Clinical Supply Chain Integration Could Boost Hospital Bottom Lines

A possible discrepancy exists between hospital executives’ high-level view of the importance of clinical integration to supply chain and financial performance and the effectiveness of the actual on-the-ground approaches taking place in many health systems.

That is the conclusion of two separate surveys conducted by Acurity and Nexera to determine hospital executives’ understanding of supply chain, related pain points, and strategies for clinical integration, sustainable cost reduction, and operational efficiencies. Acurity is a group purchasing organization and performance aggregation group that helps providers deliver better care and reduce operating expenses through enhanced supply chain performance. Its sister organization, Nexera, is a national healthcare consulting firm with roots in supply chain and operations improvement.

While 66% polled said that they currently tie clinically integrated initiatives to the budget, only 5% of executives indicated clinical integration as their supply chain’s current top priority.

Perhaps most notably, when asked if clinicians are involved in formalized supply chain utilization and procurement decisions, the majority of senior and financial management professionals said yes, while the majority of clinical, operations and materials professionals—all of whom are central to this effort—said no.

These discrepancies beg the important question of whether the majority of health systems have a unified cost management strategy—with clear and accepted expectations—and if high-level goals are actually being conveyed to the front lines.

Seventy-three percent of hospital administrators said supply chain is tied to their cost management strategy. Fifty-three percent of those respondents answered that their institution has performed a coordinated supply chain assessment in the last two years, with 78% saying that it met their objectives for cost reduction and operational improvement.

Yet many of the same respondents then pinpointed cost reduction as their supply chain’s biggest priority, as well as the area that could use the most improvement—suggesting that the current strategies being employed have not been sustainable.

While nearly all respondents agreed that supply chain management plays a significant role in good margin control and the ability to establish a sustainable financial model in a patient-centered, highly reliable environment, other answers suggest that the current cost management strategies being employed may not be achieving the best results, especially if they do not prioritize a method for involving clinicians.

“It is encouraging to see that many executives recognize the importance of supply chain to their health system’s fiscal health and its ability to deliver quality care at a lower cost,” said Christopher O’Connor, President and CEO of Acurity and Nexera. “However, in order to make cost reduction initiatives truly sustainable, providers must involve clinicians. A unified structure—in which the goals of supply chain, clinical, and finance leaders are inextricably linked via targeted clinical initiatives that are tied to the budget—is the best way to achieve meaningful results and ensure long-term success. This requires a cultural change that comes from the top.”

The road to clinical integration is both lengthy and complex, but clear-cut, top-down communication of strategic objectives and the incremental initiatives needed to get there are essential to progress. Clinical supply chain integration is not just a singular project or goal—it is a cultural shift in how a health system operates in order to achieve the best results for its patients, its staff, and its organization.