Tackling the Supply Chain with Technology

Updated on April 11, 2022

By Michael DeLuca

Supply chain expenses rank as the second largest cost in a health system budget. This requires health systems to look for solutions to control costs without sacrificing quality of care. Not only is supply chain a large expense, but it is highly complex and relies on many systems and individuals to work together. To increase efficiency and control costs, health systems are turning to modern technologies to help manage all aspects of their supply chain. Here are some ways modern supply chain technologies can help your health system.

Enhanced Contract Management

Supply chain departments invest a lot of time and effort into negotiating contracts and they often have to manage thousands of contracts from various sources at the same time. This complexity can result in contracts being signed but not monitored closely, letting rebate opportunities or expirations fall through. Poor contract compliance has resulted in the average IDN leaving millions of dollars on the table. Modern supply chain technologies can help hospitals better manage their contracts and monitor terms and conditions. These systems can influence compliant purchases at the point of sale by only showing the requestor contracted items, reducing off-contract spend. They can also flag items that are close to reaching terms for rebates and contract commitments. A simple shift of managing contracts can provide a typical IDN up to $2 million in savings per year.

Improved Procurement Process

Another area of struggle for the supply chain falls to the purchasing process. Many health systems current item masters lack the detailed information, including images, needed to make purchases. They require purchasers to navigate multiple buying channels. Utilizing modern software solutions provide a user-friendly, one-stop shopping experience. These enable health systems to house all their products and vendors under one, unified item content repository. They can also provide purchasers with enhanced search capabilities, product images and detailed descriptions. Not only does this help users purchase products more securely under using a procurement contract, but it also eliminates the chance that a wrong item is ordered.  Health systems can feel confident that they are purchasing the right item, from the right vendor, at the right price. This also helps reduce item master maintenance, special requests and order processing times and returns. When selecting a supply chain technology, look for a solution that can integrate seamlessly with your facility’s existing ERP system.

Reduced Errors During Requisition

Many health systems still process their orders and approvals manually, which is time consuming and can lead to errors. In fact, one healthcare organization was able to increase order efficiency by 30 percent after implementing modern technologies, which resulted in an average savings of $31 per order. Modern technology can connect your supply chain and financial systems, simplifying the approval process. These can provide enhanced visibility throughout the purchasing process, helping to flag non-compliant activity and special request items so that buyers can eliminate rogue purchases. It also allows orders to be approved or rejected on a line-by-line basis or the total order. Since no two heath systems are the same, seek out a solution that can configure its workflow requisition approval process to your facility’s procurement policies and business rules.

Easily Automate Electronic Transactions

Many health systems spend a large amount of time and money on resolving supply chain issues. Modern technologies can help health systems achieve those savings by automating supply chain transactions, including purchase orders, order receipts, order acknowledgements, invoices, and more between providers and suppliers. Not only does this allow real-time, detailed visibility throughout the lifespan of the transaction, but it can help your facility track key order and invoice trends over time.

The supply chain will continue to be a critical and complex part of the health care system. To help your facility better manage all aspects of the supply chain, understand the capabilities of modern supply chain technologies and seek out a partner that can provide support, from the point of requisition through the transactions.

About the Author: Michael DeLuca is executive vice president of technology and client services for ProdigoSolutions.com, a healthcare supply chain solutions company helping hospitals gain control of supply chain spend through contract compliance and automation.

The Editorial Team at Healthcare Business Today is made up of skilled healthcare writers and experts, led by our managing editor, Daniel Casciato, who has over 25 years of experience in healthcare writing. Since 1998, we have produced compelling and informative content for numerous publications, establishing ourselves as a trusted resource for health and wellness information. We offer readers access to fresh health, medicine, science, and technology developments and the latest in patient news, emphasizing how these developments affect our lives.