More and more, IDNs are not only acquiring more hospitals, but are looking to vertically integrate, merging or exploring other partnering models with physician’s offices, ambulatory surgery centers and other organizations to gain scale and deliver quality care efficiently as they move closer to value-based models.
The healthcare supply chain is not immune to the complexity this creates while systems work toward operational integration. In fact, hospital leaders are increasingly looking to their supply chains for new ways to drive not only hard savings, but greater efficiencies and workflow enhancements.
A recent national study commissioned by Cardinal Health sheds light on some of the major obstacles amid the current healthcare landscape.1 Unsurprisingly, hospital executives identified financial demands as the single greatest challenge facing their organization. This includes a variety of issues surrounding reimbursements, cost of supplies, and cost management. Executives also recognize the role of supply chain in cost management. Two-thirds of hospital decision makers “strongly agreed” that improving the effectiveness of their supply chain would reduce overall costs, increase revenue, and lead to better quality of care. Yet only one-third rated the management of their hospital’s overall supply chain as “very effective.” To help bridge this gap, supply chain executives need to develop actionable plans to ensure that that their supply chain is performing at the highest level possible.
In order to get a strong start in 2018, supply chain leaders should prioritize and address these challenges head-on. Here are 3 resolutions that leaders can take to position their supply chains as strategic assets and unlock tapped value in the New Year.
New Year’s Resolution # 1: Identify the problems in your supply chain, and seek ways to turn them into opportunities.
As the industry shifts toward value-based healthcare, reducing costs is becoming even more critical for hospitals – there is extreme pressure to do more with less. Work with key stakeholders in supply chain, clinical areas, finance and others to identify where the pain points are, and where opportunities for improvement exist. Focus on those few that can deliver the greatest ROI. One area potentially ripe for waste reduction is the supply chain for high-value devices. In fact, at an aggregated level, there is an estimated $5 billion of annual waste in high-value medical devices alone.2 Supply chain leaders will need to understand which levers they can pull – like high-value inventory – to yield the greatest benefits toward cost reduction.
One initial step in the right direction is to gain a better understanding of your inventory management IQ – that is, how informed and efficient your supply chain is. Getting a handle of your current supply chain capabilities can help to identify gaps that create unnecessary costs. Use this diagnostic tool to answer a few simple questions about your supply chain and get a better sense of where your organization stands related to inventory management.
New Year’s Resolution # 2: Develop a clear vision for a future without those supply chain problems – complete with objectives, budgetary needs, and projected ROI.
In an environment where multiple teams and departments are competing for scarce resources – like time, executive attention, and budget dollars – the ability to clearly articulate a powerful vision of the future is critical to successfully challenging (and changing) the supply chain status quo. The vision may look different for each IDN, but in general, it can paint a picture of what it would look like to have a supply chain that is free of waste and stock outs, and allows clinicians to spend more time at the bedside. It can also demonstrate the projected bottom-line benefits of ensuring charge capture and end-to-end visibility for every single product. An actionable vision statement or plan objectives may include elements like “replace manual processes with automated systems,” “eliminate clinician time spent on inventory tasks,” and “apply data analytics to understand usage patterns and cost-per-case metrics.”
Once you have developed and communicated your vision, identify potential solutions and discuss the benefits and trade-offs with stakeholders. Take time to explain the hard and soft costs associated to your colleagues, and help them understand how a new and improved solution can reduce or eliminate cost and inefficiency. Explain what role each department would play, and the advantages they would experience by implementing a new solution. Lastly, be sure to build a network of champions who will rally around your initiative.
New Year’s Resolution # 3: Explore methodologies to support your supply chain vision.
First and foremost, don’t reinvent the wheel. Seek out proven strategies that have been successful at other IDNs and hospitals. Reach out to external support for an outside perspective that may add another element to your case. The most successful action plans are likely to incorporate proven best practices that have worked at other facilities.
Secondly, tap into technology that can help bring your vision to life. Tomorrow’s supply chains will require tools that enable automated data capture and advanced analytics. These kinds of actionable insights will help hospital leaders make smarter, more informed decisions that can reduce the total cost of care.
And finally, don’t go at it alone. Regardless of experience or expertise, it can be nearly impossible to single-handedly juggle the day-to-day responsibilities of managing an IDN supply chain while trying to transform it at the same time. Instead, consider bringing in outside assistance to guide the process by implementing proven best practices and effective technologies that will move visions into reality, fast.
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1About Cardinal Health Hospital Supply Chain Survey
This study was fielded Oct. 19 - Nov. 4, 2016, using an online survey methodology. The samples were drawn from SERMO’s Online Respondent Panel of Health Care Providers, which includes over 600,000 medical professionals in the United States. The study included 403 respondents total, including frontline healthcare providers in hospitals (n=201), service line leaders in hospitals (n=100), and hospital/supply chain administrators (n=102). All survey data on file at Cardinal Health
2PNC Healthcare; GHX quantitative research study (August 2011)