New report shows how US hospitals could save over $25bn across their supply chains

By Catherine Sturman
A new report by Navigant Consulting has found that US hospitals could save up to $25.4bn per annum through streamlining their supply chains, eradicating...

A new report by Navigant Consulting has found that US hospitals could save up to $25.4bn per annum through streamlining their supply chains, eradicating unnecessary costs and streamlining processes to boost efficiency.

Such a figure equates to 17.6% average supply chain expense reduction, or up to $11mn a year per hospital, according to the company’s consulting analysis, which looked at 2,300 hospitals. The money saved could be put towards the appointment of 160 registered numbers of 42 primary care physicians, the report has stated.

Utilising data analytics has been essential, in order to gain a greater understanding of patient needs, as well as greater collaboration between health, supply chain and finance-led professionals to look for areas to further drive operational excellence.

However, the report has also found that reducing supply chain costs did not result in the patient experience or the quality of care delivered – in fact, this led to further opportunities, greater communication and lowered costs.

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“For example, top-performing hospitals averaged 5.3 on hospital-acquired condition scores, compared with 5.5 at other hospitals. They also outperformed peers on value-based purchasing scores — 36.8 versus 36.1,” noted Healthcare Dive.

"Physician-preference items remain a huge opportunity," commented Rob Austin, Director at Navigant. "It's not easy to do. You need to get physicians, clinicians and nurses engaged and agreeing to limit their choice and standardise care.

“Physicians, nurses and other clinicians need to work with supply chain, finance and IT departments to identify what opportunities exist and adapt operations accordingly. They also need to engage suppliers often to establish value-based contracts and follow up to ensure they are hitting their targets.”

Whilst reducing pricing variation and unnecessary use of drugs and products continue to be areas of focus for hospitals to safely reduce supply costs, yet high performing supply chain departments have been found to engage data driven physicians, enhance collaboration and leverage actionable data.


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