It is time for a revolution in healthcare supply chain management

It is time for a revolution in healthcare supply chain management

August 04, 2020
Business Affairs
From the August 2020 issue of HealthCare Business News magazine

Environmental
The COVID response is creating a staggering amount of medical waste, in part due to unprecedented levels of used PPE. But healthcare was creating a staggering amount of waste before COVID. AHA also reports that hospitals generate “nearly 7,000 tons of waste every day and $10 billion annually in disposal costs.” Spending money to dispose of needless waste, is itself, also costly.

Solutions

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To address the immediate challenges of healthcare -- while simultaneously building a better system for the future -- previous assumptions and practices must be re-thought and re-evaluated to prioritize reuse, reprocessing and recycling. These efforts can
- Reduce costs, freeing up resources to fight COVID or protect against future disruptions, protect healthcare jobs and, for many hospitals, keep the doors open.
- Build a more resilient supply chain so that we have a controlled, reliable system of ensuring we have supplies, especially when disruptions occur.
- Reduce the environmental impact of healthcare.

Immediate savings opportunity
Looking through the lens of single-use medical device reprocessing, while reprocessing has been saving hospitals a tremendous amount of money and reduced the per-use cost of medical devices, we’re doing a drop in the bucket of what we can. Often, complacency and inertia have led hospitals to simply throw away their single-use devices because the manufacturer says so. This is despite FDA’s conclusion that these devices can be reprocessed safely and effectively. That means hospitals are throwing away billions of dollars of assets. For those not intimately familiar with these devices, laparoscopic surgical instruments costing upwards of $500 and diagnostic cardiac devices, sometimes costing over $3,000 are labeled for single use and often thrown away after only one use.

By some internal industry estimates, the average U.S. hospital is leveraging reprocessing only to about a third of the potential. The immediate savings reprocessing can provide for U.S. hospitals is in the billions of dollars. One specific estimate from a policy paper published by the Commonwealth Fund estimated that, on just one procedure type, based on existing data on price and procedure costs, US hospitals could save another $540 million annually, or $2.7 billion over five years. One AMDR member estimates peg nationwide A-fib case savings potential at over half a billion dollars a year.

Reprocessing is not a singular solution to our supply chain problems, but it is powerful, immediate, and still under-utilized. Maximizing the immediately available impact of reprocessing reduces costs to make up for lost revenue and extends the life span of existing assets, thereby reducing the need to buy more.

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