The Future Of Hospital Supply Chain Management

Last year a third of the $3.8 trillion in total healthcare spending was on hospital expenditures. Over the coming decade hospital spending is expected to rise by 5.7% each year, putting the squeeze on hospitals. Hospital profit margins are already tight – 1.8% for for-profit hospitals and 2.7% for nonprofit hospitals – which is causing one in five hospitals to have to close due to financial difficulties. The United States spends more on healthcare than any other country in the world, so how can we save the hospitals we so desperately need for the patients who need them?


In 2019 hospitals saw greater use by Medicare and Medicaid patients, which means that reimbursement rates are less than the cost of care in many instances. Reimbursement rates from private insurance companies is 241% the cost of care, but with Medicare and Medicaid it is only 41%. By 2027 when all the Baby Boomers have aged into Medicare those programs will be paying for 47% of national healthcare costs, leading to an even greater squeeze on the entire healthcare system.


This greater demand will also necessitate more hires, including physicians, surgeons, lab techs, and more. This will further drive up the cost of care during a time when reimbursement rates are expected to plummet.


Supply chain management in the healthcare industry is going to be crucial during this time. Currently, waste accounts for 20% of healthcare spending, which means that there is still plenty of opportunity to save the healthcare system from the inside out. According to one study, hospitals can easily and safely cut 18% from spending without affecting the quality or outcomes of patient care. This could potentially add up to $11 million in annual savings per hospital.


Data based decision making can supplement programs like group purchasing to ensure that while hospitals have the supplies they need, they don’t have extra stock sitting around collecting dust – and wasting money. Automating the management of these supplies can also save in valuable labor costs.


Learn more about the future of the hospital supply chain below.


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Written by Danielle White
Medical Writer & Editor

View all post by Danielle White