Most of the attention of the Patient Protection and Affordable Care Act is focused on the main actors who are center stage in the healthcare industry: citizens, physicians, government officials, payers. But the PPACA affects the industry on a deeper level beyond the leading roles.
Enter supply chain. Material managers are the stage hands of the healthcare industry, making sure the proper supplies and equipment are where they need to be, when they need to be there.
A change on the main stage necessitates an alteration behind-the-scenes. Responding to the industry-wide transformation, hospital supply chains are also changing their processes and systems to ensure the show runs as smoothly as possible.
Behind the curtain
Although hospital supply chains are hidden from the glamour of the main lights, they account for significant portions of hospitals' overall operating budgets. Hospitals spend approximately 55 percent of their budgets on personnel and the other 45 percent on materials and services, estimates Curtis Rooney, president of the Healthcare Supply Chain Association.
"The big amount of hospital spending is really on people; doctors and nurses and so forth. The other part is on stuff. That's where we come in," Mr. Rooney says.
Hospital supply chains are a key, yet often hidden, player in the cost reduction efforts that directly factor into the PPACA's goals of providing accessible, reliable and affordable healthcare to Americans.
"The [PP]ACA was about insurance reform and contained big cuts to hospitals, among other things. Reduced payments to hospitals have forced them to find savings anywhere they can. We've already seen consolidations aimed at creating greater economies of scale. Next will be an effort to make the healthcare supply chain more efficient," Mr. Rooney says.
That effort includes the development and usage of track-and-trace technologies and unique device identifiers, which Mr. Rooney sees as the next big step to help material managers improve and standardize their processes, as well as help them link up more closely with the clinical side of care. As it currently stands, he adds, hospital supply chain traceability has some catching up to do with the 21st century.
"We can track an orange to a grove in Florida faster than we can track an implant to a patient," Mr. Rooney says. "That's horrifying."
Revitalizing the supply chain
Plans are already in motion to bring the antiquated system up to date. In November 2013, President Obama signed the Drug Quality and Security Act, which requires drug manufacturers, repackagers, wholesale distributors and dispensers to label each product with a product identifier so it can be tracked at each step as it moves through the supply chain.
The recently issued UDI regulations, though not affiliated with the PPACA, are the first push toward global, widespread standardization that will improve supply chain efficiency and improve patient care by enabling any person to recall the manufacturing and distribution process of each individual product.
In December 2013, The U.S. Food and Drug Administration named Lawrenceville, N.J.-based GS1 US the first accredited issuing agency for UDIs.
"Building on the success of the retail and grocery supply chains, healthcare has begun to implement GS1 standards that include global location numbers and global trade identification numbers and can be linked to a data pool," Mr. Rooney says. "UDI and track-and-trace are the next big step in this process. Both will improve patient safety, lead to better inventory controls, decreased shortages, eliminate 'gray markets,' assist in more accurate sourcing of materials and increase efficiency and save money."
The curtain rises
All these improvements are undoubtedly beneficial, but given supply chain's invisible nature, it isn't always apparent how these changes happen. With the curtain constantly lowered over the levers, pulleys and logistics of supply chain, the general public is left in the dark when it comes to the inner workings of the overall operation.
Remedying this disconnect is the electronic health record, Mr. Rooney says, as it will serve as a touch point of common ground between the clinical and logistical sides of healthcare.
"The vision of supply chain that we hold is the EHR is where the supply chain meets the patient, and so we need to do a number of things to make sure that all the appropriate information is put into the record so that both suppliers and the clinical piece can be married," he says. "It is our hope that in the future, the EHR will be the focal point and connect the two halves of the same equation more visibly and with more transparency."
These changes are not going to be immediate, and, like all implementations, may be subject to a few obstacles along the way (Here's looking at you, HealthCare.gov). However, UDIs and track-and-trace systems are the beginning of innovation and optimization of hospital supply chains, and supply chain managers are tasked with the responsibility of reaching for and implementing these improvements.
"The role of the materials manager is to embrace this change and develop relationships with the C-suite to demonstrate the value of these changes in a very tangible and measured way," Mr. Rooney says. "As hospitals and other healthcare providers look for ways to save money, they're going to see this is low-hanging fruit."
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