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Study: Hospitals Could Reduce Supply Expenses by $23 Billion, Maintain Quality

Guidehouse analysis suggests a 17.8 percent average supply expense reduction opportunity across all hospital types, sizes

The supply chain has long been a cost reduction target for hospital and health system leadership, and rightfully so: it represents close to a third of a hospital’s overall operating expense, and it is predicted to surpass labor as a hospital’s greatest expense in a few years. This focus has only intensified as provider operating margins dwindle and the pressure to reduce costs while maintaining quality rises.

A new Guidehouse analysis magnifies the opportunity that U.S. hospitals have to save billions of dollars by further streamlining supply chain processes and associated product use — without affecting quality. 

According to the study, hospitals nationwide could reduce their supply chain budgets by 17.8 percent on average. This equates to $23 billion in aggregated annual savings, or $9.9 million per hospital – an amount equal to the annual salaries of 150 nurses, or the cost of 4,000 cardiac defibrillators or five Da Vinci robots. 

The analysis also reveals that:

The pressure on hospitals and health systems to reduce costs and maintain quality will only intensify, no matter the outcome of healthcare reform. Opportunities exist for all organizations, even top performers, to improve supply chain efficiencies while continuing to offer the highest levels of care to the communities we serve.

Christine Torres
System VP of supply chain management
Main Line Health

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