Hospitals and Integrated Delivery Networks
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Co-authored by Jason Henry and Sharon Higgs
?2016. FedEx. All rights reserved.
Introduction
While adapting and complying with costly changes in regulations as well as increases in operating costs, hospitals have managed to remain profitable. This is due primarily through Medicare, Medicaid, and private insurance reimbursements for services rendered. However, new health care reform initiatives reduce percentage of these reimbursements, especially for hospital inpatient services. Less reimbursements coupled with costly phased rolled-out regulatory requirements is forcing some hospitals out of business.
To stay afloat, hospital executives are looking at the second largest expense after labor; supply chain management. Executives are examining their business models and recognizing the need to scrutinize supply chain management practices, which represents nearly half of its operating expense. Relying on Group Purchasing Organizations (GPOs) and third party providers (3PLs) to negotiate contracts with suppliers to manage supply chain order fulfillment and transportation.
This white paper focuses on how hospitals and Integrated Delivery Networks (IDNs) can manage their inbound supply chain to reduce unnecessary costs and increase efficiencies to significantly improve their profit margins.
Evolving Trends
Group Purchasing Organizations (GPOs) grew in popularity between
Westminster Company is a giant Global manufacturer of health products whose brand has been recognized by the world. As the company they have three different operations which produce and distribute different product lines. Their main strategy on which they are working and which is a major success for them is decentralized management. Now they are re-evaluating their traditional supply chain strategy because the company is getting too much pressure from their large domestic’s customers and global customers. Now the company has to study on
In He and Mellor’s article, cuts in the Medicare payments would increase the amount of care provided to the uninsured by for-profit hospitals (He and Mellor, 2016). In the article, “How Much Do Hospitals Cost Shift?” Frakt explains that nonprofit and for-profit hospitals are in competition with each other. Nonprofit hospitals encourage for-profit hospitals to enhance trustworthiness and quality. For-profit hospitals persuade nonprofit hospitals to cut costs and become more efficient (Frakt,
The negative impacts of healthcare reform to health systems are significant in that health systems are preparing their resources on developing Accountable Care Organizations (ACO) for bundled payments and population-based reimbursement. In this economy the impact to health systems may require healthcare systems to figure out ways to continue to keep positive financial performance due to the cost-reduction of healthcare reform. For some time now, health systems have subsidized their losses from the Medicare and Medicaid systems by contracting with commercial payers for their premium rates. As a result of the healthcare reform, cost shifting will shrink. Another negative impact over the next few years will be the large shift in health plan enrollment. Less people will be covered by highly
On March 23, 2010, President Barack Obama signed the Affordable Healthcare bill into law. There has been much controversy over this Affordable Healthcare Act before and since it was signed into law. It was estimated that 30 million people would sign up for the new healthcare and that the healthcare industry would need a bigger workforce. Within hospitals across the United States there is already a shortage of nursing and medical staff. What will this new law mean for hospitals in their declining health care professionals? In what other ways will this healthcare law impact hospitals across the United States? This paper will attempt to explore some of the realities and possibilities in greater depth.
One of the goals of the Affordable Care Act (ACA) was to reduce healthcare spending in the US (DeMichele, 2015). However, the passage of the ACA has spurred activity that is counter to this goal of decreased spending in the form of increased hospital consolidation which many studies show has led to higher prices. While, there are many other effects of hospital consolidation such as the impact on quality of care or innovation, these topics are beyond the scope of this paper.
On March 23, 2010, President Barack Obama signed the Affordable Healthcare bill into law. There has been much controversy over this Affordable Healthcare Act before and since it was signed into law. It was estimated that 30 million people would sign up for the new healthcare and that the healthcare industry would need a bigger workforce. Within hospitals across the United States there is already a shortage of nursing and medical staff. What will this new law mean for hospitals in their declining health care professionals? In what other ways will this healthcare law impact hospitals across the United States? This paper will attempt to explore some of the realities and possibilities in greater depth.
On March 23, 2010, President Barack Obama signed the Affordable Healthcare bill into law. There has been much controversy over this Affordable Healthcare Act before and since it was signed into law. It was estimated that 30 million people would sign up for the new healthcare and that the healthcare industry would need a bigger workforce. Within hospitals across the United States there is already a shortage of nursing and medical staff. What will this new law mean for hospitals in their declining health care professionals? In what other ways will this healthcare law impact hospitals across the United States? This paper will attempt to explore some of the realities and possibilities in greater depth.
Although the Affordable Care Act (ACA) became law nearly five years ago, the rhetoric overt the law and its provisions continue in Congress and around every kitchen table in America. While no one disagrees the healthcare system prior to the passage of the ACA was flawed, healthcare reform under the ACA continues to evolve and is likely to continue evolving in the future. Despite this, it is the law, and the healthcare industry is doing its best to keep up with the law’s mandates. For the hospital healthcare administrator, there are numerous changes affecting how hospitals do business, not only with the insurance industry, but with patients as well. The following overview discusses the basics of the ACA, the positive and negative ramifications for hospitals, and the impact the law will have for years to come. Although the final incarnation of the Affordable Care Act will develop over time, its premise of ending healthcare disparities and quality care for all citizens is long overdue.
If you are in the healthcare industry, you have probably heard some rumblings about the
Medical reform has been a long standing goal of the more liberal elements of our society. Their vision of universal health care took a step forward with the implementation of Affordable Care Act. Health care facilities, and specifically emergency rooms, already operate under the most stringent guidelines. The new regulatory and financial demands placed upon these facilities created by the Affordable Care Act looks to cause a crisis in medical facility management. Facility administrators are now faced with the challenges of significantly larger patient volumes, smaller staff sizes, rationing directives, and insurance regulatory complexity. The increased number of patients now covered by the Affordable Care Act will have a detrimental effect on hospital emergency rooms and services, creating a significantly larger burden on Health Care Administrators.
From 1991 going forward, the health care environment again experienced fundamental changes as a result of the deregulation of hospitals which according to Ingols and Brem (as cited in Swayne, Duncan, and Ginter, 2006) was occurring for the first time in a decade. According to the authors, the impact of the move was immediate. Following the deregulation, the financial viability of most hospitals was
The external stakeholders are the community, patients, MedKey System members, CMS, HMOs (ie. Blue Cross Blue Shield and Tri-Care), and any other private insurances (Richards & Slovensky, 2004). Medicare reimbursement in Alabama was the lowest rate in the nation. This was a constant struggle for the hospital administrators to try to operate on such low reimbursements for their services, which is a threat. Eighty percent of patients were Medicare or Blue Cross in which there was difficulty-negotiating prices with Blue Cross due to monopoly. Buyers have high bargaining power as reimbursements rates are low from Medicare and Blue Cross held monopoly in the services area so negotiating prices was difficult. Suppliers have lower bargaining power due to low Medicare reimbursements and difficulty negotiating prices with Blue
Hospitals and health systems in the U.S. are experiencing a remarkable transformation in their business models directed from numerous influences that are projected to ultimately turn the industry around. Pressures include providers troubled with the quantity of services they are responsible for, to providers who concentrate on presenting high-cost services that give emphasis to sustaining healthy populations (Dunn & Becker, 2013).
In a traditional setting, supply chain management would integrate the totality of operations and processes which ensure that the product is created and delivered to the end consumer (Handfield, 2011). Within the setting of healthcare provision, the supply chain management would refer to the totality of the operations which ensure that the medical act is created and delivered to the patient; this medical act includes both the services of the medical teams, as well as the medical products required, such as medical equipments, beds, MRI machines, or medicines.
DIMCO may gain many advantages by implementing supply management chain. Implementing SCM can reduce problems within the company’s internal functions, external suppliers, and external distributors. Some advantages DIMCO can gain from implementing SCM are as follows; the supply chain would improve the quality of service to the end user; reduce channel cost; and create a competitive advantage. (Reid & Sanders, 2010) The implementations of SCM will strengthen DIMCO partnership with suppliers and distributors. Supply chain management can also prevent such challenges such as the bullwhip effect, caused by erratic replenishment of orders placed on different levels in the supply chain that have no apparent link to final product demand. (Reid & Sanders, 2010) An effective and efficient SCM will allow partners to share information concerning health, safety, government regulations and environmental issues. SCM will provide a common network for communications, suggestions, and feedback. This will assist DIMCO in meeting the need of customers quickly and in an efficient manner. Overall, SCM would assist in