One of the comments I hear often from healthcare financial executives is that they are continuously being pushed to "do more with less." I hear this in relation to workforce management, revenue cycle process improvements, changing reimbursement models, automation efforts and IT projects.
But, most frequently, I hear it about the supply chain. Healthcare providers who are being squeezed from all sides are looking to the supply chain for ways to wring every penny possible out of their spend, while knowing they can't drop the ball with product quality and patient safety.
It's a Herculean task that may have just gotten even harder.
On Sept. 11, Irving, Texas-based supply contracting firm Novation released its Budgeting Impact Projections report, which said, in short, that supply chain costs will increase by 2.9 percent in 2013.
The report incorporates information from a number of resources, including Novation contract information and category experts, suppliers, raw material resources, the U.S. Producer Price Index (PPI) and the U.S. Consumer Price Index (CPI) to examine economic indicators, commodities, global exchange rates, labor costs and the state of the global economy.
And, as anyone who pays the slightest bit of attention to the news knows, the state of the global economy isn't so rosy right now. The U.S. is scrambling to recover from the recession that hit hard a few years ago, thanks in large part to disastrous mistakes made by the real estate and banking industries. Greece, Spain and too many other nations are teetering on the brink of financial ruin.
"Fluctuations in the global economy play a large role" in the rising cost of supplies, Larry McComber, Novation's senior vice president of strategic services, told me. "For example, commodity prices could escalate this fall if policymakers in the European Union, China and the United States provide the rumored additional economic stimulus to counteract slowing growth. Energy prices are hovering at about $95 per barrel, and analysts anticipate prices remaining near this level. And the severe drought in the Midwest is expected to affect prices for corn and soybeans as well as other field crops, which should, in turn, impact retail food prices, although the full impact of the drought is not yet known."
The effects of all this global strife is hitting close to home for most healthcare organizations. The financial pressure being felt by providers is evident in the responses Novation received to its recent National Economic Impact Survey, in which 69 percent of respondents indicated they plan to reduce the amount they spend on supplies through their group purchasing organization in 2013.
So, healthcare providers are caught between a rock and a hard place: trying to cut supply chain spending at the same time the price of each individual item is increasing.
The financial executives and supply chain managers I speak to are no strangers to dealing with tight budgets and big demands. They are used to doing more with less. Let's hope they can rise to the challenge of doing even more with even less in 2013.