Promise and problems with supply chain management approaches to health care purchasing.
BACKGROUND
Double-digit health care inflation, coupled with widespread reports of poor care quality and deadly medical errors, has caused private sector employers to reevaluate their health benefits purchasing strategies, with a focus on supply chain management approaches. In other industries, this strategy has proven to be an effective method for simultaneously reducing costs and increasing quality.


OBJECTIVE
This article describes four current applications of supply chain management network methodologies to health care systems and identifies potential ways to improve purchasers' return on investment. In particular, information exchanges, purchase decision, and payment agreement components of integrated supply chains are described.


METHODS
First, visual depictions of the health care supply chain are developed from a purchaser's perspective. Next, five nationwide programs designed to realign incentives and rewards across the health care supply chain are described.


RESULTS
Although several nationwide efforts are gaining traction in the marketplace, at this time, no cost reduction and quality improvement program initiative appears to systematically align the entire health care supply chain from providers to purchasers, raising doubt about the ability of supply chain management network techniques to significantly impact the health care marketplace in the short run.


CONCLUSIONS
Current individual efforts to coordinate the health care supply chain do not act on all of the actors necessary to improve outcomes, promote safety, and control costs. Nevertheless, there are indications that several of the individual efforts are coming together. If national efforts touching on all critical elements can coordinate with purchasers, then the health care supply chain's performance may improve significantly.
Center for Healthcare Innovation, Education and Research, Rawls College of Business, Texas Tech University, Lubbock, TX, USA. eric.ford@ttu.edu
Eric W
EW
Ford
Dennis P
DP
Scanlon
D003299:Cooperative Behavior; D004059:Diffusion of Innovation; D017598:Efficiency, Organizational; D006264:Health Benefit Plans, Employee / Q000458:organization & administration*; D008421:Materials Management, Hospital / Q000458:organization & administration*; D019300:Medical Errors; D011786:Quality Control; D012052:Reimbursement, Incentive; D014481:United States