ABSTRACT
Healthcare providers are facing continued lower operating margins, increased risks, and potentially once-in-a-lifetime healthcare reform. With this backdrop, there is an increasing focus on supply chain management as a means to minimize risk, optimize operating costs, improve revenue, improve operating margin, and hence enable the hospital to better serve the patient. Executives are now recognizing that health providers have relatively immature supply chains, and that development of strategic management of supply chains is generally at a nascent level.* Healthcare organizations typically proceed through an evolution of basic processes in supply management.† Initially, many providers are not focused on managing the supply chain, but rely on an external group purchasing organization to negotiate all of their contracts, and focus on driving compliance in the physician community. Organizations seeking to drive change must begin by establishing a charter to do so with their executive team, and make a commitment to moving away from a transaction price-based focus. Another critical element at this stage of development is the ability to isolate and measure where and how third-party spending is occurring in healthcare systems, through improved spend management.
