How 4 Health Systems Rein in Supply Costs

Rene Letourneau, for HealthLeaders Media , April 22, 2013

"We can no longer labor in isolation. The challenges of healthcare today around cost and quality require health systems work together, both locally and nationally. Premier alliance hospitals in Ohio and across the country are well along that path already. They are preparing for and adapting to a post-reform world that increasingly links costs and quality and pushes providers to coordinate and become accountable for overall health of a population," he added.

Alkire says the healthcare industry lags behind other industries when it comes to purchasing supplies and believes the collaborative concept will go a long way toward closing the gap.

"Purchasing is a complex business, and to be successful you need to leverage data and scale. The reality is that today's healthcare supply chain is in the stone ages compared to other industries. This is largely because of the fragmented nature of healthcare in America," Alkire said.

"This type of collaboration allows hospitals to better aggregate their purchasing volume to get a lower price point and to use data and benchmarking to identify opportunities for improvement. The benefit of this work is lower healthcare costs that can be returned to the communities served by these hospitals," he added.

Given that the supply chain ranks second only to workforce management for where hospitals spend their money, the 57% of healthcare administrators who are focused on reducing purchasing costs this year may want to consider joining a collaborative similar to POWR.

The remaining 43% may want to reconsider their response to the survey question because it might be time to embrace a new model for finding supply chain savings.

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