As deliberations over how to make healthcare more cost-effective continue to play out in forums across the country — from the U.S. Congress to state governments to health systems and hospitals — it strikes me that we are paying insufficient attention to what should be an obvious consideration – the cost of supplies.

By some estimates, the “supply chain” represents as much as 40% to 50% of a hospital’s or health system’s operating cost, amounts that are exceeded only by the cost of labor.  This will not come as a surprise to anyone who has looked closely at an itemized hospital bill and discovered a $10 charge for an aspirin tablet.  Clearly, as they seek new ways to cut costs and increase effectiveness, hospitals must take into account the supplies and related processes used by their organizations.

A study reported in Health Services Research (August 2012) found that the largest hospital expense may be from supplies including medical devices, such as stents and artificial joints.  A cost analysis on more than 10.2 million patient discharges for various conditions revealed that, at 24.2% of costs, “supplies and devices” were the leading contributors to the increase in average cost per discharge — surpassing intensive care unit charges, imaging, and other advanced technological services.

As important players in the healthcare industry, all suppliers hospital food suppliers, pharmaceutical companies, bed sheet manufacturers, medical device manufacturers, and others) have roles to play in achieving the goals of healthcare reform — reducing waste and improving the quality of patient care.

Read the full article here