White Paper: Reducing Healthcare Costs With Supply Chain Best Practices

By Motorola, Inc.

With extreme pricing pressures on today's healthcare providers, reducing costs while delivering high-quality medical care is a top strategic imperative. To achieve this objective, provider efforts have been focused primarily on eliminating waste in clinical operations, for example, through initiatives that reduce unnecessary testing and the length of hospital stays. While these are valid and important ways to reduce healthcare costs, one area that consumes nearly one third1 of all hospital operating budgets often remains overlooked — the healthcare supply chain.

When it comes to expenses, supplies are second only to labor, with millions of products moving along the supply chain every day — through manufacturers, distributors, Group Purchase Organizations (GPOs) and healthcare providers to patients. Although the healthcare supply chain is one of the oldest and most complex, it remains immature1 in its level of collaboration, driven by a lack of data standards and paper forms that drive errors and duplication into the process. Cycle times increase and data accuracy shrinks, ultimately increasing supply chain costs, general healthcare costs and potentially affecting patient safety.

Inconsistent data standards for product, trading partner and customer locations translate into substantial inefficiencies in the healthcare supply chain, where manual data processing is typically required as orders and product shipments travel through as many as 17 different locations. Inefficiencies may start inside the hospital at the beginning of the demand cycle, where inventory management procedures require workers to collect information on paper that must then be entered into the computer — a double-touch of data that introduces ample opportunity for errors. Orders are compiled using product identifiers from the first distributor in the supply chain. Access this content to read the entire white paper.