Innovation and creativity are the key components of the successful procurement and supply chain management. Our hospital industry is considered the most complex organization among the service industries and is becoming more and more complex. Hospitals face numerous challenges. Revenues are declining and the cost of providing healthcare is increasing day by day due to the increase in materials costs, manpower costs, and administrative expenses. Moreover, recent price fixation by National Pharmaceutical Pricing Authority (NPPA) on products such as drugs, stents, and implants, and the recent launch of Ayushman Bharat Scheme has reduced our profit margins drastically. A look at our operating margins confirms the problem.
Ideally, the cost of materials in hospitals should not be more than 25-28 percent of the revenue earned. But if we look at the P&L statement of many hospitals, the cost is more than the desired figure. There is tremendous pressure on the materials manager to cut costs and improve the operational efficiency of the hospital. Cut costs is the slogan echoing in every nook and corner of the healthcare industry. The future competition is anticipated to be between the supply chains and not among the hospitals. Unless we think outside the box and embrace best practices in supply chains, we face the possibility of been beaten by the competition. A major limitation of the current supply chain system practiced in most of the hospitals is that they are not linked with performance, patient safety and clinical outcomes. The only solution that I firmly believe to enhance operational efficiency, better patient care, and profitability is by embracing the best practices, technologies, and strategies. The following paradigm shifts can help us to achieve the triple aim goals (better health, better care and lower costs).
Clinically integrated patient-centric supply chain model. In today’s evolving healthcare landscape, a successful hospital should have a supply chain that aligns with the corporate strategy connected with the performance and clinical outcomes.
Intelligent processes. Supply chain automation and analytics, the advanced inventory systems could be the next frontier for improving care. Automated technology today delivers supply chain data and analytics, which can support patient safety, reduce costs, and improve workflows.
Embrace patient safety approaches. Supply chain management plays a major role in ensuring patient safety because the choices made along the supply chain can have major repercussions for patient care.
Effective supplier relations management. In most of the hospitals, the role of the supply chain professionals is confined only with negotiations and in cost reductions which means that they are not involved in real business and that leads to increasing the risks and reduction in overall value of the service to the patients.
3D music technique in inventory management. Music – 3D is used in cost reduction techniques selectively. Items that require stringent management control are identified and effectively controlled and thereby results in lower inventory levels, sound inventory control, and significant cost reduction.
Vendor managed inventory model. Consignment Model is an effective means of controlling costs and very useful in the reduction of locked up capital inventory and its carrying costs. This is an effective strategy that enables suppliers to reduce lead times required to fulfil orders.
Lean six sigma supply chain model. The implementation of lean six sigma eliminates activities that do not add value to customers. This approach reduces the amount of wasted time spent on each phase of an operation in a supply chain, by streamlining them to just the essential actions that add value to customers.