Healthcare_Supply_Chain

Operations Management Decisions in the Healthcare Industry Another important issue facing hospitals and health centers around this country is the concept of supply chain management. This is an often overlooked part of the hospital organization that has great effects oncosts and savings for a facility. Managing the supply chain efficiently and having good control over supplies often is the difference between a successful and productive facility and one that is losing money. Supply costs alone can make up as much as 25% of a hospitals operating budget (Stark, Mangione). Administrators that realize the importance of supply chain management make sure that the properly trained personnel are in these positions. Understanding the clinical areas of a hospital as well as the non-clinical areas can be a great help with managing inventory. Also, developing good relationships with vendors and forming quality partnerships can prove to be effective attributes of a good supply chain management. Information technology upgrades can also help improve supply chains. The Sisters of Mercy Health System recently found out the benefits that an efficient automated system can yield. Prior to overhauling their supply chain system, the Sisters of Mercy, which operates 18 hospitals, was very ineffective and costly. Each hospital was ordering its own supplies and doing so without any input from hospital staff, nurses, or physicians. After being overwhelmed with rising costs and mounting waste they decided to form the Mercy ROi (Resource Optimization innovation). After centralizing a storage and distribution center for all 18 hospitals, they decided to invest in the latest supply chain automation software. All aspects of supply chain became better organized through automation from planning, managing inventory, and different warehouse functions. All of the hospitals were linked on the same network. Mercy has realized astounding returns from this investment, with the supply chain turning losses into incremental revenues averaging 153 million dollars annually, and 24 million dollars profit directly resulting from forming the ROi(W.P. Carey). Although initially an expensive investment, sinking funds into quality supply chain management, whether it is training or technology, has proven time and time again to pay for itself and then some in the long run. More importantly, increasing spending on the supply chain does not take anything away from patient care, but when used efficiently and effectively greatly improves it (Singh 3). Nurses are just one example of employees in the healthcare industry. Effective management and control over all of the employees is the best way to run an organization. Empowering employees through positive reinforcement and letting employees make key company decisions can help boost an individual’s productivity. Several programs and strategies have helped employees become more efficient and thus more productive to their organizations. Some of these are now making their way into the healthcare industry, as pressure to cut costs continues to mount. This only makes sense as the healthcare industry has costs rising faster than any other industry in the service sector (Herrick). Lean and Six Sigma business management strategies have been helping the manufacturing world cut costs for years, but they are relatively new to the healthcare industry. Hospitals across the country are beginning to adopt these strategies at an attempt to save money. According to a study by the American Society of Quality, 42 percent of hospitals report some sort of Six Sigma deployment (ASQ 2009). Although it is early to quantify any of the early results of implementing these strategies, their record in the manufacturing industry is solid proof that it works. Reducing waste and increasing productivity is a goal that should be adopted by all organizations regardless of the discipline. If the healthcare industry had adopted some of these strategies earlier, it is quite possible that the crisis would not be as drastic as it is today.