable accurate inventory management and asset utilization, thereby reducing a large chunk of supply chain costs. According to surveys, clinicians and physicians spend more time doing non-patient-related activities owing to disrupted supply chains. RFID offers providers more time and resources to pay attention to their patients, thereby augmenting patient care.


In short, radio frequency identification is linking producers, distributors and purchasers end to end across the entire healthcare supply chain, allowing manufacturers to view real-time inventory and consumption data. The technology enables hospitals to better manage their high-cost products and services without burdening medical personnel with tedious supply chain tasks, and it also enhancing efficiency, augmenting the patient experience and changing the landscape of the healthcare industry.


Source: RFID Journal