Five Steps the C-suite Should Know About Optimizing the Hospital Supply Chain

• Physician engagement is a must in reducing supply costs

Physician preference items (PPI) account for 40% of non-pharmacy supply spend, with prices and consumption continuing to rise. To successfully engage physicians and get them on board to reduce supply costs, hospitals must have the right data and information to ensure physicians that cost reductions will not compromise patient outcomes such as length of stay, time in the OR, and other clinical factors. Physicians are significantly more likely to accept implant cost reduction when a complete context of what drives cost for their cases is presented, along with recognition of the complexity of their daily jobs. Executives should ensure that their organizations have a way to marry supply costs and demand information with patient billing and utilization data to develop the complete picture of current clinical practice and utilization at the hospital and successfully engage physicians.

• Supply chains as agents of change

When managed correctly, hospital supply chains can become a change agent for accomplishing organization-wide goals and objectives. With the right metrics and methodologies in place, supply chains can optimize both their transactional and strategic roles to drive bottom-line improvements for hospitals.

Rand Ballard is senior executive vice president and chief operating officer with MedAssets, Inc. He may be reached at solutions@medassets.com.