Hospitals & The Growing Cost of Healthcare

The Future of Healthcare How better supply chain management leads to savings for hospitals In 2019, U.S. HEALTHCARE SPENDING REACHED =$3.8 TRILLION HOSPITAL EXPENDITURES ACCOUNTED FOR ONE-THIRD OF TOTAL SPENDING From 2020-2027. hospital spending will increase by 5.7% each year Yet, 1 IN 5 HOSPITALS ARE LIKELY TO CLOSE DUE TO FINANCES PROFIT MARGINS HOSPITALS and The Growing Cost Of Healthcare 2.7% 1.8% The U.S. spends more on healthcare than any other nation* BUT most hospitals see minimal profit margins from patient care Large, nonprofit hospitals For-profit hospitals In 2019, revenues for nonprofit hospitals grew more slowly than expenses 4% 4% 3% Why Are Hospitals STRUGGLING? In 2019, hospitals saw higher use due to Medicaid expansion By 2027. MEDIÇARE as Baby Boomers age into Medicare coverage, government programs will pay 47% of nationwide healthcare costs and MEDICAID 241% 41% But, Medicare reimbursement rates are just 41% of private insurance rates That's often less than the cost of care Private Insurance Medicare reimbursement rates reimbursement rates TIGHT JOB MARKET By 2025. 2.3 MILLION NEW HEALTHCARE WORKERS - including nurses, lab techs, physicians, and surgeons But, there aren't enough new graduates to fill these roles Hospitals are already offering big bonuses, free housing, and other perks to try to recruit more talent EMERGING TECHNOLOGIES Specialty drugs and implementing new technologies are costly Hospitals need budget surpluses to pay for research and development and to improve patient care More than half of hospital executives say better supply chain management could grow their profit margins by up to 3% “Healthcare is not based on supply and demand. It can't be ´stocked' like it's a traditional product" Supply Chain Management DRIVING EFFICIENCY IN HOSPITAL CARE Mike Rip Founding Director of Healthcare Administration & Public Health Programs at Michigan State University waste Nearly all hospital executives say supply chain is an investment priority 3 in 4 doctors and nurses think seamless supply amounts to 20% of total chain operation is critical healthcare spending Adopting supply chain efficiencies from other industries could save healthcare sector up to Hospitals could safely reduce supply expenses by nearly 18% – without negatively impacting quality of care $130 BILLION in annual cost savings That's $11 MILLION for each hospital Savings that could be used to Fund 回 日 Build salaries How Hospitals Can REDUCE WASTE for up to 2 160 42 or outpatient surgery centers registered primary care physicians nurses REDUCE INVENTORY CENTRALIZE SUPPLY DEPARTMENT OPTIMIZE WITH IT OWESLEY NHS O Health Care Healthcare University of Missouri Health System ELIMINATED EXCESS STOCK of COMBINED PURCHASING for USES AI to track and maintain supplies and expired inventory 4 individual campuses the nation's blood supply REDUCED wasted expired stock and supply shortages INTEGRATED ORDERING to STREAMLINED ordering and inventory management allow for high-volume discounts Results Results Results $15 MILLION saved over 7 years 20% 33% 35% 30% 50% Projected expense reduction of over $50 MILLION* Fewer Supply Orders Per Week Reduction In Procurement Staff Reduction In Overstocked Perishables Reduction In Lower Inventory Holding Costs Delivery Costs *after 12-14 years In 2018. healthcare organizations managed 93% 8.41 MILLION gigabytes of data of healthcare executives are looking for a better approach to data analytics The Future Of Hospitals: DATA-BASED DECISION MAKING "Big data" could save the U.S. healthcare industry UP TO $450 BILLION ANNUALLY • Analyzing patient data to improve outcomes • Using operational data to boost productivity • Improving revenue and profit margins • Eliminating waste, fraud, and abuse Overlooked Opportunities FOR COST REDUCTION DATA ENTRY: PURCHASED SERVICES: AUTOMATION: 20% 78% 17% 30% Nearly 20% of doctors' and nurses' time is spent manually count inventory managing supplies Up to 30% of hospital purchases don't match contract 78% of hospitals still Invoice ROITM - just 17% monitor inventory with real-time RFID tracking pricing Automatically reconciles service invoices and contracts Finds pricing errors and off-contract spending Provides benchmarks for pricing outsourced services Sources: viehealthcare.com/invoice-rol oecd.org/health/health-data.htm Hospitals can save money, time, and themselves with supply chain management ncbi.nlmnihgov/pubmed/24657227 digitalauthority.me/resources/big-data-in-healthcare apnews.com/5dc460ae8d8b4c8a93c6c3108fd71e9c jamanetwork.com/journals/jama/article-abstract/1148376 advisory.com/daily-briefing/2019/05/13/hospital-prices-rand bostonscientific.com/content/gwc/en-US/executive-perspective/quick-study.html money.cnn.com/2018/05/04/news/economy/health-care-workers-shortage/index.html hitinfrastructure.com/news/organizations-see-878-health-data-growth-rate-since-2016 navigant.com/-/media/www/site/insights/healthcare/2018/supplychainanalysisinfographic.pdf revcycleintelligence.com/news/using-big-data-in-the-hunt-for-healthcare-fraud-waste-and-abuse toolsgroup.com/success-stories/nhs_ga=2.27875388101788408.1543232035-138887441.1543232035 businesswire.com/news/home/20191101005304/en/2019-Hospitals-Health-Systems-Market-Report-USA Presented by healthcaredive.com/news/more-than-half-of-hospital-leaders-see-supply-chain-improvement-as-path-to/549944 mckinsey.com/industries/healthcare-systems-and-services/our-insights/the-big-data-revolution-in-us-health-care THEALTHCARE“ VIECONSULTING healthcarefinancenews.com/news/looking-slash-hospital-supply-chain-costs-centralizing-operations-one-way-do-it axios.com/hospitals-are-making-a-fortune-on-wall-street-1513388345-1b7e1923-e778-4627-8fcc-bfab39e2d5c4.html michiganstateuniversityonline.com/resources/healthcare-management/changes-and-challenges-in-the-healthcare-supply-chain VIEHealthCare.com mckinsey.com/industries/healthcare-systems-and-services/our-insights/strengthening-health-cares-supply-chain-a-five-step-plan mercer.com/our-thinking/career/voice-on-talent/high-job-growth-expected-for-us-healthcare-but-where-will-the-workers-be.html prnewswire.com/news-releases/black-book-survey-new-generation-cdi-enhances-patient-care-and-reduces-financial-risk-300734394.html DEVELOPED BY multivu.com/players/English/8041151-cardinal-health-hospital-supply-chain-management-survey/docs/survey-infographic-pdf-3666997.pdf N NOWSOURCING cmsgov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/ForecastSummary.pdf