Healthcare Supply Chain

Management

Expert Views

Healthcare Supply Chain Management

By Bhakti Shuke

RFID technology is helping providers tackle problems to improve patient outcomes.

TAGS
Health Care
Inventory / Warehouse Management
Manufacturing
Supply Chain

Feb 21, 2021Minimizing healthcare costs has become the new motto for hospitals and physician practices. The
healthcare industry is witnessing a sharp spike in prices for almost all products and services. This alarmingly
high spike in expenditures is disrupting the availability of products being marketed to the masses.

Many healthcare organizations have started examining their billing and services section of the revenue cycle,
while the majority have begun to focus on their healthcare supply chain management. The industry's supply
chain is a vital driver of cost expenditures and is, therefore, attracting maximum attention from stakeholders.
Nearly all hospitals still use outdated tools to manage their inventory and supply chain activities, which makes
supply chain costs the number-one expenditure for hospitals and healthcare systems.

During the last decade, supply chain management has emerged as a crucial competitive
advantage for companies in various industry verticals. In standard terms, a supply chain can be defined as the
physical and informational resource necessary to deliver goods or services to an end user efficiently. As an
extended term, the supply chain includes all activities associated with manufacturing, including extracting raw
materials, processing, storing and transportation.

In the healthcare industry, the supply chain is typically a highly fragmented and complicated process.
Promoting efficient supply chains in the healthcare industry can help physicians, practices and hospitals design
a comprehensive, cost-effective plan across their organizations. The Global Healthcare Supply Chain
Management Market is predicted to garner a revenue of US$3.67 billion by 2027, growing at a CAGR of 7.6
percent, according to the latest analysis by Emergen Research.

What is Healthcare Supply Chain Management?

Healthcare supply chain management covers the procurement of materials, the tracking of supplies, and the
supplying of products and services to patients and providers. The primary purpose of the supply chain is to
provide products promptly to fulfil providers' needs. The supply chain is the holistic flow of products between
suppliers and customers and it efficiently delivers products at a low cost.

Supply chain management faces a myriad of challenges, such as stockpiling supplies, the requirement for
specific products in inventory, out-of-stock issues, and product expirations that subsequently contribute to
costly delivery, an unexpected surge in inventory expenses and pilferage. These issues, combined with others,
lead to a costly budget for suppliers. The healthcare management supply chain is responsible for stocking and
managing organizations' inventory.

The starting point of the healthcare supply chain is the medical product manufacturer, at which items are
produced and sent to distribution centers. Depending on the product, hospitals either purchase inventory
directly from the manufacturer or distributor, or a purchasing contract is formulated on behalf of the hospital.
Stocking essential supplies in inventory ensures that providers have timely access to these products, and that
patients have unrestricted access to life-saving equipment.

Similar to industrial supply chains, the healthcare supply chain comprises multiple independent agents, such as
insurance companies, doctors, hospitals, regulatory agencies and employers. Agencies such as the U.S. Food
and Drug Administration, as well as healthcare payers such as Medicare and other private insurance
companies, are involved in healthcare supply chain management.

Automation of Healthcare Supply Chain Management

Software automates manual tasks carried out repetitively by healthcare organizations, in order to achieve an
enhanced supply chain system. Such automation enables the streamlining of inventory and a reduction in
waste, allows timely and accurate data-based decision-making, and lowers the costs of supply, labor and
operations.

Two types of supply chain management technologies are available to choose from: enterprise resource planning
(ERP) systems and so-called "best-of-breed" or niche healthcare inventory and supply chain systems. ERPs are
often not the first choice for healthcare settings because such solutions are widely deployed across a broad
spectrum of industry verticals, and healthcare expertise is scarce. The second type, niche solutions, are more
flexible and affordable, and are equipped with more profound industry knowledge that enables accurate
healthcare-directed solutions.

These systems are more inclined to zero in on particular areas, such as interventional medicine, surgery and
other disciplines that contribute to 60 to 70 percent of a hospital's total supply chain costs. Different automated
tools can also help organizations improve price transparency, such as computerized order-entry systems to
streamline a physician's orders, or radio frequency identification (RFID) technology that can provide volumes of
data from a product's barcode.

How RFID Is Enhancing the Healthcare Supply Chain

RFID technology is considered the next big wave of the future, and novel and innovative applications of this
technology emerge daily in the healthcare industry, from iPads and asset tracking to hygiene solutions. RFID is
an identification and data-collection technology that leverages radio waves to sort, locate and control materials,
patients and assets with minimal to no human intervention.

RFID is typically combined with other technologies, such as mobile devices, Bluetooth and sensors, for varied
purposes. Passive RFID tags allow for seamless patient identification, while drug-authentication and active
RFID tags enable the efficient tracking of products. The technology is exceeding the expectations of being
solely an asset tracker and is rapidly evolving to improve patient care.

There are several key benefits to employing RFID for healthcare supply chain management. RFID-assisted
bracelets enable physicians to quickly access patients' files, resulting in faster treatment and enhanced
traceability of prescribed drugs. It ensures that the right patient receives the correct dosage of the proper
drug, thereby maintaining the "Five Rights" of medication administration.
In addition, RFID can facilitate the collecting of accurate data during clinical trials, then deliver that
information straight into hospitals' databases. The technology, combined with error-prevention systems, can
enable accurate inventory management and asset utilization, thereby reducing a large chunk of supply chain
costs. According to surveys, clinicians and physicians spend more time doing non-patient-related activities
owing to disrupted supply chains. RFID offers providers more time and resources to pay attention to their
patients, thereby augmenting patient care.

In short, radio frequency identification is linking producers, distributors and purchasers end to end across the
entire healthcare supply chain, allowing manufacturers to view real-time inventory and consumption data. The
technology enables hospitals to better manage their high-cost products and services without burdening medical
personnel with tedious supply chain tasks, and it also enhancing efficiency, augmenting the patient experience
and changing the landscape of the healthcare industry.

Bhakti Shuke is a content writer with a zeal for designing and developing all sorts of first-rate content. She is
passionate about science and healthcare but also has a fervor to stay updated with the latest happenings in the
world. When Bhakti is not writing, she can be found gazing at the stars, talking long walks, drowning in music,
cooking delicious pasta or curled upon the couch with her nose in a book, pretending the outside world doesn't
exist.