Study: Hospitals’ Annual Supply Chain Savings Opportunity Reaches $25.7 Billion

Average supply expense reduction opportunity per hospital up 23% since 2017, savings achievable without impacting quality

Unnecessary U.S. hospital supply chain spending has reached $25.7 billion a year – a 11.8% or $2.7 billion surge from 2017 – according to a Navigant analysis of 2,127 hospitals.

For individual hospitals, the average annual supply expense reduction opportunity jumped 22.6% from 2017 to $12.1 million, an amount equivalent to the average annual salaries of 168 registered nurses or 51 primary care physicians, or the average cost of 3,100 knee implants.

As with previous years, the analysis suggests lower supply spending doesn’t mean lower care quality as higher performing supply chain departments also scored better on a pair of Medicare quality programs.

Physicians and other clinicians understand the significant savings to be had in decreasing variation, and they’re as frustrated as any stakeholder by the lack of progress. Realizing these opportunities requires system and supply chain leadership to have more direct conversations that start at a place no clinician can walk away from — quality of care. Such conversations are best initiated by someone clinicians know has been in their shoes.

Chuck Peck, MD
Guidehouse Managing Director 

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