Unlike other enterprises, hospitals have a unique revenue generation pattern; we will notice that the costs, utilization and revenues are mostly de-linked and many times increased cost does not proportionately translate into increased revenues/reimbursement. This takes us to the very basics of understanding factors that would push or pull revenue. There are many questions that need to be addressed. However, the biggest question is – “Can we manage an enterprise where we understand the cost of product and service; have no control on utilization of resources and have a little visibility on expected revenues?”

Of the three factors that are mentioned above, only supply cost seems to have clear visibility and hence is being questioned time and again; and utilization and reimbursement linkage to supply cost is neglected.

Supply chain leaders across the world have demonstrated and have achieved success in cost reduction by implementing several resource optimization strategies like the lean practices, process optimizations, bulk inventory procurements and currently by even involving physicians in the procurement process. However, despite all these efforts, few challenges within the hospital supply chain process persist. In fact, comparison between HFMA’s 2005 and 2008 supply chain benchmarking survey reveals that :

• 1. Physician buy-in and Automation, are still persistent challenges over last three years
• 2. New improvement opportunities are emerging; such as Supply-Revenue integration, Data standardization and management of supplier contracts