FS_WP_CardinalHealth_040816_MC_v3

Recommendations

Info

H O S P I T A L Transforming the Supply Chain into Strategic Asset Creates Growth Opportunities in Healthcare GROWING NEED TO ELIMINATE WASTE AND INCREASE PRODUCTIVITY The second highest cost for hospitals after labor is surgery and medical supplies. 3 The healthcare industry has experienced a shortage in providers and personnel for years. Labor costs cannot be trimmed because healthcare doesn’t need less staff. In fact, healthcare needs more staff. Empowering healthcare personnel to be more productive would be an improvement. The aging baby boomer population—which is the largest generation to retire in history 4 —will bring a massive wave of more than 37 million chronic care patients. 5 Without sufficient healthcare providers and staff to care for the existing population, the baby boomer population will undeniably stress the already stretched health system. To support this new influx of patients, there will need to be additional investment in labor to focus on patient care. Patient care would be the priority over non-clinical duties. Medical supply costs are the only other option to focus on. Medical supplies are typically associated with purchasing contracts. Discounts and volume pricing are frequently negotiated by hospital supply chain executives. Further discounting for medical supplies can only go so far. Discounting is just not a sustainable option. For the past couple of years, medical supply costs have increased. Medical supply acquisition costs are not under the hospital administrators’ control, but inventory control and supply chain processes are. Inventory control would improve supply management, optimize ordering and reduce waste. TRANSFORMING THE SUPPLY CHAIN INTO A STRATEGIC ASSET Every year, $5 billion are lost in the implantable device market, according to a survey released by the Global Healthcare Exchange. 6 Needless to say, current supply controls and management systems at hospitals are suboptimal. Hospital staff is responsible for handling current supply systems that are not interconnected. The failure to share data from disparate systems results in waste when healthcare staff is used to manually track information. Ultimately, this results in duplicate orders and expired products. Figure 3) Healthcare Supply Chain HOSPITAL PATIENT FACTORY WAREHOUSE 6 All rights reserved © 2016 Frost & Sullivan
Transforming the Supply Chain into Strategic Asset Creates Growth Opportunities in Healthcare According to a recent survey conducted by SERMO Intelligence, 7 the increase in supply costs is one of the top issues facing health systems today after payer reimbursements, financial issues, drug shortages and operational efficiency. Most of the respondents agreed that improving their supply inventory control systems would reduce costs. Few hospital executives felt confident that their current efforts were effective, and 85% of respondents were considering and evaluating supply management and waste reduction investments. Clearly, supply waste and errors are real and very costly. Other industries have spent decades improving and optimizing inventory control and supply chain to produce products, distribute products, reduce waste and increase profit margins. According to The Gartner Supply Chain top 25 for 2015, Amazon, McDonald’s, Unilever, Intel and Inditex were the top five global supply chain leaders last year. All of them are either in the industrial or retail segments. Inditex, a Spanish clothing manufacturer and retail giant, is a newcomer to the list. Intel is a returning leader for 2015. None of the top 25 is in healthcare. Gartner also recognized Apple and Procter & Gamble (P&G) in the newly created Master category for their supply chain leadership for more than 10 years. With the exception of the Apple “CareKit” focused on the healthcare space, Apple falls under the industrial category, like P&G. 8 How does this relate to healthcare? The healthcare industry can leverage decades of proven processes and technology to reduce supply waste and improve supply control. There hasn’t been a better time in the healthcare industry to learn from other industries. STREAMLINING INVENTORY AND WORKFLOW Manufacturing of products is driven largely by market conditions such as demand. In hospitals, the only demand that can be managed is elective surgeries and scheduled procedures. Ordering supplies for planned activities relies on available information. For unplanned surgeries and cath labs, hospitals have information about the supplies required for each procedure. Data in the form of historical supply usage is the critical underlying element needed for sophisticated inventory control and supply chain management. Technology platforms with usage data and analytics provide a powerful combination that will reduce waste and control costs. STATE-OF-THE-ART INVENTORY MANAGEMENT SOLUTION—RFID VS. BARCODES RATIONALE FOR MOVING FROM CURRENT TECHNOLOGY Today, barcode technology is widespread. 9 Driven by retail and manufacturing distribution activity, barcode technology increased accuracy and speed, improved inventory control and reduced cost. However, barcode scanners—considered a semi-automatic inventory management system—require a person to point the UPC in the right place and click each and every time. Barcode technology is prone to human error. Therefore, barcodes are not the ideal technology to track high-value devices and implantables. There is another technology that is ideal for this type of item. RFID IN HEALTHCARE RFID is another type of automatic identification. Its first implementation dates back to the 1970s. RFID is an automatic identification technique and has many applications. In simplest terms, RFID uses radio wave frequencies (low end of the electromagnetic spectrum) to read information from a microchip. The microchip has an antenna—the chip and antenna duo is often referred to as an RFID tag or transponder—which sends waves to an RFID reader. The RFID reader converts the radio waves information into digital form, and this information is then transmitted to a computer. All rights reserved © 2016 Frost & Sullivan 7
Page 1 and 2: Transforming the Supply Chain into
Page 5: Transforming the Supply Chain into
Page 13: Auckland Bahrain Bangkok Beijing Be

FS_WP_CardinalHealth_040816_MC_v3

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?