BEYOND PROCUREMENT

Posted on by EnvisionED HC
BEYOND PROCUREMENT

Why Supply Chain Has Become a Strategic Function

Five years ago, supply chain was largely viewed as a purchasing department. Today, it sits at the intersection of patient care, financial performance, resiliency, technology, and risk management. Hospital leaders are increasingly recognizing that the ability to secure critical products, manage costs, and navigate disruptions has become a competitive advantage—and, in some cases, a matter of patient safety.

Supply Costs Continue to Rise

  • Hospital supply expenses increased 9% year-over-year in 2025 according to Kaufman Hall’s national hospital benchmarking data covering more than 1,300 hospitals. Supply spending is now 26% higher than 2022 levels. 
  • According to the latest American Hospital Association report, hospitals spent approximately $202 billion on supplies in 2024, representing 13% of total hospital expenses.

Drug Shortages Remain a Major Concern

  • The AHA reported 270 active drug shortages in the United States as of March 2025. These include critical medications and IV fluids. 
  • Shortages of sterile injectable drugs continue to affect hospital operations nationwide. 

Supply Chain Disruption Is Still a Top Executive Issue

  • In a 2025 survey of healthcare supply chain leaders:
    • 69% expect supply chain challenges to persist or worsen
    • 36% identified supply disruptions as their biggest concern, ahead of cost pressures. 

Global Dependence Creates Risk

  • Nearly 70% of medical devices marketed in the U.S. are manufactured exclusively overseas, creating vulnerability to tariffs, geopolitical issues, and transportation disruptions. 

What Hospital Leaders Are Focused on Right Now

According to Gartner, AHRMM, and health system supply chain executives, the top priorities are:

1. COST MANAGEMENT

Health systems are:

  • Expanding supply chain oversight into purchased services and pharmacy.
  • Building tariff-impact models.
  • Consolidating procurement and distribution operations.
  • Standardizing products and contracts. 

2. RESILIENCY

Organizations are:

  • Diversifying suppliers.
  • Increasing visibility into supplier risk.
  • Building contingency plans for shortages.
  • Creating regional sourcing strategies. 

3. AI AND AUTOMATION

Leading systems are investing in:

  • Predictive inventory management.
  • AI-assisted demand forecasting.
  • Contract analysis.
  • Automated invoice auditing.
  • Natural-language spend analytics.