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What is value in the health care supply chain?

Value statements, or Value propositions

Each have different definitions and objectives, but they are relatively the same within various industries. And then there’s the health care supply chain. What’s the value proposition?

Pinpointing the priorities:

Supply chain in health care has many competing value statements within any given organization. The elasticity and influence of the supply chain in health care have many competing objectives — values — inside the same organization. The ability to flex from one to another is a monumental challenge when a pandemic competes for priorities and goals. How far can the supply chain be stretched without snapping? How quickly can it retract?

Several variables, or influencers, can enhance or stall the whole supply chain

  • Revenue.
  • Delivery of care.
  • Regulatory guidelines.
  • Data intelligence, both enterprise and predictive.
  • New, diverse supply channels.
  • Financial stewardship.
  • Strategic sourcing.
  • Reliability.
  • Demand planning.
  • Storage and operations.
  • Purchasing and order management.
  • World events.

What does health care covet?

  1. Delivery of care.
  2. Compensation for the delivery of care. 

The health care supply chain requires revenue to operate; it is that simple. There is a well known saying in business “no margin, no mission” and competing values and priorities do not sit well within that business mindset. COVID-19 has forced organizations to implement a new standard, not a new normal within health care. No one likes a gun held to his or her head when making decisions; right now, the coronavirus has its finger on the trigger. As stated by the Congressional Budget Office, health care spending is projected to climb (see graph).

How much do we spend?

 In 2020, U.S. health care spending accounted for 18% of the GDP, which is the highest health spending among developing countries; comparatively, Canada is 3%. 

Supply chain has many priorities, namely the support of patient care and the management of supply expenses. Competing demands or unplanned disruptions (i.e., COVID-19) will strain the infrastructure. The supply chain failures during the vaccine rollout revealed many cracks in the armor of health care. The ability to deliver needed supplies to rural America was disastrous. Quarantines and shutdowns impacted logistics and transportation channels, and thousands who had contracted COVID-19 hampered supply lines. The significant impacts that supply chains and operations have on the planet and society are not meeting stakeholders’ expectations for sustainability.

What is value?

The value statement is murky within the health care supply chain. Who defines value? Ultimately, it is the customer, and senior leaders are taking a more complex look at the supply chain’s role. Let’s hope it doesn’t take too long. 

Thank you for reading. I can be reach me at [email protected] if you have questions or feedback. Like the content? subscribe here

Tim Ingram