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How Do We Heal the Healthcare Value Chain? Over the last decade, as shown in figure 1, the hospital supply chain has been one of the few that has improved operating margin, reduced inventory and improved revenue/employee. In contrast, the manufacturing suppliers to the hospital organization have grown inventories and struggled to preserve margins. Across the value chain from the patient to the raw material suppliers, total inventories have grown and costs have escalated. With pending regulations, hospitals are being forced to rethink processes, redefine value and work more holistically to improve sourcing practices. The suppliers to the hospital systems are having to rethink their systems to rethink the customer (from selling to the physician to selling to a more formal buying organization based on patient outcomes) and adapt to the new processes within the hospital for value analysis. Supply chain processes within the hospitals have matured. Hospitals have made more progress on improving cash-to-cash cycles than their upstream manufacturing trading partners. They have reduced inventories and attempted to work with suppliers. As shown in figure 2, it is notable to see that this industry is one of the few where downstream trading partners have actually improved payable terms for their suppliers. The future lies before the healthcare provider. As the provider of patient care, they have the greatest potential to lead in the healthcare value chain’s redesign to improve value. They have come a long way, but the changes have been incremental. They have focused primarily on traditional sourcing techniques; not a redesign of the healthcare value chain from the outside in, and the redefinition of complex and antiquated processes.
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Healthcare Study:Healthcare Providers
Summary ChartsFeb-Apr 2013
Supply Chain Insights LLC Copyright © 2013, p. 2
Agenda
Study Overview
Measuring Value and Cutting Costs
Supply Chain Performance
Supply Chain Organization
Supply Chain Insights LLC Copyright © 2013, p. 3
Study Overview
Supply Chain Insights LLC Copyright © 2013, p. 4
Most Respondents Work Within the Hospital Supply Chain
Supply Chain Insights LLC Copyright © 2013, p. 5
Over Half Have Over 20 Years Experience in Healthcare and Supply Chain
Supply Chain Insights LLC Copyright © 2013, p. 6
Agenda
Study Overview
Measuring Value and Cutting Costs
Supply Chain Performance
Supply Chain Organization
Supply Chain Insights LLC Copyright © 2013, p. 7
Top Way to Measure Value is Lower Costs Without Reducing Quality of Care
Supply Chain Insights LLC Copyright © 2013, p. 8
Negotiating Lower Prices is Most Important Cost-Cutting Effort
Supply Chain Insights LLC Copyright © 2013, p. 9
Negotiating Lower Prices is Top Performing Cost-Cutting Effort
Supply Chain Insights LLC Copyright © 2013, p. 10
Important but Low Performance: Improving Product Utilization
and Working Across Functional Silos
Supply Chain Insights LLC Copyright © 2013, p. 11
Important but Low Performance: Improving Product Utilization
and Working Across Functional Silos
Supply Chain Insights LLC Copyright © 2013, p. 12
Other Cost-Cutting Efforts (Open-Ended)
Supply Chain Insights LLC Copyright © 2013, p. 13
Other Cost-Cutting Efforts, Continued(Open-Ended)
Supply Chain Insights LLC Copyright © 2013, p. 14
Other Cost-Cutting Efforts, Continued(Open-Ended)
Supply Chain Insights LLC Copyright © 2013, p. 15
Value Analysis Group:Nearly Three-Quarters Have a Formal Program or Group
Supply Chain Insights LLC Copyright © 2013, p. 16
Value Analysis Group: Supply Chain is Primary Leader;
Changing/Adding Products are Most Common Decisions
Supply Chain Insights LLC Copyright © 2013, p. 17
Value Analysis Program:Supply Chain Costs, Physician Preference and Infection Rates
are Top Decision Factors for Product Changes/Additions
Supply Chain Insights LLC Copyright © 2013, p. 18
Value Analysis Program:Two-thirds Rate Program as Successful
Supply Chain Insights LLC Copyright © 2013, p. 19
Collaborative Programs:Over Half Have Any Collaborative Programs for Increasing Financial Performance When Buying Supplies/Equipment
Supply Chain Insights LLC Copyright © 2013, p. 20
Collaborative Programs:Collaborative Programs with Suppliers
Are the Most Common
Supply Chain Insights LLC Copyright © 2013, p. 21
Collaborative Programs:Collaborative Programs with Suppliers
Are the Most Common
Supply Chain Insights LLC Copyright © 2013, p. 22
Collaborative Programs:Nearly Half Rate Them as Effective
Supply Chain Insights LLC Copyright © 2013, p. 23
Other Efforts to Reduce Costs(Open-Ended Responses)
Supply Chain Insights LLC Copyright © 2013, p. 24
Other Efforts to Reduce Costs, Continued(Open-Ended Responses)
Supply Chain Insights LLC Copyright © 2013, p. 25
Agenda
Study Overview
Measuring Value and Cutting Costs
Supply Chain Performance
Supply Chain Organization
Supply Chain Insights LLC Copyright © 2013, p. 26
Reducing Costs and Managing Data Are Top Business Challenges in 2013
Supply Chain Insights LLC Copyright © 2013, p. 27
Top Supply Chain Roles in 2013: Reducing Costs, Improving Value-based Outcomes
and Improving Inventory Turns and Cost
Supply Chain Insights LLC Copyright © 2013, p. 28
Three out of Five Rate Their Supply Chain as Successful in Meeting Goals
Supply Chain Insights LLC Copyright © 2013, p. 29
Reasons for Rating Supply Chain as Successful (Open-Ended)
Supply Chain Insights LLC Copyright © 2013, p. 30
Reasons for Rating Supply Chain as Somewhat Successful, Continued (Open-Ended)
Supply Chain Insights LLC Copyright © 2013, p. 31
Reasons for Rating Supply Chain as Less Successful (Open-Ended)
Supply Chain Insights LLC Copyright © 2013, p. 32
Inventory, Compliance and Customer Satisfaction Are Where Supply Chain Performs Best
Supply Chain Insights LLC Copyright © 2013, p. 33
Agenda
Study Overview
Measuring Value and Cutting Costs
Supply Chain Performance
Supply Chain Organization
Supply Chain Insights LLC Copyright © 2013, p. 34
Supply Chain Organization:Three-Quarters Have a Formal Supply Chain Organization
Supply Chain Insights LLC Copyright © 2013, p. 35
Supply Chain Organization:7 Functions Report Through It on Average;Reports Primarily to Chief Financial Officer
Supply Chain Insights LLC Copyright © 2013, p. 36
Supply Chain Organization:Most Likely to Contract and Manage for
Medical & Surgical Commodities
Supply Chain Insights LLC Copyright © 2013, p. 37
Supply Chain Organization:Purchasing is Primarily Done Corporate-Wide