10:38am Saturday 11 July 2020

Getting older & costing more, healthcare sector facing challenges to be more efficient

And according to study author Dr Vikram Bhakoo, hospitals may be running up to 20 per cent less efficient than they could be by not taking full advantage of e-business technology that is in widespread use across the retail and grocery sectors.  

The “E-business Adoption within the Australian Pharmaceutical Hospital Supply Chain” study, the first of its kind to be conducted in Australia, involved detailed case studies of 15 key organisations across the pharmaceutical supply chain, from medicine manufacturers and wholesalers, to logistic service providers and public hospitals. 

The study found that paper-based records and operational bottlenecks, such as poor information sharing between manufacturers and wholesalers, are preventing the uptake of e-business technology that would lead to a much more sustainable and efficient healthcare system.

Dr Bhakoo from the University’s Faculty of Business and Economics said that of the hospitals that were studied, those that had effectively implemented e-business technology were better off.  “These hospitals that used technology such as bar coding and electronic messaging across procurement and inventory management purposes, recorded dramatic improvements in service levels and reduced errors in the supply chain by between 15 to 20 per cent.”

“As supply chain costs constitute up to one-third of a hospital’s expenses, digital technologies can be adopted to achieve significant savings, while boosting overall labour productivity and patient safety.”

These improvements are likely to have a domino effect among other public hospitals that are collaborative and happy to share their insights said Dr Bhakoo, however recent Productivity Commission figures show that many hospitals have been reluctant to embrace e-technologies.

The lack of progress in e-business adoption is attributed to a range of regulatory, technological and financial factors, according to Dr Bhakoo, with each of these factors playing different roles for each entity in the supply chain.  “While technological issues such as managing IT risk and system integration issues were the chief concerns for hospitals, financial factors such as a faster cash flow and a return on investment were key stumbling blocks for the pharmaceutical manufacturers.” 

“Australia also faces challenges due to its market size, which is rather small on the global scale, amounting to only 1% of the worldwide pharmaceutical industry. The challenge lies in aligning international standards with improved local approaches to supply chain management,” Dr Bhakoo said.

The study findings complement ongoing work by the National E-Health Transition Authority (NEHTA), the regulatory authority overseeing the deployment of electronic systems within the healthcare sector. 

“If we are to address the issue of rising costs in health care we need to take a holistic view of the supply chain and include diverse stakeholders to understand where the bottlenecks lie,” concluded Dr Bhakoo.

More information: 


Dr Vikram Bhakoo
Faculty of Business & Economics
T: +613 8344 5320
M: 0422310945

David Scott
Media Unit
T: +613 83440561
M: 0409024230

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