Next-Generation Supply Cost Savings

Remaking Partnerships with Suppliers and Physicians to Achieve Sustainable Value

Topics: Supply Chain, Finance, Physician Preference Items, Sourcing, Logistics, Pharmacy, Strategy, Cost Management, Margin Performance

By reading this study, members will be able to:

  • Understand the strengths and weaknesses of different sourcing strategies 
  • Build trust with physicians and suppliers by providing visibility into utilization and spending patterns
  • Align goals and incentives to create long-term collaboration between hospitals and suppliers

Executive Summary

A renewed focus on supply chain

In today's operating environment, hospital executives are focusing on the supply chain as an area of untapped cost savings opportunity, elevating its improvement to the forefront of their margin preservation strategies. Some are also finding new sources of value in supply chain—improving operational processes and clinical outcomes to inflect performance beyond cost.

Supply chain opportunities include length-of-stay, revenue capture

While supply chain has traditionally not been seen as an effective lever for reducing length-of-stay, progressive institutions are discovering new ways to do so by carefully evaluating product outcomes, or by utilizing suppliers’ expertise in Lean or Six Sigma approaches to improve throughput.

Well-executed supply chain strategies can also help hospitals generate downstream revenue to bolster margin performance.

Three aspects of next-generation supply chain strategy

Focus on these three areas to unlock supply chain opportunities beyond cost.

1. Negotiate on total value: Some supply chain executives are looking beyond volume and focusing on contract compliance as a negotiating lever. By focusing on more comprehensive product evaluation strategies, they can also consider total cost incurred over time and the impact on end-user satisfaction.

2. Ensure data transparency: Organizations with optimal contracts already in place are finding value through the post-contract period by leveraging physician supply utilization data with suppliers to demonstrate contract commitment.

3. Capture shared value with suppliers: A fully realized sourcing strategy lays the groundwork for longer-term strategic partnerships with suppliers. Progressive institutions are working with key suppliers to reduce mutual costs, realize collaborative efficiencies, and achieve better outcomes.

Read the full study to learn more

Members, read Next-Generation Supply Cost Savings to learn 12 ways to transform your supply chain strategy and achieve sustainable value.

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