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Supply Chain and Logistics – Hospitals

Responding efficiently can save lives….

By: Ananta Kanoria| Gagan Vermani| Ravitosh Srivastava| Saurabh Saboo| Sumit Mallik
Hospital Value Chain
Hospital

Pricing

Information Facility

Supply chain
&
Logistics

Sourcing Inventory

Transportation
Facility
• Facility plays a central role in the
functioning of the supply chain of hospital.

• Leading Factors :
• Location – density of population, proximity to suppliers

• Type of services – Specialized or General

• Layout – size of machines, changes in technology

• Flexibility and Expandability

• Number of beds – size


Hospital Facility Layout
Inventory

Pricing

Information Facility

Supply chain
&
Logistics
Sourcing
Inventory

Transportation
Inventory

• Inventory averages about 30-35% of the hospital’s Supply


chain costs

• A typical hospital pharmacy has more than 2,000 products


in its inventory

• Hospital pharmacists are expert at evaluating the efficacy


of drugs, many haven't looked closely enough at their
inventory management processes

• In fact, the typical health system pharmacy does not use


calculated methods for determining product orders.
Inventory

• Consequences of traditional pharmacy purchase:

• Low inventory turns per year

• Missed contract compliance

• Excess inventory levels

• Frequent stock outs and costly emergency deliveries

• Workflow interruptions and expensive rework

• Increased health system labour requirements


Inventory - Optimizing

• Inventory Process Redesign

• Buyer Experience
Technology • Velocity Ranking

• Technology
• Inventory management tools
– HIMS
nce
r
Ex uye
rie
M
Ch age


B

Change Management
pe
an
an me
ge nt

• Streamlining product
replacement process
• Organizational acceptance
of new process
Inventory - Optimization

• Benefits of Optimized Inventory

• Increased Inventory Turns

• Increased capital availability

• Improved Contract Compliance

• Improved service due to reduced stock outs

• Freeing up of pharmacist time – to focus more on


patients rather than inventory.
Transportation

Pricing

Information Facility

Supply chain
&
Logistics

Sourcing Inventory

Transportation
Transport - Functions
Optimized Transport - Benefits
Sourcing

Pricing

Information Facility

Supply chain
&
Logistics

Information
Sourcing Inventory

Transportation
Sourcing – non core functions

• Major functions outsourced to third party vendors


• Medical transcription is very big abroad
• Canteen
• Cleaning/Sanitization
• Managing inventory – only pharmacy supplies taken
care of by hospitals. Inventory management
outsourced (Nebraska Medical Center outsourcing to
Owens & Minor)
• IT – AMC, website maintenance, data storage
• Help desk
Sourcing – Why or why not!

• Advantages
• Cost saving – leads to additional capital for expansion
• Specialization achieved by way of focusing on
providing healthcare service to patients
• Functions outsourced to institutions specializing in the
field so no compromise on quality
• Disadvantages
• Loss of Vision - third parties not attached to the cause
• Third parties may divulge certain data to competitors
Information

Pricing

Sourcing
Information Facility

Supply chain
&
Logistics

Sourcing Inventory

Transportation
Contribution of
Information Technology

• Integration – Supply chain management system with


Financial Management system, Clinical Management
system.

• Electronic Data Interchange – Patient data, Invoice


Payment.

• Tracking – Bar Code scanning, RFID usage.


Contribution of
Information Technology

• Automation Technology

• Automated point-of-use data capture that automatically initiate


restocking

• Automated integration with patient accounting system

• Robots to transport medium-sized items

• Pneumatic Tube systems to rapidly transport small items horizontally


and vertically.
Pricing

Pricing

Information Facility

Supply chain
&
Logistics

Sourcing Inventory

Transportation
Pricing – Driving Factors

• Products & Services – surgical supplies, radiographic film


laboratory reagents, therapeutic agents. Reduction of
commodity prices, inventory levels and distribution fees by
hospital Group Purchase Organizations (GPO).

• Participants & Processes – manufacturers, vendors . Right


product to the right user at the right time .

• Accountabilities – No departmental silos, clinician


“choices “ to be evaluated in context of bottom line.
Pricing – Driving Factors

• Departmental initiatives – To achieve commodity savings.


Facilitate value analysis process that enables physicians
and line managers to take supply decisions.

• Assessment of Savings potential – Benchmarking and


process analysis. Handled by Cross functional team.

• Focus – Initiatives to attack areas where supply cost is a


significant portion of total cost per case. Scope,
Complexity, Risk to be considered.
Hospital

Pricing

Sourcing Facility

Supply chain
&
Logistics

Information Inventory

Transportation
Thank You

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