IntroductionHealthcare facilities are very vital for any society to function appropriately. Its existence is a relieve to many as healthcare services are inevitable in a man’s life. People tend to get ill often enough in that, in one way, or another may require services offered by hospitals. For good hospitals to be sort for by people; its services are to be excellent and its costs affordable. The main challenges that many face during such moments of illness are; the quality of services offered and its total costs. Services rendered may be good, but the costs incurred may sometimes not be affordable. Striking a balance between offering quality services and having an affordable cost is a challenging factor among many healthcare providers. Many private firms that offer healthcare services are known to be the best in terms of services provided. However, many are unable to sort for such services because of the high costs involved. On the contrary, those who seek services in Government organizations tend to pay less but get substandard services.
It is sad that many sometimes postponed treatment or even not seek any medical attention owing to the costs involved are enormous. Many people end up dying because of the fact that they lacked finances to seek for proper treatment (Ballou & Ronald 30). Since the government based healthcare institutions are available, many people rush to get treatment in such places leading to overcrowding which makes it difficult for the practitioners to execute their services appropriately. The burden of attending to so many people yet the workforce is low is a major challenge that they face.
There has been an increased attempt to dialogue on how this phenomenon can be handled so as to assist in providing quality services but at affordable rates. Healthcare providers in association with their suppliers can bring about the desired outcome on the matter at hand. One of the methods to make this possible is by hospitals joining GPOs-Group Purchasing Organization (de Búrca, Seán, Brian & Donna 427). GPOs aim at assisting the bargaining power of clients to sort for discounts that will eventually assist them to gain more in their sales than under normal rates.
It should be noted that the healthcare services especially the hospitals and clinics will continue to exist due to its demands in the market; this, therefore, calls for a remedy that can be adopted to ensure neither the clients nor the service providers suffer (Kumar, Arun, Linet & Chun 100). The service providers need funds to keep running their premises; on the other hand, the ill patients need the services for them to get back to shape after suffering some disease or illness.
The ultimate goal of any healthcare service providers is to offer quality service at affordable costs. There are some ways that can be adapted to ensure this goal is achieved. Purchase of high volume commodities and a proper management of supply chain have benefited many industries over years. If the same approach is incorporated into the health care arena; then reduction of costs will be experienced.
Reducing supply chain steps
In the market world, many retailers tend to want continuously to reduce costs so as to get a high yield of profits. Reducing steps in the chain of supply is the main strategy to reduce costs. Eliminating middlemen can greatly help in reducing costs incurred. Every middleman involved adds an amount of money as part of their fees that eventually affect the final price accorded to a commodity. Commoditization of an item can also assist in reducing the costs incurred in purchasing a commodity. Commoditization of a commodity simply entails the fact of making a commodity into something that is not distinguished by its brand (Ballou & Ronald 30). With this, a commodity can be bought in bulk and, therefore, offered at a reduced price. The more you buy, the less you pay without necessarily compromising the quality of the product in question.
In a market where items are commoditized, the variation involved in specific commodity characteristics or its quality is minimal, and, therefore, the competition arises on the price involved. The cost of an item is majorly influenced by volume and not the brand. Many of the healthcare products are standardized hence supplied as a brand rather than a commodity. This has resulted in paying more for less rather than paying less for more (Kumar et al. 102). Buying a brand is costly. This is the mistake that many of the purchasers of healthcare products make.
Streamlining the Healthcare Supply Chain
There are several factors that have been aligned to endorse and develop the retail industry entrance culture to the healthcare arena. The trend has been made possible by the fact that application of cost-control measures are in place. Despite the rising demands in the health services, the need to search for better alternatives is rising. The availability of customers’ access to information has assisted greatly in allowing customers to want to seek medical attention as opposed to traditional times where people found no need for visiting hospitals. Their access to information allows them to understand the boundary between what needs a practitioner’s attention and that which does not need any hence sort for alternatives that are cheaper. Going to the hospital alone will need consultation fee which a client may not have at their disposal (de Búrca et al. 440). Getting the right information available to them assist in knowing what exactly is required of them.
The increased uniformity of approaches on how to treat common diseases and illness based on homogeneous guidelines has assisted in making many of the medical services products be priced as commodities hence making them affordable. The broader application of models like mass retailing has assisted in removing additional costs from the supply chain. Partnerships that permit the system on hand to take advantage of mass purchasing power and be in a position to reduce cost while saving more and meeting the needs of the patients. In many instances, many of the simple products of health care are priced higher than the required standard. The generic drugs often cost pennies to produce per pill; this is however not the case with drug stones who traditionally priced the generics in accordance to their brand name correspondent rather than about their acquisition cost(de Búrca et al. 430). This has proven to result to markups to close to 50% and more. Initially, a brand name could be overpriced not basing on the effectiveness of the drug but the name it has created for self.
Besides, some retailers have begun to offer facilities like in-store clinics that provide basic health services for treatments that do not require emergency attention. The medications offered in these clinics are offered at commodity prices and not brand name prices. These clinics have assisted in providing convenient services with lower prices but offering quality services. Such clinics have trained practitioners who are supervised by a physician who may be present at the site or doing supervision remotely. Many of the clinics are connected to a major hospital that may directly or indirectly affect the operations of their satellite clinics. Research has shown that one among ten clinics is associated with the main hospital. This is however set to change with the increased numbers demanding such services. The good thing about these clinics is the fact that they provide services like those that could have been provided in the main hospital, the only difference is, it can only handle minor cases that could have been handled in the big hospital and cause more(de Búrca et al. 439). This, therefore, reduces the chances of a hospital flocking with masses of people with common or less severe illnesses; this gives way for serious disease to be handled in the main hospital while the minor illnesses handled in their clinics.
The in-store clinics are the best options for patients who may not have insured themselves through insurance. The small clinics provide a platform for them to access services in same measures as those who can afford the big hospitals. The advancement of information Technology, IT has assisted majorly in keeping of records that are used for future reference. If the small clinics are not in a position to treat some illness, the patients are referred to their main hospital where treatment continues without necessarily having to begin by consultation which also has its fee (de Búrca 331). This is therefore seen as an ideal method to cut on costs but get quality services.
The clinics also assist in connecting patients who may not have healthcare providers to healthcare providers that are in existence and are efficient and sufficient due to their past records.
(b)Strengthening the healthcare supply chain
Reducing the costs incurred in the healthcare supply chain is one among the many steps to gaining more. Apart from reducing, strengthening the supply chain is vital if progress is to be seen and maintenance of the chain to continuously offer higher profit yields than before. It is unfortunate that there have been gaps in the supply chain, yet there are increased numbers of people in need of the services. It is good news that some models have been put in place to curb the challenges at hand and also increase the productivity required to be on par with the rising markets (Kumar et al. 97). Below are strategies that one can employ to bring about a strong system of supply in the health care arena.
Easing shortages and improving safety
The issue of drug shortages has been of concern to many nations in the world. Supply shortages create a chance for the production of counterfeit drugs that are released to the market because there is demand for drugs, yet there are no enough of them to be dispensed. The fake ones come the same way with the original ones yet may not be effective enough to cater to the needs of the people (Kumar 95)). The growing market is the main reason for the shortage, however; plans are underway to ensure the issue is handled.
Having a reliable system that can make precise estimates depending on the demand at hand is paramount. Supply and demand chain is greatly influenced by the market at hand. Supplying excess of a commodity may result in having some percentage of wastage (Kumar 98). On the contrary, producing less will lead to a shortage which is still disastrous. Striking a balance between what is in demand and what is to be produced is vital.
Building a new health-care supply chain
Living in the present yet using methods from the past may not be ideal. Times are changing, and the approach given to things should also keep advancing or change to suit the current trends. There are both internal and external factors that have to be dealt with for a new structure to be established.
The aspect of segmentation is important in restructuring the supply chain. One-size-fit-all system is outdated and may not apply to the current times. There can be differentiation regarding profits per drug, the importance attached to a drug or patients device, services rendered and customers relation offered. Segmentation allows for variety. If customers cannot afford one item, they are provided with an alternative that will still suit their requirement. Profits can be maximized if the different versions of the same thing are present. This allows the satisfaction of different category of clients which later result in higher profit yield (Monczka et al. 770). It should be noted that each client is unique, therefore, should be treated uniquely by the needs presented.
Agility is another factor to be put into consideration. This simply means acting fast when an emergency arises. However, the ability to create an operating model is vital. This allows for flexibility to suit the customers demand yet still with reduced costs. An agile chain requires stability to function effectively. Stability is necessary for production, aspects of visibility and replenishment.
Alignment and collaboration are external factors that can assist in structuring a new supply chain. Being in line with the market demand will allow the yielding of a lot of profits as opposed to supplying items that are not in the market demand. To be in a position to produce more, the healthcare sector can align itself with a standard that is accepted globally and accepts the exchange of data, capabilities and processes. This can increase efficiency and decrease the chances of counterfeit items (Monczka et al. 774). Chances of reducing errors related to medication are minimized and consumer’s item safety enhanced.
Collaboration is important if the supply chain partners are to reap wholesomely. Acting as a team is important and crucial as opposed to acting individually. The supply chain touches on several parties involved; if they all act towards a given agenda, the possibility of excelling is enhanced (Monczka et al. 754). The counterfeit cases are seen where people act independently. If set standards are put, all should be in a position to subscribe to that. Embracing the collaborative method will ensure customers get the best of products; products that are safe and economical regarding price.
There has been negotiation going on involving drug prices. There is a need to redefine the role played by organizations that are mandated to set the prices of medical products. The program that is involved in the negotiation wishes to abolish the average wholesale prices that were initially set in regards to a drugs cost. Manipulating the customers using prizes tagged will be a gone story as a standard body will take over the activities about pricing the of medical items (Storey et al. 770). For instance, the generic diabetes drug is set to reduce to as low as 65% of the current price.
Over-the-Counter –OTC health products
Providing potential customers with relevant information concerning drugs will assist them in making informed decisions. Over the counter drugs are as effective as those prescribed by the doctor in the hospital. Saving the need to visit a hospital but be in a position to effectively use the over-the –counter products assist in saving few coins that could have been used at the hospital for consultation. It should be made known to the patients that, some illnesses do not need a doctor for a prescription of drugs, general knowledge of the same may assist greatly in acquiring the drugs. For instance, a pregnancy test can be done at home without visiting a clinic or a hospital (Storey et al. 774). This among many other types of information should be made available to patients through platforms that are easily accessible.
Forming habits of taking precautions wherever possible helps in future cases of treatment. Routine check-ups like dental cleaning, vision examination, cancer screening among many other examinations can be ideal if sort for, for future saving (Storey et al. 772). These services are normally free Hence; patients should seize opportunities when they arise.
The healthcare supply chain has had challenges as opposed to the supply that involves other industries. Building an effective chain of supply for the medical products and services, a lot has to be invested in. More profits can be generated if only the right methods and strategies are employed. Borrowing some knowledge from the other types of supply can be ideal in saving the situation in the medical arena. It is sad that occasionally many postponed treatments or even not seek any medical attention because the costs involved are enormous. Many people end up dying because they lacked finances to seek for proper treatment. This should not be the case since strategies put in place are meant to curb all these. Collaboration among all the key holders of the supply chain is the crucial factor to be considered among all; the ultimate goal being offering quality services at affordable cost.
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