Hospital Supply Chain Metrics
Measuring and tracking hospital supply chain metrics is one way healthcare systems are keeping an eye on these rising costs.
With supply teams under pressure to achieve greater cost savings, more organizations are now turning to the use of hospital supply chain management tools that can help them collect, analyze, and report on hospital supply chain metrics and identify opportunities for standardization and waste reduction. These top-performing supply chain teams are leveraging cutting-edge digital supply chain technology to streamline processes and boost operational efficiency.
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The value of hospital supply chain metrics
Healthcare systems are using hospital supply chain metrics to identify and eliminate inefficiencies in their supply chains and evaluate the impact of supply chain management practices. They are essential for improving inventory management, boosting profitability, and enhancing patient care. By monitoring and reporting on meaningful, actionable metrics, healthcare organizations can manage the hospital supply chain more strategically, thereby contributing to reductions in supply costs and generating greater value from their relationships with key suppliers. By tracking the right sets of metrics, they can help promote continuous improvement across supply chain functions, from planning and procurement to asset tracking and inventory optimization.
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Using hospital supply chain metrics to drive performance
Hospital supply chain metrics are the data points and measurements that health systems leverage to quantitatively evaluate and optimize supply chain performance. They are used to:
- Establish baseline measures for benchmarking, or for comparing the efficiency, resilience, or other aspects of their supply chain with that of competitors.
- Uncover opportunities for improving supply chain performance.
- Set cost savings goals and track their progress towards meeting those goals.
- Guide and assess the impact of supply chain optimization efforts and initiatives.
Supply chain metrics are used by hospital supply chain managers to keep hospital executives informed and demonstrate accountability. They help improve decision making across the healthcare organization and they are critical to helping healthcare systems transform their supply chains into a competitive differentiator.
Essential hospital supply chain metrics
Healthcare systems generally collect and view hospital supply chain metrics using supply chain data analytics tools and BI dashboards and scorecards. While the metrics tracked by each hospital will depend on its unique priorities, reflecting its patient base and portfolio of services, there are key performance indicators (KPIs) that every healthcare organization should measure. Some of the healthcare supply chain metrics deemed essential by the Association for Health Care Resource & Materials Management (AHRMM) of the American Hospital Association are:
- Supply Expense Per Case Mix Index (CMI) Adjusted Discharge
- Supply Expense as Percent of Net Patient Revenue
- Number of Expired/Obsolete/Wasted Product as a Percentage of Total Purchases
- Spend Under Management (SUM)
- Inventory Turns
- Internal Requisition and Order Fill Percentage Rate
- Supplier Fill Rate
These and the other 25 hospital supply chain metrics recommended by AHRMM, the leading membership group for healthcare supply chain professionals, to define the essentials of supply chain performance. These metrics should be reviewed regularly by health systems to evaluate the health and resilience of their supply chains. These health supply chain management measures can be used to reduce inventory and holding costs, identify renegade spending and opportunities for improving inventory management, and monitor the relationship between supply expense and patient revenue.
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Going beyond metric-tracking: Fostering collaboration through the digital supply network
One of the easiest ways hospitals can share critical supply chain metrics with their supply partners is through the digital supply network. TraceLink's Digital Network Platform is the world's largest cloud-based network of supply chain partners for the healthcare sector. The platform now connects over 280,000 members and enables end-to-end information sharing and visibility across the healthcare value chain.
Members can build applications that integrate data from multiple sources and locations, allow their supply chain teams to work collaboratively with suppliers in a single virtual workspace, and accelerate data-driven decision making across hospital and retail pharmacy supply chains.
Hospital Supply Chain Metrics FAQs
What are hospital supply chain metrics?
Hospital supply chain metrics are key performance indicators (KPIs) that health systems use to evaluate and improve the efficiency, effectiveness, and resilience of their supply chains. They help identify opportunities for improving supply chain performance and assessing the impact of supply chain optimization efforts.
Why are hospital supply chain metrics important?
Metrics are important because they help healthcare systems better manage their inventory of clinical products and supplies, improve the efficiency and resiliency of their supply chains, and enhance their overall profitability.
What are the most important hospital supply chain metrics?
The Association for Health Care Resource & Materials Management (AHRMM) of the American Hospital Association has provided a list of 32 essential KPIs that every healthcare system should monitor and track. These include: Supply Expense Per Case Mix Index (CMI) Adjusted Discharge, Number of Expired/Obsolete/Wasted Product(s) as a Percentage of Total Purchases, Supply Expense as Percent of Net Patient Revenue, Spend Under Management (SUM), Inventory Turns, Efficiency in Clinical Supply Spend, Contract Versus Non-Contract Versus Off-Contract Spend, Internal Requisition and Order Fill Percentage Rate, Percentage of Items with Identified Substitutes, and Supplier Fill Rate.