Optimizing healthcare procurement: Five challenges and best practices

Procurement is a crucial component of a healthcare organization’s ability to function optimally. Without essential medical equipment and pharmaceuticals, it's harder to maintain safe working environments for healthcare providers and deliver quality care to patients. 

Healthcare organizations that still rely on manual procurement practices may encounter obstacles to maintaining smooth internal operations. Manual systems can limit visibility and increase the risk of violating industry regulations. To alleviate the challenges of healthcare procurement, it’s crucial to prioritize transforming traditional procurement with modernized solutions and workflows.

With the right software, your team can turn procurement from a fragmented, low-visibility process into a strategic initiative that saves time so staff can focus on providing patients with the best possible care.

The importance of procurement in healthcare

Procurement in healthcare is a critical behind-the-scenes process that can impact every interaction an employee has with a patient. Here are three reasons procurement is essential:

• Availability of critical goods for patient care: With high-quality supplies readily available, you can provide timely treatments that lead to better patient outcomes. 

• Ability to build and sustain patient trust: Well-managed procurement processes help ensure consistency in care, which can strengthen patient confidence. 

• Protection of organizational financial health: Keeping a firm grasp on your procurement operations helps you stay within budget and preserve resources for the entire organization. 

   

A good procurement strategy not only ensures you have the necessary supplies to help patients but also positions your organization to adapt effectively to macroeconomic changes, which can affect events like mergers and acquisitions.

How is healthcare procurement different?

Healthcare procurement differs from other industries in part due to its strict regulations. Procurement decision-makers must navigate workplace safety and patient privacy rules, and a strong procurement strategy needs to account for these and other critical factors. 

Some of the unique challenges of healthcare procurement include:

• Specialized medical supplies: Depending on your area of expertise, you may need access to vendors that provide highly specialized supplies.

• Stockout risks: Hard-to-access materials can increase the risk of running out of essential supplies.

• Multiple departments with different needs: In large organizations, varying departmental needs and limited inventory storage space can complicate procurement.

• Product safety regulations: Supplies used to help patients must comply with strict safety protocols.

• Limited supplier options: Specialized items often come from a relatively limited pool of suppliers.

   

In addition to navigating these factors, healthcare organizations often rely on value-based procurement. This approach encourages selecting supplies that maximize patient outcomes while still considering cost savings, though implementation can vary across healthcare settings. 

Procurement differences across hospitals, nursing homes, and private practices

Individual healthcare sectors have distinct procurement needs and restrictions, which can make managing procurement activities even more complicated.

• Hospitals: Operating on a large scale, hospitals require everything from surgical equipment to face masks and other specialized supplies. They typically have bigger budgets and dedicated internal procurement teams to help streamline the process.

• Nursing homes: With a focus on long-term care, nursing homes need consumable products (such as hygiene items or supplements) and must time procurement carefully. They also rely on specialized suppliers for items like mobility aids and often work with smaller budgets. 

• Private practices: Specialized clinics, such as dermatology, physical therapy, or dentistry, require specific types of vendors. Procurement is usually handled by individuals rather than teams, making efficient and straightforward processes crucial. Budgets are often tighter in these settings. 

   

While procurement initiatives look different across these sectors, all organizations must contend with a few common challenges.

5 challenges of healthcare procurement

As you revamp your existing healthcare procurement strategy or create a new one, watch for these potential setbacks.

1. Increasing complexity in healthcare supply chains

Globalization and rising costs have made modern healthcare supply chain management more complicated. Your team must stretch its budget without sacrificing quality and find creative ways to avoid network disruptions if a main supplier fails. That means strategically sourcing backup vendors that meet your sector’s regulations, which can be difficult without the help of smart procurement technology.

2. Changing regulatory compliance

Obtaining FDA-approved goods and medications supported by the CBA, maintaining data privacy under HIPAA guidelines, and monitoring OSHA standards for workplace and patient safety requires significant effort. Even strong procurement operations struggle to track updates manually and review networks for potential violations regularly.

3. Supply shortages

While direct supplier contracts and fragmented networks were once standard, these strategies are now likely to lower visibility and limit operational control. When your team is locked into a single vendor route, any stock outage or supply chain interruption can delay critical supplies. In modern procurement, supplier reliability and on-time delivery are critical for effective risk management.

4. Decentralized procurement

When teams or individuals make purchasing decisions in isolation, it's easy for procurement silos to develop. Separate departmental dealings with suppliers can cause confusion, erode trust, and increase costs, while also raising the risk of off-policy purchases and missed opportunities to consolidate orders. 

5. Manual procurement processes

Manual procurement imposes an unnecessary time and energy burden on teams, especially in smaller operations like specialty clinics or assisted living centers. These processes take longer, increase the risk of errors and fraud, and reduce operational visibility. Poor visibility can lead to patient policy violations or accidental rogue spend.

4 best practices for healthcare procurement

No matter where you are in optimizing your healthcare procurement strategy, these practices can serve as helpful goalposts to keep you on the right track.

1. Centralize procurement

Create a digital database that acts as your single source of truth. Use it to maintain compliance with industry regulations and track all your procurement operations. Centralized procurement makes it easy to reference purchasing policies when sourcing certified suppliers, apply guidelines when making purchases, and update policies should rules change. 

Bringing all procurement operations under one roof also provides you with reliable insight into your organization's purchasing habits. You can consolidate orders, build vendor trust, and make smarter buying decisions. 

2. Build a resilient supplier network

A resilient and diverse network of suppliers can help you bounce back quickly after disruptions. Maintaining strong supplier relationships with primary vendors while building connections with secondary ones creates a strategic supply chain safety net, allowing you to pivot to backups when needed.

It’s also wise to work with suppliers that have proven performance records. A procurement solution with end-to-end visibility provides insights into supplier consistency, error rates, and overall network resilience. 

3. Forecast inventory demand

An effective inventory management strategy ensures you have sufficient goods to meet current needs without overstocking, thereby minimizing waste and maximizing efficiency. With the help of business analytics, you can analyze historical data and buying trends to predict inventory demand more accurately, helping you plan purchases strategically and avoid costly shortages or excess inventory. 

4. Use procurement software and automation

Procurement professionals must account for numerous regulations, shifting industry requirements, and budget restrictions, making manual processes time-consuming and error-prone. 

Integrating agile e-procurement software into your workflows allows your team to automate routine tasks. Crucial steps—like purchase order approvals, invoice document matching, or reminders for stakeholders to approve invoices—can happen instantly. A solution that integrates with your existing systems provides visibility into your entire workflow, giving you more control to make faster, smarter buying decisions. 

Benefits of healthcare procurement software

To meet current needs while supporting organizational growth, implement a flexible healthcare procurement solution that evolves with your team. Here are five ways software can prove itself an essential asset:

• Decreases manual processes and reduces risk: By automating standard procurement tasks, software saves your team time and lowers the potential for human error.

• Optimizes spending and cost control: With full network visibility, you can see where you spend every dollar and regain control over your finances.

• Makes it easier to purchase responsibly: Through enhanced vendor visibility, you can use strategic sourcing to find suppliers that align with your values and support responsible business practices.

• Helps maintain regulatory compliance: By storing regulatory guidelines for easy access, procurement software reduces the risk of violations.

• Ensures inventory accuracy: With historical inventory data on hand, you can optimize when and how you purchase supplies to save money and minimize waste.

   

With software working behind the scenes to streamline operations, you can enable your staff to focus on providing top-notch patient care and scale organizational impact.

Power your healthcare procurement strategy 

You want to enable your staff to provide the best care for your patients, and procurement is a critical part of your organization’s ability to do so. However, frequent regulatory changes and unpredictable supply chain disruptions can make it challenging to maintain a consistent, efficient network. To stay ahead, it’s essential to modernize your procurement strategy

Amazon Business can help, with features like Amazon Business Analytics Reports, Guided Buying, and SSO, Amazon Business can help your organization streamline your purchasing processes. Through seamless system integrations, it consolidates all your procurement data, giving you the insights needed to make more informed decisions.

If you're ready to revolutionize your healthcare procurement strategy, sign up for a free Amazon Business account today and discover tailored solutions that simplify ordering, enhance supplier management, and drive operational efficiency.