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North American Healthcare Supply Chain Management Market Slated for Highest CAGR Thanks to Provider Consolidation

Analysis  |  By Jack O'Brien  
   May 18, 2020

Hospitals account for nearly three-quarters of supply chain management market demand side, according to a new report.

The healthcare supply chain management market is expected to see its largest growth in the North American market between 2020 to 2025, according to a Research and Markets report released Monday morning.

Overall, the healthcare supply chain management market is projected to increase at a compound annual growth rate (CAGR) of 7.9% during the forecast period. 

The report attributed the North American market's projected CAGR to widespread consolidation among hospitals, as well as the "rising prevalence of chronic diseases and growing awareness in the region." Meanwhile, the European market is projected to have the second highest CAGR, according to Research and Markets.

Hospitals account for nearly three-quarters of the healthcare supply chain management market demand side, according to the report.

The study is the latest examination of how the healthcare supply chain market is changing and how it effects provider organizations.

Related: Need for Supplies to Fight Coronavirus Opens Door to Unusual Brokers — and Scammers

The market is expected to benefit from the increased adoption of software-based systems compared to hardware-based systems due to "the increasing number of online purchases, improving business intelligence, and growing preference for eco-friendly logistics."

Similarly, while the on-premise segment holds the largest share of the market, the cloud-based segment of the market is expected to experience the highest growth rate over the next five years.

Related: What Will Never Be the Same Again in Healthcare?

Wasteful supply chain spending has been a growing concern for hospital leaders in recent years given that they oversee organizations operating on razor-thin margins.

Navigant, a Guidehouse company, released an analysis in November 2019 that estimated hospitals and health systems unnecessarily spent $25.7 billion on supply chain operations in 2018.

Wasteful spending on supply chain by provider organizations has increased by nearly 12% since 2017, the analysis found, with the average annual supply expense reduction opportunity rising 22.6% over the same period.

Related: Unnecessary Hospital Supply Chain Spending Reaches $25.7B

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.


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