In 2024, executives in the health care supply chain are challenging how things are done. They are thinking differently about supply chain, moving it from a line item to the bottom line.
Recent years have been tough, with lots of challenges, like more drug shortages than we’ve seen in almost 10 years. Success in health care supply chain and GPO will depend on overcoming logistical challenges and cutting costs to relieve pressure on quality and finances.
Moving toward a more strategic, forward-thinking approach will be key. Supply chain leaders need to shift their focus from everyday problem-solving to a more complete, value-centered strategy. Here are three important areas where leaders can get more value from their supply chain operations to boost financial and operational success in 2024.
1. Move from Just Cost-Cutting to Adding Value
Usually, health care leaders measure the success of the supply chain by looking at financial reports. They often aim to control expenses and handle admin costs. And for good reason: the supply chain can be as much as 40% of a hospital’s total operating costs.
But instead of just trying to save money, supply chain leaders can find ways to add value while improving efficiency. There’s often a lot of variation in the supply chain, which can drive up costs and waste. By using tools like the SMI Critical Product Attributes Framework, supply chain pros can find products that aren’t crucial and streamline or cut them out. This approach, like how Costco offers high-quality goods with less variety, not only makes procurement smoother but also ensures cost-effective operations and quality care for patients.
2. Think Like a Consumer When Dealing with Your GPO
Many organizations are stuck in a cycle of constantly renegotiating with their Group Purchasing Organization (GPO). This cycle is very tactical and lacks strategic planning. Big GPOs often focus on admin fees and distract providers from getting the best value for their money, while also limiting them to only using certain suppliers.
If you think about it from a consumer’s point of view, this doesn’t make sense. Consumers don’t limit themselves to just one store; they go where they get the best value.
Traditional GPOs restrict where you can shop, focusing on prices and fees rather than quality. But why should we allow exclusivity in our organizations when we wouldn’t do it as consumers?
Using a secondary GPO can help improve negotiations and pricing for supplies and services not covered by the main GPO. This breaks the cycle of traditional negotiations and allows for better long-term value. Strong GPO partners should work closely with your organization to meet strategic goals and prioritize contracts that create lasting value.
3. Put Patients and Providers First
Improving outcomes and experiences for patients and providers is always the top priority in health care, and the supply chain is no exception. Focusing on these groups can also increase value and standardize care.
Some supply chain leaders might be hesitant to limit supply options, fearing it could upset providers. But a high-performing supply chain benefits the organization as a whole. Involving clinicians early in the process can address their concerns and align changes with their goals for quality care and resource management.
In the future, supply chains led by clinicians will be crucial for reducing variation and improving quality. By identifying the specific product needs of clinicians, leaders can work with their teams to find options that meet those needs while reducing costs.
Patients expect reliable, high-quality care at a fair cost. Offering too many product options can overwhelm staff and increase the risk of errors. Streamlining options can improve outcomes and lower costs.
Upgrade Your Supply Chain Operations
This year, supply chain leaders will focus even more on proactive processes and operations. By concentrating on these three areas, your organization can improve its supply chain and become more successful and value-driven.
Contact us if you’re ready to level-up your supply chain strategy.
Read more in Pharmaceutical Commerce about Advantus’s recommendations for transforming your health care supply chain: https://www.pharmaceuticalcommerce.com/view/three-areas-to-drive-supply-chain-value.
