The healthcare supply chain in the U.S. is different from normal supply chains because it affects patients’ health, not just product availability. For people who run medical practices, like administrators, owners, and IT managers, it is important to know how doctor choices affect supply costs and waste. This article looks at how these preferences affect money and operations. It also talks about how automation and artificial intelligence (AI) can help manage healthcare supply chains better.
The healthcare supply chain is a complicated system. It includes manufacturers, distributors, healthcare providers, and vendors. They work together to deliver medical supplies, devices, and medicines. Unlike stores or factories, healthcare supply chains must keep good quality products that affect patient health. This makes it hard to balance cost, supply, and clinical use.
Doctors’ preferences have a big effect on healthcare supply chains. These preferences mean the specific tools, devices, or products doctors like to use because they are used to them or think they work better. Even though these choices are meant to improve care, they can cause problems in managing inventory and buying. For example, some doctors may want supplies from specific sellers who are not part of group buying contracts. This causes “rogue” spending. Departments buy outside approved suppliers, which makes costs go up.
These preferences cost a lot of money. Items chosen by doctors make up more than 60% of healthcare supply spending. Because of this, even small inefficiencies can cause hospitals to waste millions. On average, a hospital wastes about $12.1 million yearly due to supply chain problems partly caused by different doctor needs.
Hospitals in the U.S. waste almost 25% of their supply chain budget. This waste totals about $25.4 billion every year. This happens in medicines, medical devices, and other clinical supplies. Doctor preferences cause much of this waste.
One big problem is that doctors often keep using old preference lists that are not updated when stock changes or vendor contracts end. If these lists are not updated, hospitals buy many types of the same item or from different sellers in the same system. This causes extra stock, expired items, and repeated spending.
For example, at Spectrum Health, they saved a lot of money by cutting the types of hand sanitizers from 30 kinds to only 3. This saved over $30,000 a year. It shows how reducing the number of different items doctors prefer helps save money and manage supplies better.
Also, research at the University of California, San Francisco found that using cost scorecards helped surgeons see the costs of each procedure. This helped them make better buying choices. The group saved almost 10% on surgical supplies, which was over $836,000 in one year. These results show that making doctors aware of costs can change their buying habits without hurting patient care.
Another big problem is not having clear information about costs linked to doctor preferences. Departments often can’t see detailed cost data about how their buying affects the whole hospital budget. Armond Green from Triose calls this a missing part in supply chain management. When departments don’t know the cost of not following approved suppliers, they are more likely to spend too much.
Group Purchasing Organizations (GPOs) help lower costs by combining buying power from many healthcare providers. GPOs make contracts with preferred sellers and give hospitals discounts for buying in bulk. These efforts save the healthcare system about $55 billion every year.
But GPOs don’t always work well when doctors want to buy from suppliers not included in GPO contracts. This reduces the savings from buying together and makes supply chain coordination harder.
Healthcare managers face a constant challenge. They must balance doctors’ wishes for choice with the need to keep costs down for the system.
A 2017 study by Cardinal Health showed that 78% of hospital staff still count inventory by hand during the supply process. Even though more people know about automation, only 17% of hospitals use real-time automated tracking. Counting by hand takes time, can have mistakes, and stops hospitals from managing stock and purchases well.
Manual work also leads to stockpiling, especially during the COVID-19 pandemic when hospitals feared shortages of things like masks and gloves. This fear made hospitals buy too much and caused problems in managing inventory. Sometimes, central warehouses added to this problem by encouraging extra stock to avoid supply breaks.
Artificial intelligence and automation have shown they can change healthcare supply chains. The health sector is about 10 to 15 years behind other industries in using automation, but AI use is expected to grow a lot in the next three to five years.
Medical administrators and IT managers should watch how AI tools can cut waste and make costs clearer.
AI systems can track supplies in real time. They automatically check inventory numbers to stop running out or having too much. This cuts down on the manual work of counting and ordering and lowers human mistakes.
For example, automated forecasting tools use past data and current use to guess which items are needed and when. This prediction helps avoid last-minute orders and price jumps. It also matches buying to clinical needs shaped by doctor preferences.
Most healthcare IT leaders (69%) now see the supply chain as their best source of useful data, even more than electronic health records (EHR). AI tools look at big data sets to find waste, costly items, and places where doctor preferences cause inefficiency.
This data can create cost scorecards like those used at the University of California, San Francisco. These cards show doctors the financial effects of items connected to their work. When doctors understand costs, they can work better with supply chain staff to make changes without hurting patients.
Many hospitals still use old methods like fax or email for purchase orders. Automation tools use electronic data interchange (EDI) and connected buying platforms that link sellers and hospital stock systems. This speeds up buying, cuts errors, and helps follow approved supplier lists while considering doctor input.
Automation also helps follow rules by requiring reasons when buying from non-approved suppliers. This pushes for more responsibility and cuts rogue spending.
Doctor preferences keep being a challenge for healthcare groups. These preferences show clinical experience and benefits doctors want to keep. But if left unchecked, they cause repeated buying, extra stock, and higher supply costs.
Here are some ways to reduce these extra costs:
People who run medical practices in the U.S. face big cost problems from supply chain inefficiencies but also have chances to improve. By understanding how doctor preferences affect buying, administrators can build systems to track and manage supply use.
IT managers have an important job advocating for automation and linking data systems for real-time checks. For healthcare to succeed with AI and automation, they need good technology, training, and clear communication between departments.
It is important to find a balance between doctors having choice and keeping costs under control. Practice owners should support open and team-based approaches that consider both patient care and money management.
Doctor preferences affect healthcare supply chains strongly and link to about $25.4 billion in avoidable costs every year in U.S. hospitals. These choices often cause repeated buying, extra stock, and waste. Even with cost pressures, many hospitals still rely on manual work, limiting data use and quick responses.
Group Purchasing Organizations help cut costs by combining buying power, but doctors buying outside these groups reduces savings. Value analysis teams and cost reports have helped doctors see costs better and reduce waste.
AI and automation tools are new ways to help hospitals spend less time on manual tasks, track supplies in real time, and use data to guide buying. Medical leaders in administration and IT should focus on using these tools and building cooperation between teams to manage doctor preferences without hurting patient care or finances.
By fixing problems with doctor preferences through better processes, automation, and open data sharing, healthcare providers in the U.S. can better control supply costs and cut waste.
The healthcare supply chain involves the network of producers, manufacturers, distributors, transporters, and vendors that deliver healthcare products, aiming to improve patient health efficiently and affordably.
Physician preferences directly influence supply chain costs, as differing preferences for tools and supplies can lead to inefficiencies, excess waste, and increased overall spending in healthcare.
SCM serves a strategic role in balancing patient care quality, affordability, and operational efficiency, impacting hospital financial structures and overall patient experiences.
Total landed supply costs encompass all expenses related to acquiring a product, including purchase price, logistics, insurance, and associated fees, rather than just focusing on initial product costs.
Efficient data collection is crucial for understanding costs and improving efficiency. It enables better inventory management, waste reduction, and ultimately lowers costs while enhancing patient care.
Automated systems provide real-time tracking and data analysis, reducing manual errors, improving inventory accuracy, and fostering efficient procurement processes, all of which can enhance patient outcomes.
Relying on physician preference cards can lead to inefficient supply usage and increased costs due to a lack of uniformity and failure to update these items regularly.
GPOs leverage collective purchasing power among healthcare providers to reduce costs and streamline procurement processes, improving overall supply chain efficiency for member organizations.
Cost scorecards, which correlate supply costs to specific procedures, can provide insights that encourage physicians to adopt more cost-effective practices, potentially leading to significant savings.
Future-focused organizations are elevating supply chain roles to executive positions, emphasizing a comprehensive understanding of supply chains to innovate and enhance patient care experiences.
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