Supply Chain Risk Management and Hospital Inventory:
Effects of System Affiliation
David Zepeda, Northeastern University, Boston, MA, (617) 373-3549, d.zepeda@neu.edu
Gilbert Nyaga, Northeastern University, Boston, MA, (617) 373-2116, g.nyaga@neu.edu
Gary Young, Northeastern University, Boston, MA, (617) 373-2528, ga.young@neu.edu
ABSTRACT
In this study we propose a supply chain risk management (SCRM) approach in health care
supply chains. Utilizing detailed data from hospitals in the State of California, we investigated
inventory cost in hospital operations under conditions of uncertainty in supply due to existing
supply chain infrastructure and uncertainty in demand due to service mix variety. We also
examined the potential moderating effects of hospital system affiliation that potentially affect a
managers’ confidence in their supply chain. Our results suggest that weaker supply chain
infrastructure and greater service mix uncertainty are associated with greater inventory
accumulation. As a risk buffering approach, results suggest that hospitals mitigate supply chain
risk by risk pooling through small hospital system affiliation.
Key words:
health care services; hospital operations; supply chain risk management; inventory management