Supply Chain Savings Support Mission-Critical Objectives

By , SVP CHC Supply Trust November 13, 2018 Financial Performance, Supply Chain

Supply costs are one of the fastest-growing cost centers for hospitals. These spiraling expenses tend to hit community-based hospitals hard because many don’t wield enough purchasing power to command preferred pricing. Other hospitals, though larger or part of a health system, face unique supply chain challenges and concerns despite their greater purchasing power.

Holding the line on supply chain costs is, or should be, a top priority for community hospitals of all sizes. By reducing supply costs and better managing the supply chain, a hospital can expand its savings margin and free up funds for capital improvements and strategic hires.

Here are three approaches to help hospitals achieve supply chain savings and improvements.

  1. Collaborate with key stakeholders to negotiate better pricing. The highest percentage of supply costs is often associated with a hospital’s operating room. Get everyone to the table with manufacturers — hospital executives, physicians and surgeons — to negotiate for more favorable prices on physician preference items such as orthopedic implants and cardiac rhythm medical devices.
  2. Evaluate your group purchasing organization (GPO) options to maximize cost reduction. Today almost all hospitals have one or a variety of group purchasing contracts in place, but few review them regularly. It’s important to understand the savings your hospital can qualify for and select the GPO with the most benefit for your specific needs.
  3. Analyze your materials management practices to get the most savings from your GPO. This process should include monthly or quarterly reviews to ensure your hospital is receiving previously negotiated prices from suppliers. It’s also helpful to cross-reference hospital procurement data with your GPO contract list to identify opportunities for greater savings potential by converting to new products. Involving a multifunctional team of department leaders in this process helps ensure buy in.

CHC Supply Trust, the supply chain services arm of Community Hospital Corporation and CHC Consulting, offers a full spectrum of supply chain solutions tailor-made for community hospitals, including Tier 1 GPO pricing, regardless of hospital size or annual spend. CHC Supply Trust offers a Complimentary Supply Spend Analysis to compare the cost of items already being purchased to CHC Supply Trust pricing for the same exact items. This analysis provides a conservative estimate of how much new members can save simply by purchasing those items through CHC Supply Trust. CHC Supply Trust members typically save between 10 and 20 percent annually over rates charged by other GPOs.

Learn more about CHC Supply Trust’s full spectrum of supply chain services including the Complimentary Supply Spend Analysis.


By , SVP CHC Supply Trust November 13, 2018 Financial Performance, Supply Chain

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