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Hospital Supply Chains : Past, Present, And Future

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Hospital Supply Chains:
Past, Present, and Future

Coauthored by Jason Henry and Sharon Higgs

?2016. FedEx. All rights reserved.

Introduction

Hospitals managed to remain profitable throughout the years while adapting and complying with costly changes in regulations as well as increases in operating costs. They were able to accomplish this primarily through Medicare, Medicaid, and private insurance reimbursements for services. However, the latest health care reform initiative has reduced the percentage of reimbursements, especially for hospital inpatient services. Less reimbursements coupled with costly phased rolled-out regulatory requirements is forcing some hospitals out of business.

To stay …show more content…

Evolving Trends
Group Purchasing Organizations (GPOs) grew in popularity between 1970 and 1980. Concurrently, the larger for-profit hospitals were expanding their networks by acquiring the smaller not-for-profit hospitals. To remain competitive and reduce the risk of succumbing to take-overs by the for-profit hospitals, not-for-profit hospitals began to unite and form IDNs to reduce costs.

Over time, new healthcare reform measures were causing fundamental changes in reimbursement for services to hospitals and IDNs. Consequently, healthcare providers had to establish financial stability. This opened the door for third-party logistics providers (3PLs) to establish a strong presence in the healthcare industry. 3PLs? offered solutions to mitigate transportation and supply chain expenses that streamlined the order-to-delivery process and reduced expenses.

The introduction of the Affordable Care Act (ACA) will forever be recognized as legislative history. Conversely, the ACA has altered the landscape of the healthcare industry, albeit primarily impacting hospitals. Insurance reimbursement for hospital services rendered model is now determined on a ?quality of care? model and is determined by many regulatory nuances. The ACA is being incorporated in phases over a period of years because of the magnitude of change required to comply. Furthermore, the launch of the first phases involve a drastic reduction in reimbursement; while at the same the costs for

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