OC Reilly Blog: Smart Spending is Always in Style

By Bill O’Connor, President and CEO, OC Reilly Inc.

Health care-related spending in the U.S. is on track to shrink by 1.4% this year, according the federal Bureau of Economic Analysis, as stated in an article in the June 30, 2014, issue of Modern Health magazine.  The same article, though, cites a separate report from the Health Research Institute at PricewaterhouseCoopers that predicts a 6.8% jump in spending for next year.

Is the economy recovering strongly enough to support this anticipated rise in health care spending in 2015?  Will the Affordable Care Act provide sufficient increases in insurance coverage as the platform for this predicted growth?  And how did earlier calls for increased health care spending in 2014 due to the ACA implementation get ratcheted so much lower – so low, that spending levels actually went down? 

The murkiness behind these conflicting questions “illustrates the risks of trying to make inferences about long-term health care cost growth from noisy quarterly data,” said Jonathan Skinner, a health care economist from Dartmouth University, quoted in the article.

This all goes to prove, once again, that the universe of health care in the U.S. remains in a state of flux.  The best cost-related strategy for any health care system or hospital today is to exert as much control over the variables within your control.  That begins with careful, thoughtful, and impactful supply chain management.

At OC Reilly Inc., we like to refer to supply chain as the “treasure hiding in plain sight,” because when those spending patterns and decisions are understood and adjusted properly, the financial benefits flow quickly and effectively.