Unmasking healthcare supply chain cost drivers in the United States

Abstract

PurposeThis study aims to focus on the supply chain (SC) cost drivers of healthcare industries in the USA, as SC costs have increased 40% over the last decade. The second-most significant expense, the SC, accounts for 38% of total expenses in a typical hospital, while most other industries can operate within 10% of their operating cost. This makes healthcare centers supply-chain-sensitive organizations with limited facilities for high-quality healthcare services. As the cost drivers of healthcare SC are almost unknown to managers, their jobs become more complex.Design/methodology/approachGuided by pragmatism and positivism paradigms, a cross-sectional study has been designed using quantitative and deductive approaches. Both primary and secondary data were used. Primary data were collected from health centers across the country, and secondary data were from healthcare-related databases. This study examined the attributes that explain the most significant variation in each contributing factor. With multiple regression analysis for predicting cost and Student's t-tests for the significance of contributing factors, the authors of this study examined different theories, including the market-based view and five-forces, network and transaction cost analysis.FindingsThis study revealed that supply, materials and services represent the most significant expenses in primary care. Supply-chain cost breakdown results in four critical factors: facility, inventory, information and transportation.Research limitations/implicationsThis study examined the data from primary and secondary care institutions. Tertiary and quaternary care systems were not included. Although tertiary and quaternary care systems represent a small portion of the healthcare system, future research should address the supply chain costs of highly specialized organizations.Practical implicationsThis study suggests methods that can help to improve supply chain operations in healthcare organizations worldwide.Originality/valueThis study presents an empirically proven methodology for testing the statistical significance of the primary factors contributing to healthcare supply chain costs. The results of this study may lead to positive policy changes to improve healthcare organizations' efficiency and increase access to high-quality healthcare.