Supply Chain Management in an Era of Healthcare Reform

Healthcare reform is coming. Regardless of the specifics of the plan, the future will surely focus on informing the patient, will most certainly further constrain revenues, and will likely increase patient throughput. With all that said, leadership can expect significant challenges during the coming reform period.

In the current environment and the one to come, provider executives must continue to find the means to do more with less. Effective supply chain management working within an integrated care delivery context—one in which the quality a patient demands and the cost necessary to deliver on that expectation—is integral to both an organization’s economic success and the quality of patient care it is able to provide.

  • Supply chain expenditures comprise between 20% and 50% of the total cost of care budget. In our predominantly not-for-profit system, a high percentage of every dollar saved on supply acquisition will circulate directly back into patient care.
  • Supply channels tie up much-needed capital. Reductions in these areas fuel investments in facilities and patient care equipment.
  • Supply chain influences choices of patient care products and technologies.
  • Supply chain data systems hold the key to accurate identification of patient care supply utilization and are critical to the development of the next generation of cost management strategies.

Given the vital role of your organization's supply chain in influencing both the cost and quality of patient care, empowering supply chain management and having them apply supply chain processes in the clinical setting is essential. Your role is, quite simply, to enable and encourage supply chain managers to pursue educational opportunities that will enhance their tactical and leadership skills and forge a tighter connection with clinicians and their practices.

Determining whether your efforts are paying off is just as straightforward. Simply look at a patient record to learn whether it includes every significant—i.e., treatment-essential—product that was used to care for the patient. With this supply chain discipline in place, you’ll have tangible proof of your supply chain’s engagement in the clinical setting and your organization will be empowered to:

  • Ensure patient safety in product recall situations
  • Effectively study the impact of supplies on patient outcomes
  • Better understand and more clearly articulate the cost of goods for the services rendered
  • Identify cost/quality trade-offs

Whatever the future, empowered supply chain managers who can supply chain discipline in the clinical setting provide organizations with an invaluable opportunity to significantly affect the cost and quality of care they deliver. The time to access this opportunity is now.

Ed Hisscock is co-founder of Appleseed Healthcare Resources. He may be reached at
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