Sourcing & Logistics

What drives Supply Chain costs in healthcare facilities?

Oct. 27, 2020

To identify the top cost drivers in your healthcare facility should be obvious once you run the numbers. Not surprisingly, a global, supply chain-straining pandemic tends to usher certain elements higher up the list at the expense of others that linger.

Healthcare Purchasing News annually surveys its readers about a variety of topics and one of the questions posed each year since 2017 involves perceived top cost drivers. See chart 1.

HPN Senior Editor Rick Dana Barlow reached out to Amazon Business for comment on the results and what they might say about the industry. Bill Kopitke, Amazon Business’ Head of Healthcare, briefly shared his interpretations.

HPN: What surprised you the most about the responses and the trending over the four-year period and why?

KOPITKE: It is a little surprising to find the high percent of organizations [that] recognize the negative cost impact when supplies have inventory shortage. Prior to the pandemic, we began to focus more on our role as an important source for backordered supplies. We realized healthcare providers conducting the same practices for sourcing supplies were not effective to secure scarce supplies.

What issues may be missing from this list about which the healthcare supply chain should be concerned and why?

We find the process for when employees outside of the supply chain department need to make their own purchases to be inefficient, distracting and ultimately costly for organizations. This involves hundreds to thousands of employees when make orders through “Specials,” “X-types,” P-cards, or cash with reimbursement all have their faults with process. When you aggregate the experience for each employee, the cost is significant! Yet, it doesn’t show on this graph or other studies. Amazon Business continues to drive awareness on non-contracted spend.