The Complexities of Healthcare Supply Chains

Cost reduction could impact the quality and efficiency of health care by using information technology (IT). It was a federal policy initiative to increase the outcome of patient’s health (Jacobs, 2012). It was for hospitals to increase the use of technology to assist to manage expenses. It ended up improving the

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

Success for many organizations depends on the firm’s ability to balance product and process changes while exceeding customer expectations for improved cost delivery and quality. In lieu of these issues firms have started to implement principles of supply chain management. Supply chain management mainly involves managing the flow of incoming materials, manufacturing operations, and downstream distribution has to be in alignment that is responsive to change in customer demands eliminating a surplus of inventory.

The purpose of this paper is to conduct a comparative analysis between for-profit hospitals and not-for-profit hospital. It will discuss the characteristics of each as well as factors affecting the operations of both systems. Additionally, it discusses potential areas of improvement and some of the challenges associated with each relative to finance and operations.

Main goals as a health care organization to optimize but also to achieve the flow of products and service with limited resources. First step is finding a local vendor for supply chain. The local vendor of choice is McKesson, they operated and have local warehouse but are a large supply chain organization that has a large online present with maintaining and providing medical supplies. They provide services with software offer by their organization. In which the operations strategy for the organization is to develop high quality invoice tracking and ordering system with using the McKesson’s software. All equipment and distribution of supply is to be maintained by supply staff with using the system to track orders, placing orders and obtain invoices from inside the EMS Station. Marketing team would have to build a strong relationship with the local McKesson warehouse staff and local hospital home medical oxygen supplier, by promoting and build an effective teamwork with them to maintain quality supply management. For follow up services, Operational manager must check on supply staffs on how well they are keeping and maintaining all equipment, and supplies for all trucks, find innovative ways to make improvement with orders, invoices and maintaining supplies to meet the needs of each ambulance on the streets

To add to the dilemma, the rising cost of healthcare will not adequately be addressed by any new healthcare system. The costs of healthcare in America are staggering and currently represent over 17% of our national GDP with the expectation of that number rising to 20% in less than 5 years. These costs are direct hits on the revenues received by hospital which affect their ability to remain operational. As the hospital’s revenues and profit margin decrease, so does the expected longevity of the hospital.

A Customized Textbook, Supply Chain Management SCHM2301, ISBN9781308037400 Copies are on reserve in the library

If the hospital focuses on processes, people and resources, this can be achieved at the most cost-effective way as possible. Manatt (2013)

It will be a win-win strategy for every participant in the medical devices supply chain. In details, first, MTC could form a strategic alliance to hospital ‘innovators’, such as Cleveland Clinic, to develop new high tech device. Patent could create a new revenue stream for both parties. Moreover, MTC would know earlier and react faster about what surgeons really need from the company’s next devices. At the same time, hospitals would be willing to cooperate due to the gain through such early involvement program. Second, implementing low unit of measure (LUM) Lean/JIT systems between distributors and hospitals. RFID tags could provide information on locations of medical device. Accordingly, manufacturer/distributors would have visibility to hospital’s items and control the order lead time to maintain a least landed cost. It is a desired result for distributors since they are more willing to shift from the traditional bulk model of shipping inventory in full-case quantities of use. Third, a higher percentage of ‘on-contract’ purchase benefit the cost saving which has become an important supply chain metric in leading hospitals. Last, supply chain touch points create potential safety issues and unnecessary expenditure. MTC should give a scrutinize of current process, in addition, eliminate touch point such as off-site

In regards to the survey information the hospitals gathered, many of the hospitals shared the same strengths and weaknesses, with a few notable exceptions. Areas that were consistently low throughout all the hospitals were cleanliness of the hospital as well as noise level, an aspect which pharmacists do not have control over. An area in which they do have control over is if a patient’s medications are explained to them, which was a weakness of a majority of the hospitals. An area where the hospitals showed a collective strength was communication with doctors and nurses. A synergistic relationship between nurses, doctors and pharmacists will change this weakness of medication education to a strength.

For several decades health care has been tied to the economy and with the current downturn we see continued efforts to control and reduce over-head costs. Health care organizations in their effort to become more efficient and address changes in the industry have altered their strategic business plans. Lee & Alexander (1999) researched organizational change in hospitals and their survival, in this paper I hope to discuss their findings and add other examples to validate their conclusions.

Though they are not entirely comprehensive tools, a great deal can be learned about a hospital or other healthcare organization for-profit or not-for-profit from an examination of their annual financial documents (Finkler & Ward, 2006). The balance sheet and statement of revenue and expense can both yield valuable clues even in the absence of other evidence about changes that might be occurring in the organization, a definition of the type and degree of certain problems that it might be facing, and potential opportunities for improvement in performance that might exist (Finkler & Ward, 2006). Comparing two or more years' worth of financial information yields even more valuable insights, tracking movement in the hospital or other organization's ability to finance its activities and thus continue providing services at the same level, quantity, and scope as current operation.

Financial administrators are always working to find innovative ways to reduce cost. This industry is notorious for spending lots of money and needs to find an effective way to reduce expenditure. You provided two great examples in your post for reducing cost. Fee-for-service is an attractive option as it allows patients to pay for services they need and not waste money on unnecessary services. How can the fee-for-service option save money for the hospital? Reducing the cost of supplies is the other possibility undoubtedly the hospital uses a massive amount of supplies on a daily basis, and educating staff on how to minimize wasting supplies is one way to fix this issue. Another technique to save money on supplies is to find a new supplier that

“Hospitals can be non-profit, for-profit, and government-owned and/or operated” (Baker & Baker, 2006). There are different terms for each classification in how to report and handle the finances but the basics are the same for any type of business. Business finances require the following basic fundamentals: creating “budgets, understanding capital expenditure, loan acquisition, and financial fees” (Baker & Baker, 2006). Government owned and operated hospitals offer unprofitable services; which

The hospital industry consist of privately and publicly owned and operated hospitals and medical facilities. The financial backgrounds of these assorted categories of organizations are sizeable and contrasted. Therefore, industry ratios are to be considered and evaluated from a greater proportion in order to identify with the financial data involving the industry as a whole (Dunn & Becker, 2013). Based on analysis and evaluation of the financial ratios gained from Nasdaq and Google Finance, it is apparent that the hospital industry is gradually rising and supports increase in profitability. These ratios are divided into several categories: Growth rates, financial strength, valuation, profitability, efficiency, dividends, and management effectiveness.