The average hospital's supply costs grew almost 40% between 2003 and 2005, from $36 million to more than $50.5 million, according to the Association for Healthcare Resource and Materials Management. VHA Inc. has found supply chain costs to be the second largest expense for hospitals (after labor), with most of it in four service lines: cardiology, cardiac surgery, orthopedic surgery, and neuro-spine procedures.

As hospitals and health systems continue to struggle to enlist physicians in efforts to chip away at this behemoth, it seems a good time to review the key components identified by VHA as integral to success in such efforts. A detailed discussion of these components and information on best practices for each is available in the VHA publication Engaging Physicians in Supply Cost Reduction at www.vha.com.

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By assessing an organization's readiness to pursue supply cost reduction and by developing the six key components across the operational stages, organizations can determine their own methodology for supply initiatives. Successful initiatives are the ones that are customized to meet the unique needs of each situation.

Publication Date: Tuesday, September 23, 2008