H-Source – Supply Chain efficiency can save billions…here’s how


The DFW Hospital Council is posting blogs submitted by our Associate Members. The following was provided by H-Source. For guidelines, please contact Chris Wilson at chrisw@dfwhc.org.

Healthcare costs are rising and reimbursements are declining. As a result, shrinking margins are forcing hospitals to find new, innovative ways of maintaining financial health. As CEO and President Emeritus of the American Hospital Association and H-Source board member Rich Umbdenstock states, “The new generation of healthcare leaders and CEOs must understand that cost controls are the future. Medical facilities will never be paid more than they are today for services.”

Hospitals have responded by cutting labor costs, which represents about 33% of expenses on average. As margins continue to get squeezed, hospitals are further forced to look at more ways to cut costs, and supply chain is a prime candidate. Supply chain represents about 31% of expenses on average, and as the Association of Resource and Materials Management (AHRMM) stated, “Billions of dollars’ worth of new devices, pharmaceuticals and equipment expire or are thrown away each year.”

In 2012, the National Academy of Medicine estimated the U.S. health care system wasted $765 billion a year, more than the entire budget of the Defense Department, as reported by ProPublica.

As the second largest expenditure in healthcare, supply chain inefficiencies represent a tremendous opportunity to recover costs that to date have largely gone untapped. Supply chain waste is caused by a myriad of factors, such as product outdates, physician preference changes, minimum order requirements, product upgrades, contract changes, manufacturer return policies, physician termination and relocation, and the list goes on.

If we make supply chain more efficient, we stand to save, quite literally, billions of dollars each year in our healthcare system.

H-Source is a marketplace platform that allows hospitals to sell slow-moving and unused devices, equipment, and pharmaceuticals that they don’t need or can’t use, and recover a portion of those costs. Hospitals and Surgical Centers can buy unused devices, equipment and pharmaceuticals from each other at a reduced cost and in custom quantities, saving money.

It’s a logical win-win marketplace that’s been elusive without the technology in place to support it. That’s all changed with H-Source. Because it’s built with extensive knowledge and experience in the healthcare system, H-Source allows hospitals to use purchase orders to buy supplies in the marketplace.

Automated, real-time reporting and tracking make administration of supplies bought and sold with the technology easy. Hospitals can participate within a custom IDN, geography, or facility type, or they can access supplies offered by the entire H-Source community.

The H-Source platform is being utilized for “selfdistribution” or “single warehouse” applications for virtual or brick-and-mortar warehouses for IDNs, ACOs, and facilities. The goal is to help hospitals create a proactive, collaborative environment to recover costs in supply chain and improve sustainability.

To learn more, visit H-Source at http://h-source.com/.