March 20, 2023 | Procurement Strategy Blogs
Healthcare procurement is a critical function that plays a key role in ensuring that healthcare providers have the supplies and equipment they need to deliver high-quality care to patients.
Similar to other businesses, healthcare procurement involves sourcing, purchasing and management of goods and services required to support healthcare delivery. But the healthcare sector requires effective procurement strategies to make sure healthcare providers have access to the products and services – from medical supplies and equipment to pharmaceuticals and IT services – so that they can deliver quality care to patients on time.
Other than managing costs, the healthcare domain has complex regulatory requirements that procurement professionals must navigate to ensure supplier quality and reliability, as well as to promote sustainability and ethical practices.
A successful healthcare procurement organization requires a deep understanding of the healthcare industry because of the critical nature of everything involved, with the sole aim to save lives in the most effective manner. It requires commitment to continuous improvement and constant focus on delivering value to patients and healthcare providers in the same way.
In recent years, there have been several trends and new best practices in healthcare procurement that are followed in global markets.
Technology has been a key enabler of quick diagnostics without any interventions or hospital stay, drastically cutting waiting times and inaccuracy. Apart from improving efficiency, the use of technology has also enabled healthcare providers to reduce costs by using automation and analytics tools to streamline the procurement processes and at the same time improving supplier management.
Sustainability has been a growing voice in healthcare procurement. With focus on social responsibility, healthcare providers are increasingly looking to partner with suppliers that have strong commitment to ethical and sustainable practices. This trend is on the uptick and has been helping the healthcare industry reduce its environmental impact by reducing waste, impact of products and ensuring fair labor policies across the board.
The healthcare is not without its challenges, more so after the global pandemic. Changes that could have ideally taken decades to come into practice have already been adopted across major global healthcare companies and service providers by means of digital transformation initiatives.
However, with all the changes thrust on the healthcare industry, there are several challenges that the industry needs to address. One of the biggest challenges is the complex nature of the healthcare supply chain, as a result of a wide range of products and services, as well as multiple stakeholders and regulatory requirements. The supply chain risk and government regulations make it difficult to identify cost savings opportunities and ensure compliance.
Another challenge that healthcare procurement organizations need to constantly balance is the need to balance cost savings with quality and patient safety. The products and equipment that are purchased need to meet high standards of safety and effectiveness, while also minimizing costs.
Implementing best practices in healthcare procurement helps streamline procurement processes and identify cost savings opportunities, collaborating with other stakeholders to improve efficiency.
Some of the best practices include implementing:
Procurement professionals need to work in close coordination with stakeholders to understand their needs and requirements. This ensures that the procurement process is aligned with the company’s goals.
Data analytics help enterprises to make informed decisions and further identify areas of improvement. Data analysis also helps identify cost-saving opportunities and substantially improve vendor performance.
A robust contract management process involves careful consideration of contracts and constant monitoring vendor performance to ensure promises are fulfilled.
A successful healthcare procurement strategy could be the "Just-in-Time" inventory management system. This uses real-time data to monitor inventory levels and automatically reorder supplies as needed, helping reduce waste and improve efficiency.
Second would be the use of group purchasing organizations (GPOs) to achieve cost savings through collective bargaining. This gets enterprises discounted prices, allowing access to high-quality products and equipment at lower rates.
The COVID-19 pandemic will keep haunting the healthcare sector for quite some time. This event also highlighted the critical importance of PPE for healthcare professionals as well as patients and their relatives, leading to procurement professionals being tasked with sourcing high-quality PPE from reliable vendors.
The healthcare industry has witnessed incremental growth in the use of digital medical devices, with healthcare providers relying on them for diagnosis. Here too, procurement professionals need to select vendors are reliable and can supply high-quality devices that meet regulatory requirements.
Pharmaceuticals are another major focus area for the healthcare industry and require constant and skillful negotiations to ensure high-quality products at a reasonable rates.
Also Read: MEDICAL DEVICES SUPPLY CHAIN STRATEGY
Healthcare procurement is a critical function with significant impact on cost and quality of healthcare delivery, including products and services. With best practices, technology, collaboration, healthcare procurement can overcome the challenges and improve efficiency, quality and achieve cost savings.