Enabling long term value added partnership in the healthcare industry

Abstract

The USA healthcare industry has recently undergone significant pressure to become competitive and think innovatively due to its increased growth as a percentage of the GDP, which was as much as 14. 1% in 2001. Additionally hospitals are faced with an estimated nursing shortage of 600,000 by 2020, and with an aging patient base that demands better quality at a lower cost. Specifically, hospitals tie up as much as 35% of their budgets in inventory and in the required labour to manage it. Moreover, future improvements will necessarily require a solution beyond statistically sound inventory policies and software packages. The contribution of this thesis is to provide an analysis of "Long Term Value Added Partnerships" and their role in enabling innovative and trust based vendor - hospital inventory supply relationships as a suggestive solution for the healthcare industry. The study included two hospitals leading the way in such relationships with a leading healthcare vendor in the USA market. The conducted literature review helps understand the benefits and implications of attempting to establish long term value added partnerships in the healthcare industry. From describing the pressures and the traditional mindset of hospitals towards inventory practices, the study moves on to explain two inventory management methodologies widely used across different industries, and it finally provides an account of the drivers and potential pitfalls of strategic alliances which are information intensive in nature.

(cont.) The research framework is followed by a detailed description of the methodology used while conducting field observations, 47 interviews and data analysis of the visited hospitals. Subsequently the research findings are presented and supported by graphical representations of both the soft and hard data collected. Finally the thesis conclusion is given in the form of a list of recommendations to be adopted by both healthcare vendors and hospitals.