Healthcare cost reduction hinges on supply-chain savings

Thought Leadership presented by TRIOSE

The healthcare climate of the 21st century has already prompted difficult choices and given rise to creative solutions and sophisticated business practices — and we’re only 15 years in.

With opposing market forces of rising costs and lower reimbursement, there will be a rocky road ahead for some time to come as hospitals and healthcare systems face margin erosion more than any other market segment in the U.S. Costs have already come out of the system in the form of pharmaceutical cost cuts, resulting in their own margin reductions. Full-time healthcare employees have been targets for bottom-line savings as labor expenses have also been trimmed.

At first pass, both of these measures may have appeared to be effective, but in reality, they have not categorically shown a drastic outcome in lowering overall costs. So where do we turn to further reduce costs and ensure a financially viable healthcare model far into this century?

Relying on legislation seems to be an endless battle, wrought with special interests, and dependent upon processes that lack urgency and any real connection to the day-to-day challenges of our industry. We haven’t yet exhausted all the factors within our own control where additional savings can be realized. This is where the supply chain comes in. Healthcare supply chain teams have a golden opportunity to leverage their knowledge and data to not only maximize their current cost-saving methods, but to pioneer new approaches to logistics and potentially game-changing, sophisticated solutions.

Third-party logistics (3pl)

Several hospitals have realized the potential for savings in the supply-chain space and have partnered with 3PL companies to reduce shipping and handling costs, streamline their operations and provide quick and smart data in a pinch. However, it was recently estimated that a full 50% of the healthcare market is still managing its own freight expenses and may not be realizing ultimate savings. That means half the market could be saving in areas that they are unaware of, simply by leveraging the expertise of a logistics company.

Freight management

The most basic of the healthcare logistics services is the strategic management of inbound and outbound freight from vendors. This includes small parcel, large cargo freight and international shipments coming in and out of hospitals every day, often at the initiation of numerous and varied individuals within the organization.

Many healthcare professionals are unaware of the freight expenses that are added to their invoices for products purchased, or of the opportunity to combine or even eliminate these charges. Often, physicians schedule procedures in a short time frame, requiring hospital purchasers to place overnight orders with expensive shipping costs to meet their needs and those of patients. These costs can also be contained with strategic management and oversight.

Logistics companies offering freight management programs can add significant value in not only lowering freight costs, but in extrapolating data quickly and creating visibility to where freight dollars are actually being spent. This ultimately leads to better management and accountability throughout the healthcare network.

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