Hospitals in the U.S. are facing serious financial crunch but fail to understand that they are save significant costs by better managing the supply chain. It is strange that while other organizations are very well aware of the role of supply chain in costs, hospitals remain blissfully unaware. As the result of this, the hospitals are faced with serious financial challenges and the costs cannot be effectively borne by the state as they tend to burden state resources too. The authors have thus focused on the management of supply chain to see how this one method can bring down the costs. By paying more attention to reduction of costs for supplies, hospitals can effectively reduce the financial burden they face each year but the fact remains that the sheer lack of understanding about role of supplies and collaboration among key players continue to put supply chain management in the background where it remains permanently ignored.

Jonathan Ketchum has found that gain...

He is the assistant professor at the School of Health management and Policy and in his research on the subject of cost of supplies; he has found that hospitals tend to ignore the cost of supplies because they buy whatever is offered to them right off the shelf. They cannot order customized items for which they could have bargained for lower prices. But since they purchase finished goods, they are oblivious to how they can bring down the cost of supplies.
Ketchum is hence studying the role of gain sharing in bringing down costs. He believes that if hospitals reward doctors for their role in reducing cost of supplies by sharing profits from money saved, then doctors would want to find ways to bring down costs. This would encourage doctors to look for ways to control costs and one such way can be to join a consortium where physicians would agree on which supplies to use and on standardizing various supplies.…