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September 27, 2023

Three Trends Driving Health Care Supply Chain Reinvention

You might be tempted to let your health care supply chain run in maintenance mode with a GPO. But the last few years have taught us a crucial lesson: Successful health care organizations have a strategic plan for their supply chains. And their plans are forward-thinking and future-proof.

If you haven’t refreshed your plan for the post-COVID-19 environment, you’re not alone. Twenty-five percent of health care supply chain leaders still don’t have a strategic plan.

Learn how the top organizations are reinventing the traditional health care supply chain to succeed under today’s financial pressures.

The traditional health care GPO has its limits

If you’re part of a group purchasing organization (GPO), you’re in good company. About 97% of hospitals use these relationships to leverage buying power for lower prices. And GPOs have successfully been doing that for over 100 years. However, the traditional GPO model has its limits.

“The practice of keeping many suppliers on contracts that expire every two to three years has created an unstable environment,” says Dan Hurry, president of Advantus Health Partners. “It never allows health systems to pursue value beyond product price points. Just as you finalize an agreement, update systems, educate staff and convert products, it’s time to start the whole process over again.”

Strategic supply chain management requires better supplier relationships

Your organization can grow beyond the health care GPO to develop a strategic approach to your supply chain. To do this, we must reimagine the status quo of short contracts based on price points.

The health care supply chain needs long-term, stable supplier relationships. Both health systems and suppliers should be responsible for achieving key performance indicators (KPIs). This approach forms long-lasting, value-based supplier relationships focused on performance. These partnerships make up the building blocks for a more mature, transparent supply chain.

3 trends in strategic health care supply chain management

As you develop or refine your strategic approach to your supply chain, take a lesson from the best. Gartner outlines the top 3 supply chain trends among top-ranked organizations. These mature supply chain organizations don’t just save money. They improve patient outcomes, lower costs and create more socially responsible supply chains positioned to evolve amid industry change.

Align to increasing financial pressure

Recently, health care has felt the squeeze from both directions: Costs are higher, and margins are shrinking. Health care leaders are optimizing their supply chains to ease financial pressures.

To find new ways to manage costs, mature health care supply chains focus on driving value. For example, they stave off inflationary cost increases from suppliers and collaborate with clinicians to reduce the cost of procedures.

Sustain and build risk and resiliency

In 2023, leading supply chains are entering a phase of planning and investment. They hire risk-and-resiliency leaders to direct these efforts. Data and analytics provide transparency and confidence throughout the process.

Make ESG a priority

Environmental, social and governance (ESG) initiatives are becoming imperative. Approaching supply chains with ESG in mind enables health systems to reduce their carbon footprint, decrease energy costs and stay ahead of environmental regulations.

Find a like-minded partner who shares your goals

The right partner can make all the difference. The ideal supplier or GPO will be open to a mutually beneficial partnership. Instead of maintaining the status quo, it’s possible to choose supply chain partners that will innovate, be transparent and move away from ineffective processes.

Advantus Health Partners — ranked in Gartner’s Top 25 — is a health care solutions company that makes leveraging supply chains easier for its clients. It focuses on streamlined supply chain management, organizational purchasing, operations and cost-saving efficiencies.

Contact us for a consultation to see how your organization can leverage the successful Advantus model.

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Find out more about how we can help you transform your supply chain.