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Hospital Supply Chain Management Essay

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Supply Chain Management in Hospital: A Case Study
Samuel Toba • Mary Tomasini • Y. Helio Yang
San Diego State University, San Diego, CA
It is a common misunderstanding that hospital purchasing is just a functional part of operations rather than a strategic means to achieve financial cost savings. The supply chain process is the essential link for all programs and services offered by a hospital, and hence any improvement in managing the supply chain can positively impact bottom line profitability of any hospital’s operations. This paper provides an overview of the current issues in supply chain management that today’s hospitals face as well as a look at the measures that a case health organization has taken in managing this aspect of …show more content…

Located in nine states, KP currently is the largest not-for-profit medical care organization in the United States with approximately 8.7 million health plan members, 150,000 employees, 13,729 physicians, 32 medical centers, 416 medical offices, and $28 billion in annual operating revenue. Kaiser Permanente is unique among health care providers and hospitals because it serves both as a health maintenance organization and as a group physicians practice provider. Its revenue model is not based by the number of cases or patients served each day, but rather by the number of members enrolled in their health care system. Hence, Kaiser Permanente tracks costs at the gross level view of average cost per nursing unit per patient day.
IV. PRODUCT MANAGEMENT

Healthcare industry is a cottage industry where clinicians are independent contractors with considerable clout and specific preferences for supplies and some variations in supplies and processes are accommodated to ensure patient safety (Scalise, 2005). These Physician Preference Items (PPIs) account for 40% of total medical supply spending for an average hospital (Volpe, 2007). However, hospitals are beginning to recognize the financial burden of allowing physicians the autonomy to order whatever supplies they choose. One of the opportunities for supply chain savings as identified from the 2005 survey by the Healthcare Financial Management Association is in the area of physician buy-in especially with

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