How can medical supply chain be improved?

By Lou Ramondetta, President, Surplus Service

In recent years, the wholesale distribution of the medical supply industry has witnessed
stupendous growth. The recently held, FIME 2019 at the Miami Beach brought together 14,000 medical and healthcare trade professionals from North, Central, and South America, as well as from across the globe, to do business with 1,400 national and international companies showcasing new and refurbished medical and hospital equipment, technology, products, and supplies. At the event, I was an expert panellist and took part in the discussion of ‘Improving the Medical Supply Industry’.

The discussion involved around how to transform the medical supply chain by exploring healthcare distribution models, exploring and analysing case studies on how hospitals seek to maintain patient care while spending less on their supply chain.

Reports indicate that this industry will continue to grow at a rate of 6.5 per cent. According to the Centers for Medicare & Medicaid Services, US$3.5 trillion will be spent on national health expenditures alone. On one hand, the U.S. has witnessed a dramatic rise in drug shortage whereas, on the other, it has also added about half a billion dollars in costs for hospitals worldwide. What are the three words that come to your mind when you hear about ways of reducing cost, improving cost-effectiveness and information (data) into processes? We’d say: Supply Chain Management.

As per a recent collaborative study by Mckesson, Cerner Corporation, Oracle, Tecsys Inc., Infor Inc., GHX, Jump Technologies, Inc., Logitag Medical Solutions, SAP SE, and Ormed Healthcare Management Information Sys, the global healthcare supply chain management was valued at US$1.27 billion in 2016. By 2025, the value of this market is estimated to reach US$2.56 billion. Most people feel overwhelmed when they hear about the term ‘healthcare supply chain management’. Before we dive deeper into industry insights, let’s understand the term. Healthcare supply chain management refers to the organisation and management of resources that are necessary to deliver goods and services to the customer.

The process contains many divisions such as information technology, medical devices, pharmaceuticals and other services that help in the delivery of state-of-the-art medical care to the patients.

Cutting healthcare costs is the top concern that runs at the back of every healthcare professional’s mind who runs a hospital or an independent practitioner. Usually managing the supply chain in the healthcare industry is a complex system as it contains fragmented processes. If hospitals and physicians are looking to reduce their medical costs and improve quality, then, an efficient supply chain is a must to improve the delivery of their healthcare services. According to
Cardinal Health, healthcare organisations lost up to US$5 billion annually due to waste in the supply chain.

Medical supplies refer to a broad range of products that includes surgical, medical, hospital instruments, prosthetic supplies, disposable medical products, etc. Most of the organisations in the healthcare industry want to be the next ‘Uber’
or ‘Amazon’ without understanding the challenges, obstacles, and solutions in their supply chain. 

Most of these companies wish that their business model will overthrow the traditional business models and value propositions. Hospitals and clinics use a variety of medical supplies on a day-to day basis to provide patient care. However, a considerable amount of supplies are dumped in landfills on a daily basis, which adds to the operational cost. A wise tip for hospitals is to be aware of the tools that are used in the hospital and recycle and reuse as many items as possible. This helps to preserve the inventory and saves additional costs for the hospital.

As per reports, the U.S. spends more on healthcare per person compared to any country in the world. Did you know if the U.S. healthcare system was a country, it would have been the sixth largest economy though there would be a sharp rise in
the rates of cancer, heart disease, and diabetes? Here are some astonishing facts about the U.S. healthcare that you must know: 

  • What the U.S. spent on healthcare in 2009 was greater than the entire GDP of Great Britain
  • Healthcare costs accounted for just 9.5 per cent of all personal consumption back in 1980. Today they account for approximately 16.3 per cent
  • Approximately 41 per cent of working age Americans either have medical bill problems or are currently paying off medical debt
  • Prescription drugs cost about 50 per cent more in the U.S. than they do in other countries
  • Nearly half of all Americans now use prescription drugs on a regular basis
  • The percentage of women taking antidepressants in the U.S. is higher than in any other country in the world
  • According to one survey, approximately 1 out of every 4 Californians under the age of 65 has absolutely no health insurance
  • According to numbers released by Deloitte Consulting, a whopping 875,000 Americans were "medical tourists" in 2010
  • In 2015, 57 per cent of pharmacists were women

Bringing value

Medical distributors play a key role in the supply chain. From procurement strategies to risk management, they bring real value to the customers. Distributors are the heart of an economy as they bring in key business. When customers trust
their distributors, they are likely to place frequent orders with the distributor on a frequent basis.

The problem of medical e-waste is on the rise. Surplus Service - an e-waste management company based out of the Bay Area provides eco-friendly solutions that encourage small and big organisations to reuse electronics instead of dumping them in a landfill that could lead to chemical and environmental damage not just to humans, animals/birds but the environment as well. By repairing, refurbishing and reusing electronics and medical equipment, the company saves
millions of pounds of hazardous, chemical and toxic substances from landfills and the environment in the Bay area.

When businesses are focused solely on profit margins and not keeping track of their true carbon footprint, they often lose sight of the bigger impact the company can make. If a business doesn’t make it a priority to know where its e-waste is
ending up, then, in reality, the business is not making progress. Surplus Service offers zero waste reporting, which is a win-win for any organisation looking to make a visible difference on its carbon footprint.