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Complexity in the Healthcare Supply Chain


The healthcare industry (HC) has considered itself as operationally different from other business (Jarret, 1999). Healthcare operational process are subject to variability and are considered complex systems. Hospital managers believe that the demand is unpredictable and uncertainty is proper of the condition of being a healthcare provider; in that sense, the variability is very much influenced in the Hospital by at least three factors: (i) Clinical variability linked to the presence of different diseases, different responses from the patients treated and severity levels. (ii) demand variability due to the unpredictability of patients flow like emergency department flows (iii) care professional variability due to different medical approaches and different levels of skill (Lega, Marsilio and Villa, 2012).

Recently all over the world, the HC industry has been exposed recently to a lot of pressure. Factors like ageing of people, new technologies for treating chronical diseases, new medical research for treating patients have made the industry to reshape in most advanced economies (De Vries and Huijsman, 2011). As a result, in most countries of the OECD the expenditure in healthcare has increased over the past decade and new approaches to the problem should be addressed (McKone-Sweet, Hamilton and Willis, 2005). In that way IM can become an important strategic priority of hospitals for reshaping Hospitals and reduce costs. Recent studies show that a considerable part of the cost associated to SC can be reduced by implementing effective IM (Burns and Lee, 2008; Dacosta-Claro and Lapierre, 2003). Therefore, IM in HC has been taken more serious in the past two decades. About financial impact of the SC in the HC delivery, more than 45% of the hospitals’ budget is being spent in SC (Chen, Preston and Xia, 2013). It is believed that during the next decade, SC expense is going to become number one on the hospitals´ budget list, surpassing labor expenditures (Jayaraman et al., 2014).

Hospital´s IM is uniquely more complex and knowledge-intensive than traditional IM in manufacturing and retail. The SCM of the Hospital is more complex and knowledge-intensive than other traditional IM in five factors (Chen, Preston and Xia, 2013). First the needs of patients are diverse and require of accurate and adequate supplies and therefore hospital´s supplies are critical to the mission of bringing wellness and health to the public (Beier, 1995). Second, an average hospital uses thousands of items in medical devices, drugs, pharmaceuticals and medical equipment and most of them are of high value and

special for handling to avoid obsolescence and spoilage. Third, unlike the industry or retail there is a lack of universal product number classification system that helps to identify functional equivalent products that are important for standardisation and synchronization for the SCM. Fourth, supply selections in hospitals are often influenced by physicians and it depends in criteria like training, brand experience and context-specific demands. In the other side, the purchasing areas of the hospitals are disconnected from the decision makers like physicians (Burns and Lee, 2008). Fifth, supply products are quickly changing due to innovation in technology and medicine and therefore obsolescence of purchasing items and a large based of suppliers are issues that SCM must address.

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