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Many organizations rely on industry benchmarks to evaluate labor productivity, but only a few use a similar approach to address nonlabor expenses. It can be instructive to compare supply chain metrics among different sizes of hospitals, in terms of beds in service, and health systems. In this analysis, the comparisons are based on a total of 550 U.S. hospitals and 47 U.S. health systems (see exhibit).

Notably, for the hospitals, total operating expenses increased, on average, by 4 percent from 2006 to 2007.  Direct operating expenses were equally divided between labor cost (50.7 percent) and nonlabor costs (49.3 percent). Supply expense accounted for 16.8 percent of total expense, with medical supplies accounting for 14.8 percent and operating supplies the remaining 2.0 percent (see exhibit).

It can be instructive to compare supply chain metrics among different sizes of hospitals, in terms of beds in service, and health systems. Consider, for example, metrics on staffing, overtime use, and productivity indicators for the materials management department, including materials management administration and related departments, and three specific functional areas within supply chain (see exhibit).

For this analysis, annual data were reviewed for calendar years 2006 and 2007. Data were developed by the Healthcare business of Thomson Reuters. For more information, e-mail phil.gaughan@thomsonreuters.com.

Publication Date: Friday, August 01, 2008

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