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Supply chain management 'can help cut hospital costs'

Dubai, January 5, 2012

Successful hospital supply chain management (SCM) will can help alleviate the rising hospital costs, while helping to improve patient care, experts from Booz & Company revealed.

“In the Mena region, healthcare accounted for 3 to 5 percent of GDP in 2008 and has been rising rapidly at an average annual rate of approximately 15 percent since 2005. The region’s healthcare systems, like many others around the world, has so far been unable to develop a successful formula for providing high-quality, universally accessible healthcare at a cost that is sustainable over the long-term,” said Jad Bitar, a principal with Booz &Company.

SCM is the capability to execute broad functions - from planning to working capital management - that are involved in obtaining any product or service that hospital staff needs to care for a patient.

Implementing SCM can help to contain costs while improving care; in hospitals, it covers medical and non-medical items as well as operational and capital expenditures.

“Hospital administrators strive to improve operations in their facilities because of the far-reaching, broadly positive impact it can have. Administrators should look first to streamline and optimise their hospital’s supply chain, which accounts for between 20 to 30 percent of a hospital’s budget,” said Gaby Chahine, partner with Booz & Company. “Hospital SCM typically goes through three stages of maturity – foundation model, optimisation model, and transformation model - and even in mature markets; few hospitals have made significant progress toward the most advanced level.”

“Most hospitals worldwide still operate under the foundation model, in which the function is essentially a service provider. As the costs of healthcare continue to increase, many hospitals can revamp their SCMs into a more strategic and dynamic collaborative endeavour - one that could help them control costs and enable them to serve their patients better. Learning that achieving efficient delivery of services and increasing the quality of care are not mutually exclusive can be a strong regional catalyst for supply chain transformation,” he said.

Hospitals eager to transform their SCM will have to embark on a capabilities-building mission, ensuring that workers have strategic SCM skill sets, clearly defining strategies, creating a strong governance model, integrating processes, and ensuring availability and robustness of data.

He said transforming a hospital SCM mandates a change in thinking as well as practices as hospitals become lean and efficient, while improving their overall hospital operations, forging long-term partnerships with suppliers with whom they can collaborate closely to deliver value year in and year out, and ensuring better outcomes for patients. – TradeArabia News Service




Tags: UAE | Dubai | Hospital | costs | Booz & Company | Supply Chain Management |

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