Bauer College Study Awarded Health Care Research Grant

Associate Professor David Peng to Study How to Optimize Hospital Procurement of Medical Materials

Published on September 3, 2019

Associate Professor David Peng

Associate Professor David Peng

The United States spends substantially more than other industrialized countries on health care, yet ranks last in health outcomes. Supply expenses (spending on materials and services) comprise up to 45 percent of total spending for U.S. hospitals, and recent healthcare reforms and the price transparency movement underway will make isolating such costs more important than ever.

A Bauer College researcher was recently awarded a $94,000 grant to study two questions related to addressing such challenges ― how to induce clinicians and hospital supply chain experts to work together to optimize hospital procurement of medical materials and supplies, and how to best use the latest technology to link the supply chain management systems and the clinical systems to support these efforts.

Associate Professor Xiaosong (David) Peng of the Department of Decision & Information Sciences believes that the three-year study funded by the Association of Supply Chain Management has the potential to help the health care industry overcome some of the obstacles that have gotten in the way of holding material costs down, while continuing to improve patient outcomes.

“Historically, hospitals operate in a very fragmented way,” Peng said. “Doctors and nurses are the driving force of everything and are rightly focused on patient care, and supply chain has a more supportive function. However, with the mounting cost pressure on the U.S. health care providers, the supply chain is viewed as a new frontier for improving value of care by reducing costs and improving quality simultaneously.”

He added: “At the current time, clinicians still know little about supply chain management. Also, hospitals themselves often don’t have a very clear idea about costs, even as there is a movement toward price transparency. If we can show the benefits of a more integrated approach toward managing health care supply chain, it can be a useful reference going forward.”

Peng will work with Bauer doctoral student Raymond Fan in surveying clinical and supply chain professionals, as well as analyzing archival data from U.S. hospitals.

Peng received his master's degree in information systems management from Carnegie Mellon University and his Ph.D. in operations and management science from the Carlson School of Management, University of Minnesota. He worked as a procurement manager for a Fortune 500 company before starting his academic career.

His research has appeared in Journal of Operations Management, Production and Operations Management, Decision Sciences, Journal of Supply Chain Management, International Journal of Production Research, among others. He is currently a senior editor for Production and Operations Management Journal, and an associate editor for Journal of Operations Management, Decision Sciences Journal, and Journal of Supply Chain Management.