The Future of the Healthcare Economy
The United States spends more on healthcare than any other nation, yet hospitals are struggling. Today, 1 in 5 hospitals are likely to close due to finances, but hospitals could safely reduce supply expenses by nearly 18 percent without seeing a negative impact on quality of care. With the $11 million in annual savings hospitals would receive from this, 2 outpatient surgery centers could be built, and the salaries of 160 nurses or 42 primary care physicians could be funded. Other methods of cutting costs in hospitals include implementing artificial intelligence and restructuring supply chain management.
The University of Missouri (UM) healthcare system models this well. The university’s health facility reduces waste by centralizing its supply department. To do this, UM integrated order to allow for high-volume discounts, and combined purchasing for 4 individual campuses. As a result, the University of Michigan saved $15 million across seven years.
The National Health Service uses artificial intelligence to track and maintain the nation’s blood supply. By doing this, they are able to optimize their waste use, even reducing the amount of expired stock and supply shortage used. After using AI to optimize their waste use, the NHS saw a 20 percent decrease in delivery costs and a 30 percent reduction in overstocked perishables.
Additionally, big data could save the American healthcare industry up to $450 billion annually. The most overlooked opportunities for cost reduction are automation, purchased services, and data entry. Hospitals can save money, time, and themselves with better supply chain management, such as implementing practices to reduce waste.
More than half of executives say better supply chain management could grow their profit margins by up to 3 percent, and nearly all hospital executives say supply chain is an investment priority.
In 2019, revenues for nonprofit hospitals grew more slowly than expenses. Additionally, hospital spending will increase by 5.7 percent each year from 2020 to 2027. Find more quality-safe ways to reduce hospital costs through supply chain management savings here:
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