Exploring risk pooling in hospitals to reduce demand and lead time uncertainty
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Exploring risk pooling in hospitals to reduce demand and lead time uncertainty Gerald Oeser 1 & Pietro Romano 2 Received: 13 August 2020 / Revised: 14 November 2020 / Accepted: 19 November 2020 # The Author(s) 2020
Abstract Nearly every eighth German hospital faces an elevated risk of bankruptcy. An inappropriate use of inventory management practices is among the causes. Hospitals suffer from demand and lead time uncertainty, and the current COVID-19 pandemic worsened the plight. The popular business logistics concept of risk pooling has been shown to reduce these uncertainties in industry and trade, but has been neglected as a variability reduction method in healthcare operations research and practice. Based on a survey with 223 German hospitals, this study explores how ten risk pooling methods can be adapted and applied in the healthcare context to reduce economic losses while maintaining a given service level. The results suggest that in general risk pooling may improve the economic situation of hospitals and, in particular, inventory pooling, transshipments, and product substitution for medications and consumer goods are the most effective methods in the healthcare context, while form postponement may be unsuitable for hospitals due to the required efforts, delay in treatments, and liability issues. The application of risk pooling in healthcare requires willingness to exchange information and to cooperate, adequate IT infrastructure, compatibility, adherence to healthcare laws and regulations, and securing the immediate treatment of emergencies. Compared to manufacturing and trading companies, hospitals seem to currently neglect the variability reducing effect of risk pooling. Keywords Risk pooling . Demand uncertainty . Lead time uncertainty . Logistics . Hospitals . Germany . Questionnaire survey . Empirical research
1 Introduction The economic situation of German hospitals is difficult due to a decline in the number of inpatients, outpatient/inpatientbased rather than holistic remuneration systems, consolidation processes, unwillingness of hospital groups to compensate losses of individual members, and managerial mistakes (Augurzky et al. 2019; Telgheder 2019). More than every fourth German hospital group incurs losses, nearly every eighth hospital faces an elevated risk of bankruptcy, and the current COVID-19 pandemic is putting additional strain on hospitals (Augurzky et al. 2019; Lösch 2020). Increasing costs, quality concerns, and challenges in inventory management lead to an increasing importance of logistics * Gerald Oeser [email protected] 1
Faculty of Business and Health, Bielefeld University of Applied Sciences, Bielefeld, Germany
2
Department of Electrical, Management and Mechanical Engineering, University of Udine, Udine, Italy
to improve efficiency and effectiveness in the healthcare context (Kritchanchai et al. 2018; Minvielle 2018). Jacobs and Chase (2020) report that the average inventory for a medium size hospital is $3.5 million, which represents 5–15% of current assets and
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