
Health care
continues to be seriously challenged by the staggering reductions in government-based and managed care
reimbursement caps, growing staffing shortages, increase in regulations (such as HIPAA) and
the annual demand fueled by the rapid growth in our senior
population. Yet one of the least talked about challenges impacting
health care is one of the most complex and troublesome. Health
care must overcome years of adversarial relationships with suppliers and dramatic
internal and external inefficiencies. In addition, the GPO's need to decide whose side they are on:
the health systems or the suppliers, who are their primary source of revenue.
In other markets supply chain management has revolutionized not only how
product moves through the pipeline but also how buyers and sellers relate to each
other and form long-term value based relationships. Although aggregating volume
through GPO's was originally intended to drive price reduction it has produced
an unintended consequence. As large suppliers increased the size of
their market share through merger and acquisitions, they dramatically increased their
leverage significantly reducing the markets ability to lower cost. The only way to overcome this
dynamic is to provide health care with the solutions they need to regain control
over costs and exploit supply chain efficiencies.
Health care has not yet embraced fundamental supply chain rules and
as a result has not realized the benefits. The many
failed attempts to introduce e-commerce into the health care market are the latest examples of how
suppliers use their influence and market power to artificially inflate cost. This limits the use
of technology their customers desperately need. Of the surviving e-commerce companies almost all are
simply misleading efforts from suppliers to maintain market dominance. At the expense
of millions of Americans GPO’s, manufacturers and distributors have failed to deliver
the solution that is needed most ( "Self-Directed Supply Chain Initiatives”). When
this occurs supply chain value will find its way into health care and
only then will the layers of cost and inefficiencies be
removed. Isn’t it time you plugged into the solutions that deliver
supply chain empowerment?
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