Driving The Clinically Integrated Healthcare Supply Chain – Forbes

Christopher Furlong (Photo credit should read CHRISTOPHER FURLONG/AFP/Getty Images)

The undisputed Holy Grail in healthcare supply chain management practice is essentially everything related to its effective clinical integration. It’s about getting clinical professionals and supply chain professionals on the same page and/or out of their own way – to streamline the delivery of patient benefit.

Traditionally, supply chain management (SCM) professionals have used a data-driven “value analysis” process to stimulate their change management conversations with clinicians. However, with today’s supplier performance management (SPM) tools, if properly configured for healthcare, value analysis can become a continuous improvement process inclusive of SCM professionals, clinicians and suppliers. And that’s an important mouthful.

From a SCM perspective, the healthcare industry has been a house divided. On the supply-side, you have some of the most sophisticated practitioners to be found across industry, while on the buy-side, talking specifically now about acute care providers, you have a group that are just starting to find their sea legs.

And there are good reasons for it.

Hospitals outsourced their SCM and procurement operations to the industry’s group purchasing organizations (GPOs) many years ago and the market’s largest (Vizient and Premier) remain prominent, if not dominant.  To be fair, these GPOs almost single-handedly “raised” the hospital market’s supply chain management infrastructure. They started with customers who didn’t know what they were buying and have delivered a platform.  For the most part, they have delivered the requisite technologies and processes and helped to establish appropriate data flows, storage and automation.

But everything is changing. And while new reimbursement models tied directly to patient outcomes is a huge tip to this iceberg, it’s just one of many new developments that are noteworthy.

For example, the market’s consolidation has driven the creation of large health systems that are just now realizing their buying power and the value that a coordinated SCM approach can offer. In terms of net patient revenue, the market is now defined by multi-billion dollar businesses. Said Raymond Davis of Universal Health Services (UHS), “Although the SCM practice among even the top health systems has historically lagged behind our outside-industry peers, we’ve made substantial progress over the last five years –substantial improvements. Add-in the industry’s drive toward more clinically integrated supply chains, triggered by a combination of increasingly sophisticated offerings, realization of the value of bundling for price negotiation and changing reimbursement policy, and we have a sea change in healthcare’s SCM practice.”

Supplier performance management (SPM) practiced by healthcare providers is a bit of an oxymoron, because it’s been the suppliers that have been managing the buy side all these years. While there’s all kinds of interesting SCM dynamics in play here, one that caught my attention is the role that supplier management, also known as supplier performance management (SPM), is destined to play. Because it’s been the market’s GPOs, manufacturers and distributors that have been managing the non-patient facing flow of business.  It’s been a peculiar feature of healthcare’s supply chain that, frankly, had to change –and finally is.

In fact, the SPM tool market is exploding. And it couldn’t be better timed for healthcare, as the latest solutions are a light year ahead of where they were just a few years ago. Said Shane Hughes of Intermountain Healthcare: “Taking advantage of cloud computing, the relative ease of data integration and the addition of risk information, including logistical transparency, these solutions have become operationally strategic, even serving to accelerate the supply chain profession’s already rising profile.”

Put another way, at least as far as SPM goes, care providers now have the opportunity to avoid a learning curve and jump to best in breed.

Although the term “collaboration” has ascended to buzzword status and has, perhaps, lost a little of its original vigor, it would be hard to overstate how important it remains for healthcare. The latest SPM solutions connect the buy- and sell-side in ways that were never thought possible. In near real time, these solutions can deliver unprecedented levels of transparency, enabling practical “information connectors” that hold the network’s players accountable.

“Reliable data infrastructure enables us to centrally manage our supply chain, allowing us to benchmark and measure our progress,” said Laura Kowalczyk of the University of Alabama at Birmingham Health System.  Added, Suresh Nirody of Cincinnati Children’s Hospital, “from a management reporting perspective the fact that the disciplines of supply chain management and procurement have been unified and that our metrics have been accepted as vital to operational performance has given a huge lift to our professional morale –it’s changed our culture.”

SPM’s adoption in healthcare means better studies can be developed and deployed more expeditiously, accelerating the creation of clinical evidence. And that means the “latest and greatest” technologies and practices can find their way to patients for improved outcomes more quickly and with more certainty.

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