The Hospital Supply Chain Is Ever Expanding

With the Affordable Care Act sweeping healthcare in the U.S., hospital supply chains have had the spotlight shown on them: a somewhat disregarded discipline in a hospital has now come to the forefront in cost savings.

The Affordable Care Act has affected hospital supply chains in the realm of reimbursements. Formerly, reimbursements for supplies were based on volume: the more operations and procedures a hospital or hospital network does, the more supplies they would be reimbursed for. Not the case after Obamacare. With merit-based reimbursements as the main form of reimbursement a hospital can receive, Obamacare has led to some tight squeezes in some hospital supply chains.

The title of this article states an ”ever expanding” healthcare supply chain, but we just used the phrase ”tight squeezes.” What gives?

Well, for hospitals the supply chain is expanding, because who they are getting their supplies from is changing. Large distributors are being overlooked more and more, as large shipments are now being bought directly from manufacturers instead of through a third party. This leads to hospital networks revaluating their supply chain, preforming validations again, and expanding the pathways their goods move through.

Looking at larger chains specifically, the vetting out of warehouses used by hospitals is happening across the country. It may seem strange that the same organization that operates Emergency Rooms and pays doctors also leases out large warehouses with management systems and racks upon racks of goods, but it is apparent and noticeable in the hospital supply chain.

That doesn’t even count new overseas markets that hospitals are beginning to tap. The globalization of healthcare supplies has forced hospital supply chain managers to seek out goods in new areas, and understand the chain that will bring those goods into their hospitals.

Third party influence from hospital supply giants will obviously continue, and the healthcare world is waiting to see what their response will be.

Our best guess for what the future holds for hospitals, supply companies, and manufacturers, is a web of integration between all three. It may start off as a patchwork system, but in the coming years that system will get more robust, with hospitals deciding, based on price, whether they can attain goods directly from manufacturers at a better cost-savings than a distributor can deliver it for them, or vice-versa. It may lead to more competition, or less.