8 Healthcare Procurement Challenges and How to Solve Them
Your healthcare organization requires the right balance of talent, equipment, and supplies to meet patient care needs. However, achieving an optimal balance is often complicated by internal and external factors, such as availability of talent, supply quality and inventory, and shifts in the demand for care.
The most recent example of how shifts in demand have impacted healthcare procurement is the pandemic. Initially, many healthcare organizations struggled to obtain the talent and equipment necessary to care for the severely ill. Even now, your organization must overcome pandemic-related procurement challenges in order to deliver talent, equipment, and supplies to where they are needed most.
The Importance of an Effective Healthcare Procurement Strategy
Cost-effective procurement is essential for healthcare organizations not just because it directly impacts your ability to deliver quality patient care. Your procurement process can also lead to costly inefficiencies when not managed properly. In a multi-year study published in JAMA, researchers found that healthcare sector waste ranges from $760-$935 billion annually, representing approximately 25 percent of total healthcare spending. In the study, poor procurement processes made up a sizable portion of the waste.
To reduce waste, increase efficiency, and manage the costs of products and services, it is critical to automate manual processes and work with product and service providers aligned with your organization’s goals. According to Guidehouse research, by selecting the right partners and improving supply chain processes, you can reduce waste and potentially realize as much as an 18 percent reduction in supply expenses.
Other potential benefits of addressing your procurement challenges effectively include the following:
- Healthy inventory levels
- Effective use of employee time
- Better management of risks associated with supply shortages
- Higher levels of patient and employee safety
- Greater ability to anticipate future procurement needs
Top 8 Healthcare Procurement Challenges
To achieve the many benefits of an efficient procurement process, you need to understand the potential obstacles you are likely to encounter. Here are eight common procurement challenges your organization may be facing, and how to solve them.
1. Manual Paper-Based Processes
When you order, receive, and distribute inventory based on manual workflows, you can experience delays and bottlenecks in delivering critical supplies. However, one great way to address these outcomes is through automation. For example, an e-procurement solution can provide greater visibility into inventory availability, ordering, and delivery timelines. With data and analytics from an automated solution, you can see what supplies and equipment you have and where inventory is falling. You can also anticipate future purchasing needs and establish more realistic budgets.
Physical product procurement isn’t the only inefficiency resulting from a reliance on manual processes. The same is true when you rely on manual workflows in managed services. For example, relying on manual or periodic workforce sanction checks can open your healthcare organization to risks such as hiring employees who have been debarred or excluded from healthcare employment. One effective solution is to transition to continuous monitoring. This around-the-clock workforce monitoring solution allows you to stay informed about employee actions that could harm patients and your workplace.
2. Relying on Individual Clinicians and Facilities to Select Products and Services
Allowing individual departments and facilities in your organization to select their own product and service providers can quickly lead to cost overruns and potentially lower-quality selections. Moreover, it can make it even more difficult to achieve economies of scale with specific providers.
An excellent way to centralize procurement for efficiency and scale is to purchase products and services through a group purchasing organization (GPO). A GPO can vet providers for price and quality, saving your organization time and money. According to a Healthcare Supply Chain Association (HSCA) study, GPOs can reduce supply-related purchasing costs for healthcare organizations by as much as 13.1 percent.
Another solution is to develop more comprehensive RFP processes. By undergoing a thorough discovery process and asking the right questions in your RFP, you can determine the ideal providers for your organization.
3. Inefficient Distribution and Delivery of Products and Services
Following inefficient pathways for getting products and services to the facilities and clinicians who need them can drive up costs. For example, ordering items which require hours to break down from larger crates for redelivery to different hospitals in your health system can result in added labor costs. These costs may be hidden in other budget line items, but they affect your bottom line nonetheless.
By streamlining supply delivery systems, you can create more efficiency and reduce expenses. The same is true when you select managed services. For example, paying for background screening services you don’t use or don’t need can lead to waste and overpayment for services. Instead, you can refine background check services according to the screening services required for specific job groups and risk categories.
4. Inefficient Use of Healthcare Labor
When your procurement processes stand in the way of getting the necessary products and services to clinicians, those individuals must spend time looking for supplies rather than providing direct patient care. And when healthcare workers spend time on non-essential activities, labor costs can soar.
Nurses often spend long periods of time—sometimes up to an hour per shift—searching for equipment. To address this challenge, make sure your procurement processes don’t focus solely on ordering and delivering supplies to the correct office or hospital. You’ll also need processes to make products and services fully accessible to clinicians.
5. Inventory Imbalances Across Locations and Departments
Each hospital and department has different needs for supplies, equipment, and services. But if your procurement strategy provides the same quantities to each, you can experience shortages in some areas and unnecessary excess in others.
When procurement challenges result in an equipment shortage, you may be forced to delay or cancel patient procedures. In a Cardinal Health supply chain survey, 40 percent of respondents said they have had to cancel a procedure due to a lack of supplies.
Correcting an inventory imbalance requires your procurement processes to take into account variations across different facilities and departments. By personalizing purchasing to meet their unique needs, you can create a more predictable allocation of products and services across your organization.
6. Suspicion of Fraud or Theft
Sometimes the lack of available inventory is not the result of insufficient purchasing, but rather theft or fraudulent misuse of supplies. For example, you could have employees with substance abuse problems stealing drugs, or individuals selling medicines or equipment to third parties for profit. When inventory goes missing, your purchasing costs increase, and you have more difficulty measuring actual demand and usage.
To address this challenge, it is critical to have processes in place for identifying individuals who may be likely to commit fraud or theft, ideally before they are hired. Relying on effective background screening and continuous workforce monitoring can help manage these risks and protect your workplace and inventory.
7. Changing Regulatory Requirements
Any changes in federal and state regulations can impact the equipment and medicines you must keep on hand and the services you need to maintain smooth operations. In addition, to maintain accreditation status, you must stay in compliance with Joint Commission guidelines. As a result, you need resources and trusted managed service providers to help you monitor regulatory compliance developments and apply best practices for ongoing compliance.
8. Limited Supplier Network
When patient demand is steady and predictable, it is often easy to get the products and services you need in a timely manner. But when demand peaks, as it has through the many surges of the pandemic, relying on too few suppliers can expose your organization to back-ordered items and other delays.
To address this challenge, it is critical to examine your existing supply chain to be sure your preferred providers can scale to meet your evolving needs. If suppliers seem to be barely keeping up or don’t offer solutions to help you meet your shifting needs, it may be time to look at other providers.
Take a Fresh Approach to Your Procurement Challenges
There’s no crystal ball to pinpoint your product and service needs of the future. However, by addressing procurement challenges and reevaluating your supply chain, you can overcome common obstacles and position your organization for smoother operations.
Background check services are critical to the success of your hiring and talent management processes. To protect patients and your workplace, make sure you take the right approach to screening services procurement. For ideas to get you started, take our interactive assessment.