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Chapter 17: Health Care Purchasing
and Supply Management
Purchasing and Supply Chain Management 3rd edition
Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.right 2013 W. 1
C. Benton Jr., All rights reserved
Content
• Inventory control
• The DRG System and Operating Cost
• Health Care Supply Chain
• Group Purchasing Organization (GPO)
• Opportunities in Health Care Supply Management
• Process Overview of Capital Equipment Acquisition
Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved. 2
The Health Care Industry
• Hospitals are complex organizations providing services including:
• Inpatient treatment (nursing units), surgery, radiology, pharmacy, laboratory
• Dietary, housekeeping, physical plant engineering, administration
• Outlook
• Expected to grow and consume an even greater share of GNP
• Challenges
• Uncontrollable nonsalary costs and declining profits
Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved. 3
Inventory and Health Care
• Inventory control
• An important component in supporting the objective of providing patient care
• The 2 primary functions of inventory (in the hospital setting):
1. To maximize supply service consistent with maximum efficiency and optimum inventory investment
2. To provide a cushion between the forecasted and actual demand
Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved. 4
Complicating Factors Unique to Health Care
• Inaccurate demand estimations
• Complex patterns of the length of stay and patient mix (types of patients and diagnoses)
• More accurate forecasts could be made by using DRG or CPP related practices
• Communication is vital between:
• The practitioners (medical staff)
• The supply management function
• However, communication has traditionally been difficult
• Hospitals as a set of “little fiefdoms”
Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved. 5
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