Journal
MEDICAL CARE RESEARCH AND REVIEW
Volume 76, Issue 2, Pages 240-252Publisher
SAGE PUBLICATIONS INC
DOI: 10.1177/1077558717719928
Keywords
supply expense; supply chain management; hospital costs
Funding
- Kuwait Foundation for the Advancement of Science (KFAS) [P115-67IM-01]
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The purpose of this article is to shed light on hospital supply expenses, which form the second largest expense category after payroll and hold more promise for improving cost-efficiency compared to payroll. However, limited research has rigorously scrutinized this cost category, and it is rarely given specific consideration across cost-focused studies in health services publications. After reviewing previously cited estimates, we examine and independently validate supply expense data (collected by the American Hospital Association) for over 3,500 U.S. hospitals. We find supply expenses to make up 15% of total hospital expenses, on average, but as high as 30% or 40% in hospitals with a high case-mix index, such as surgery-intensive hospitals. Future research can use supply expense data to better understand hospital strategies that aim to manage costs, such as systemization, physician-hospital arrangements, and value-based purchasing.
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