Top Hospitals by Medical & Linen Supply Costs

Supply chain spending is currently the second largest cost for health systems and is projected to surpass labor costs to be hospitals’ greatest expense by 2020. According to Definitive Healthcare data, the top 25 hospitals with the highest total medical & surgical supply costs spent a total of over $14.2 billion in 2018, with an average annual spend of $569 million in 2018.

The top 25 hospitals with the highest laundry & linen services spend in 2018 reported total costs of over $157 million, with an average spend of $6.3 million.

Spending on medical and surgical supplies is particularly discretionary in hospitals and other care facilities, with individual physicians requesting their preferred items. These physician preference items can be more expensive than alternative supplies, and do not necessarily lead to improved care outcomes. Supply costs can be minimized without sacrificing clinical quality, and individual physicians can take responsibility for their personal spending, making them the primary target of hospitals and care facilities looking to lower overall operating costs.

A recent study by consulting company Navigant found that the average hospital could save $11 million on annual spending by streamlining their supply chains. Additionally, it found that health systems with more efficient supply chain systems and costs also had higher value-based purchasing and HAC performance.

Where hospitals often lose out on savings is in their inventory management systems — more than 75 percent of U.S. hospitals still rely on manual inventory management rather than an electronic system. Manual inventory management cannot always account for how long medical devices and other supplies have been sitting unused, how often each type of device is ordered, clinical effectiveness, and more. This disorganization leads to overspending and, and could lead to unfavorable clinical outcomes.

The following lists detail the top 25 with the highest medical & surgical supply costs and the top 25 hospitals with the highest laundry & linen services costs in 2018.