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Top Hospitals Leverage Data Analytics to Reduce Supply Expenses, Study Finds

September 14, 2017
by Rajiv Leventhal
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U.S. hospitals could reduce annual supply expenses by approximately $23 billion in aggregate through improvements in supply chain operations, processes, and product use, according to new research from Chicago-based Navigant Consulting.

The analysis of more than 2,300 hospitals also shows that lower supply spending does not have to reduce quality, as hospital-acquired condition and value-based purchasing scores are slightly better at top-performing supply chain facilities. Further, Navigant officials attest, the chance to realize savings may exist for all types of hospitals, with opportunities relatively equal across such characteristics as size, regional location, and whether the facility is urban or rural, for-profit or not-for-profit, or system-based or standalone.

The $23 billion reduction in annual supply expenses in aggregate represents a 17.8 percent average total supply expense reduction opportunity or up to $9.9 million a year per hospital—an amount equivalent to the annual salaries of 150 registered nurses, the cost of 4,000 cardiac defibrillators, or five Da Vinci robots, officials point out.

The study found that the top 24 percent of 2,331 U.S. hospitals analyzed spent $23 billion less a year than other facilities on supply chain products and related operations, processes, and procedures. As such, savings could be achieved if the remaining 76 percent of hospitals perform at the level of top performers for supply chain budget efficiency, according to the research.

What’s more, the top performers consistently leverage evidence-based protocols and data analytics to reduce variation in pricing, product use, and clinical outcomes, the findings revealed.

“It’s clear that some hospitals have the appropriate strategies and processes in place to efficiently manage supply chain budgets while maintaining high-quality outcomes,” Rob Austin, associate director at Navigant, said in a prepared statement. “For example, we have found, somewhat counterintuitively, that the highest-performing providers are simultaneously able to decrease cost and improve quality, in part by reducing clinical variation. Lower-performing supply chain departments need to leverage these types of proven best practices to drive care delivery improvements.”

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