Arnold Palmer Hospital’s Supply Chain Case
Arnold Palmer Hospital is one of the nations leading hospitals for women and children. It is located in Orlando, Florida, and is apart of a national purchasing group. Even though being apart of the purchasing group has some advantages, there are also many disadvantages. These disadvantages forced the hospital to change its supply chain strategy. After leaving this group the hospital along with several other hospitals from the group formed their own smaller, but still powerful group, Healthcare Purchasing Alliance. The company saved its members $7 million in the first year with two main changes. First, it was structured and staffed to assure that the bulk of the savings associated with its contracting efforts went to its eight members. Second, it struck even better deals with vendors by guaranteeing a committed volume and signing not 1- year deals but 3- to 5- year contracts. There are several issues facing the Arnold Palmer Hospital (APH) that led to the revising of the supply chain strategy. The main reason for the revision of the strategy was because of the frequent changing of products every year by the purchasing group, because of lower cost bidders. Another reason for the change in strategy is the fact that the purchasing group drops products that are familiar or preferred to APH, and stocked products that were not familiar to the physicians at the hospital. The final reason the case stated that the hospital changed its strategy was because the buying group was not able to negotiate contracts with local manufacturers to secure the best pricing. Because APH left the large purchasing group and formed their own group they were able to save their members $7 million, even though they had an internal cost of $400,000 to run HPA the savings and ability to contract for what the member hospitals really want makes the business a good one. The reason that Arnold Palmer Hospital’s strategy differs from a...
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