Lessons From Revenue Cycle Management and Supply Chain in Healthcare: Procurement Take Note!

I recently came across an article titled "7 Reasons to Merge Revenue Cycle and Supply Chain Management" that’s worth digging into even for those who are not in the healthcare field (based on the research the article sites). Essentially, the piece argues that we need to combine the “buy-side” and “sell-side” of the supply chain in healthcare more effectively.

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Summarizing the argument, the author notes that:

“Despite the high budget percentages, many hospitals do not implement supply chain optimization strategies. Nonetheless, supply chain is an important facet of revenue cycle management. Supply chain functions requiring special concentration include contracting, strategic sourcing, procurement and inventory management ... Likewise, areas of the revenue cycle functions demanding closer examination include patient record access, charge master accuracy, coding, charge capture, and patient accounting.”

Research cited in the article suggests 7 different reasons to combine the revenue and cost side of the equation within healthcare including:

  • “Increased and more accurate reimbursements
  • Strengthened contract negotiations and enhanced contract compliance
  • Improved transparency
  • Streamlined cross-check utilization of supplies and ease of monitoring supply revenue
  • Capturing cost-to-charge data visibility will be smoother
  • Billing will be more accurate
  • Labor will be wisely utilized and not wasted”

But the broader question is the unique world of healthcare in the US is whether these lessons apply to other industries as well (especially those with a much broader set of “payers” on the customer side). Even though the financial supply chain looks very different in other services industries let alone retail, manufacturing and other market segments, I’d argue a strong “yes” for a number of reasons including the fact that supply chain and supplier collaboration is founded on transparency and information.

The more companies can collaborate successfully on a single-tier relationship based on trusted sets of data and performance metrics, the more likely they will be able to make such collaborations multi-tier (including demand-driven) as well.

What do you think? Are there broader lessons in here for procurement, generally?

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First Voice

  1. Aloke Bhandia:

    Increasingly the “sell-side” are “buy-side” are connected and interdependent. Frequently, an efficient “buy-side” makes the “sell-side’ more competitive and as a result the overall business wins. In any multi-tiered industry, not just healthcare, the optimization of transactions between buy-side and sell-side of a company is critical for success.

    The soft skills required for strategic “buy-side” procurement professionals are similar to “sell-side” professionals as the buyers are frequently trying to convince the strategic suppliers of products or services (“sellers”) to partner with them as opposed to the competition.

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