Healthcare supply chain management; strategic areas for quality and financial improvement

Highlight•Successful SC deployment requires a sound understanding of SC principles.•Deployment of SCM creates economic surplus for the SC participants.•Economic surplus helps providers to undertake quality improvement.•Healthcare organizations should adopt innovative commercial SC tools.•Healthcare SC community needs a new generation of SC to overcome talent shortage.

Healthcare supply chain has recently attracted attention by scholars, researchers, government officials and providers as one of the main tools in their effort to manage healthcare cost and improve quality at the same time (Elmuti, et al., 2013). It is reported that healthcare costs in the United States represent a sizeable portion of the gross domestic product and it is expected to increase at a much higher rate than other sectors in the economy. Nevertheless maturity of healthcare supply chain is said behind the commercial supply chain leaving room for improvement (de Vries and Huijsman, 2011). This paper explores strategic areas where healthcare supply chain may enhance efficiency in terms of cost per patient discharge of healthcare operations while improving the quality of care in terms of reducing re-admission rate. This paper argues that fundamentals of supply chain principles should be deployed to create “supply chain community surplus” where resources can be tapped to improve quality of care. Three strategic areas were explored to maximize the provider's revenue; understanding of supply chain principles (perception change), process improvement and deployment of logistics tools.