For years, healthcare organizations have underinvested in digital technology and the supply chain and are now paying for it as they struggle to meet customer demand, according to two executives at KPMG, based in the Netherlands.
Here are their thoughts:
Editor's note: Responses were lightly edited for length and clarity.
Question: In what ways did healthcare companies underinvest in digital technology and the supply chain?
Vince Vickers. Healthcare Industry Consultant and KPMG Partner: Unfortunately, there has been an underinvestment in technology in healthcare in the back-office for decades. While some on-premise ERP solutions helped with basic supply chain functions in the late '90s and early 2000s, when you compare healthcare to other industries, we have been leapfrogged. Today, when we speak with healthcare organizations about replacing their on-premise systems with Cloud-based technologies and the CFO is listening, I can say that we will find our greatest return on that investment in their supply chain. Now, some of that is organization structure, process improvement and controls — but it can all be magnified in its impact through cloud applications, data management, Internet of Things connectivity and tracking, artificial intelligence, robotics and other enabling technologies that have been commonplace in other industries for five to 10 years.
Q: In your view, what was standing in the way of healthcare organizations making these investments?
VV: In short: culture and cost. Culturally, healthcare has traditionally been a late adopter, more risk averse and generally less adept at change management. Secondly, technology investments and the supporting critically important transformation success factors are not inexpensive. Now, with the last couple of years of the pandemic, if we can stop for a moment and find some silver linings, there are some impressive shifts in the thinking around both of these.
To respond to the pandemic, simply put: we had to change, and quickly. I have had countless clients share with me that they are amazed at how quickly they could adjust and react and absorb change when they needed to over the past two years. Regarding cost, and specific to supply chain, it's clearly recognized that outdated just-in-time and past purchasing processes are not acceptable for the evolving healthcare landscape and that there is an ROI balance that exists when you combine more current leading practices with leading and enabling technologies.
Q: What issues are arising as a result of this underinvestment in the healthcare supply chain and digital technology?
Tom Griffin. Healthcare Supply Chain Leader and KPMG Partner: Many issues are arising. Not necessarily in this order, but the short list is:
1. We know "tech debt" is a problem, where current supply chain capabilities are tethered to legacy on-premise customized/modified technologies that limited the ability to modernize the operating model.
2. Experience — both patient and user. Most healthcare organizations are limited today to linear step-by-step processes rather than exploring how the experience and outcome can be predictive or prescriptive (i.e., anticipating a need by monitor outside/environmental factors, sourcing alternative vendors/products when disruption is detected, patient registration/procedure scheduling triggers supply orders, etc.).
3. Staffing challenges/shortages and attrition, where existing job functions do not support long-term career development and are not compensation-competitive. Most supply chain functions have 15 to 25 percent of their positions unfilled, putting additional burden on remaining resources and creating a barrier to focus on strategic objectives.
Q: What needs to be done to address these issues?
TG: 1. SaaS should become FaaS — a stated objective of migrating to "Functionality as a Service." While there is great value in integrated technologies, this next generation has to embrace interoperability to connect the best operating model with the best-of-breed functionality that exists.
2. Basement to boardroom — let's bring supply chain leadership to the same level as other critical department chairs/leaders so that they can contribute to organizational decision-making and priorities (and accountability), and help all stakeholders consider being a "planning organization."
3. Continuous improvement — where we are able to build a culture of cost/efficiency gains that are measurable, but in which we are able to more quickly predict, react and respond to changes in a world that seems to be changing faster and with more variability every day.
4. Creative partnerships and collaboration — more inventory and demand-planning data-sharing between healthcare providers and suppliers is key to not only better efficiency, but our ability to better react to the next public health emergency.