WHAT IS THE HEALTHCARE VALUE CHAIN AND WHY IS IT IMPORTANT?

In the healthcare sector, delayed, lost, and damaged products can cause grave danger, as patients might not receive the medicines they need on time

The value chain and supply chain are not synonymous. The supply chain refers to the movement of goods from suppliers to customers; the value chain encompasses all activities involved in creating and delivering a product or service.

In other words, the supply chain is more about the physical movement of goods and the value chain adds value to a product, including production, marketing, and customer support after the sale. So, the healthcare value chain allows medical institutions to provide patients with the best possible care by ensuring they have the supplies and treatments they need when they need them.

WHAT HAPPENS IN A HEALTHCARE VALUE CHAIN?

Understanding the activities involved in the healthcare value chain is the first step in managing and streamlining its processes. We are talking about logistics, operations, marketing and sales, and service.

Inbound logistics: the value chain is not a product-driven process, so explaining inbound logistics can be challenging. Generally, inbound logistics in a value chain refers to the quality of inventory and the management of that inventory. Value-driven inbound logistics ensures that all inventory is accounted for and is of the highest quality. This includes checking that items are not expired or damaged and meet all necessary requirements (e.g., internal quality control, standard operating procedures).
Operations: the operations stage is where the actual product or service is produced. In this value-driven scenario, product operations and/or manufacturing aim to reduce waste and create efficiencies. This might involve automating processes, changing production methods, and improving the quality of raw materials. In healthcare, the goal of operations might be to streamline the manufacturing of drugs or medical devices.
Outbound logistics: like inbound logistics, outbound logistics should strive to ensure that a product or service reaches the customer on time and in the best possible condition. In healthcare, this means making sure that patients receive their supplies and treatments when they need them, as well as ensuring products are safe and legitimate.

It is also important to note that outbound logistics is not just about the distribution of supplies outside a warehouse. It also concerns how medical institutions distribute supplies internally. This is important to consider when managing a hospital or other medical facility.

Marketing and sales: marketing and sales focus on creating demand for a product or service. Traditionally, this includes advertising and promotions. In a value-driven context, marketing and sales are strategically designed to go beyond a one-time sale to create long-term relationships with customers. There are numerous ways to do this, ranging from creating educational materials for patients and promoting online services to partnering with insurance providers.
Service: the service stage of the healthcare value chain is where post-sales activities occur, such as continuing customer support, repairs, and maintenance. Value-driven service helps maintain customer satisfaction with the product or service and helps ensure their needs are being met. Customer loyalty programs, follow-up communications, and offering extended warranties are common examples.

THE HEALTHCARE VALUE CHAIN IN NUMBERS

Now that we’ve summarized the different stages of the healthcare value chain, let’s look at some numbers that help illustrate why these processes are so vital to the healthcare industry.

One 2019 report found that clinicians devote about 17 percent of their time to logistics and storage management activities. This affects their productivity and the quality of care they can provide.

The report also found that more than 4,500 different medical devices and products are recalled every year — and 10 percent of these have the potential to cause harm or death. One study published by the well-known consulting outfit McKinsey & Company reported that the “costs of a single non-routine quality event, like a major recall, have been as high as $600 [million] in medical device companies.”

THE LONG-TERM BUSINESS BENEFITS OF AN EFFECTIVE HEALTHCARE VALUE CHAIN

An effective healthcare value chain creates benefits beyond improving quality of care and securing patient safety and satisfaction. It creates business benefits, including:

Improved profitability: an effective healthcare value chain can increase profits by improving supply systems, reducing waste, and creating efficiencies across healthcare systems.
Promoting innovation: less waste and more efficient systems mean savvy companies can devote more resources to R&D that can lead to innovation across the organization, including the development of new treatments or therapies and better manufacturing and distribution schemes.
Helping meet business goals: an effective healthcare value chain contributes to business success by reducing waste, increasing efficiencies, and promoting innovation. It also helps businesses connect with customers and build brand loyalty.

Antares Vision Group understands the healthcare value chain, its complexities, and how to optimize it for patient security, customer satisfaction, and business success. Our integrated technologies work together to harmonise, optimise, automate, and monitor virtually every aspect of value chains and supply chains, from raw materials to production to the delivery of finished goods to consumers. This creates a fully traceable and transparent system that safeguards products, people, and planet while delivering true business value.