Why Healthcare Procurement Is Different: 5 Major Challenges Explained

There's no doubt about it.

Procurement is fundamental for every business out there.

But what happens when your business is more than a profitable project?

What if your business is the one that's fundamental for society?

Things just scale up to a whole new level.

For those of you who lead or work in the healthcare industry, we don't have to tell you how critical it is to own all the necessary equipment and resources on time, right?

But when regular procurement already feels like a puzzle to be completed with crooked pieces, how can you make healthcare procurement work better and faster? 

Overcoming key challenges, of course.

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What's Healthcare Procurement?

Healthcare procurement is the process of sourcing all the goods and services that businesses and organizations in the healthcare industry need to function. 

Primarily, hospitals and clinics, but it could also include healthcare research centers or startups in the e-health market.

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Why is Healthcare Procurement Different?

It impacts people's lives. 

For sure, buying the stuff your company needs at the right time is important and should be approached as a serious business. 

But in healthcare, procurement can literally have an impact on someone's life. Those unique materials you are acquiring are supporting what could be the next breakthrough in the treatment of a rare disease. That equipment can detect pathologies and save a life. 

So, yes, healthcare procurement is a different matter altogether.

Higher stakes

What happens if you or your team makes a mistake with an order? 

The supply chain is delayed 

What happens if that mistake occurs in a healthcare setting?

Someone could get hurt 

In healthcare procurement, a high level of pressure is always on.

Regulations are everywhere 

Well, yes 

Even to buy something as simple as gloves, you must make sure you are following the rules set by relevant organizations like the FDA or the CDC. Every single product must meet strict standards regarding safety and compliance.

Standardize is complicated 

Especially for hospitals where every department or medical specialty prefers to work with its own list of suppliers.

You might be managing ten mini procurement operations under one roof.

Add to that the pressure and you've a perfectly chaotic procurement process.

There's no such thing as unpreparedness

For real

We all know that procurement and supply chain management have to deal with unexpected issues at some point, but the degree of resilience and foresight you must have in the healthcare industry is definitely higher.

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Top Procurement Challenges and How to Solve Them

Compliance is a mess

Better said yet: Managing compliance is a mess.

Each governmental agency has its own set of expectations, and sometimes they might overlap. While it might sound tiring, missing a detail could risk both your company's reputation, money, and your customers. 

Audits become even more important, so if you don't have a clear record of meeting official standards, things can quickly become troublesome. 

And let's not start by finding the information if you're still relying on manual processes.

The solution

Make your life simpler with procurement software. It won't take the huge responsibility away, but it'd certainly be by your side whenever you need to approve a supplier, keep a record of your operations, and even forecast what's next for the market.

Supplier management 

This is a problem you'll face with any sort of procurement 

But as we've seen, healthcare is a completely unique industry, and the stakes are higher than in any other market. 

Building strong relationships should be a straightforward process, and yet, with many healthcare departments still working their procurement operations in multiple directions, it becomes an impossible feat. 

Maybe someone in cardiology needs gloves now and orders from whoever can deliver fastest. It may solve a short-term problem, but if it becomes a pattern, it creates long-term chaos.

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To further complicate the scenario, healthcare supply chains don’t have room for risky or unreliable suppliers. You need to know that every supplier meets your quality standards, has proper certifications, and can deliver on time, even during disruptions.

The solution 

Bring everything into a system, and we don't just mean software, which, yes, is useful, but here the problem lies more closely with the mindset of your people. 

Make them understand that purchases from random suppliers can only be helpful in the very short term, and that the more common it becomes, the higher the risks are for the organization and the patients.

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Demand is hard to predict

Isn't that true everywhere?

Yes, but there's no calendar for holidays in healthcare. Before the pandemic struck, no hospital could have been prepared for such a level of contagion.

So yes, making sure you have accumulated the exact amount of supplies for whatever possible and impossible scenarios is kind of normal. 

There's also the need to have an inventory that works; having all the items stored in the warehouse isn't sufficient, you must be able to know what's happening at every moment. Without clear visibility, problems arise.

The solution 

Update your data 

It's what makes forecasting work, after all. 

Those endless spreadsheets and paper files stored in drawers no one ever comes close to, could have all the information you need to make the right decisions, only if you're capable of finding it. 

Choose an inventory management system with predictive analytics that tracks usage trends, flags anomalies, and suggests reorder points the second they're needed.

Cost control

Sometimes you order packs of syringes. 

Sometimes you order new MRI machines, which, as you can expect, are quite pricey. 

Between high-tech equipment, specialized drugs, and rising labor costs, procurement teams are under constant pressure to do more with less.

But it's such a thing possible in a healthcare setting?

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GPOs are often seen as a solution, but just like we recently discussed, Group Purchasing Organizations have some drawbacks over time and might even limit you in the quest to build loyal relationships with suppliers.

The solution 

Without centralized data, it’s tough to spot trends or negotiate better terms. You might have departments ordering the same product separately, missing out on bulk discounts. 

Or maybe no one noticed you’ve been paying 15% more for an item that's less expensive should you'd been buying from local suppliers. 

Which takes us back to the importance of developing a strong procurement system.

Cybersecurity 

Living in a digital world has loads of benefits. 

But nothing is perfect. 

And while we are always recommending moving to the side of procurement software and other automation systems, you have to be careful in choosing the right alternative. 

If your data isn't safely stored, it could fall into the hands of hackers and cyber criminals, putting you and your customers in a perilous situation. 

The solution

There's no need to be afraid of IT and automation, but you must be careful in choosing who you work with. Suppliers should be thoroughly vetted so you don't end up partnering with someone who doesn't have sufficient security protocols implemented. Train your people as well; they need to be familiar with the most common cybersecurity breaches so there's no unpleasant surprises.

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Wrapping it Up: Healthcare Procurement Doesn't Have to Be Too Challenging.

While it's undeniable that healthcare procurement comes with a unique set of requirements and goals to achieve. That doesn't mean, however, that procurement professionals working in the healthcare industry have to act like wizards to deal with the impossible. 

Automation is fundamental, yes, and one of the best practices you'll find out there, but in all honesty, there's a thing you should address first.

How good is your current procurement process?

Do you even have one?

Do people across different teams know what guidelines are to be followed for purchasing?

What sort of approval workflows do you have in place? 

Are they working as expected? 

These questions and more will lay out the foundation for a successful procurement strategy, yes, even for healthcare settings.

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