As Integrated Delivery Networks (IDNs) acquire more hospitals and post-acute care facilities, the healthcare supply chains is becoming increasingly larger and more complex – leading to an exponential risk for waste and inefficiency. Concurrently, IDNs are moving toward value-based care models, which require greater efficiency and more focus on reducing the total cost of care. Steve Thompson, director of patient-driven supply chain at Cardinal Health, discusses how supply chain leaders can prioritize and address these challenges head-on in the New Year.
Q: As we kick off the New Year, what key priorities should supply chain leaders focus on in 2017?
A: In a 2015 national study commissioned by Cardinal Health, hospital executives said that reimbursement is the biggest problem facing their health systems today, followed closely by the increasingly high cost of supplies. Additional financial concerns and organizational inefficiency also topped the list.
While 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, only one-third rated the management of their hospital’s overall supply chain as “very effective.”
I believe these results provide the perfect backdrop for supply chain leaders to challenge the status quo and make some bold New Year’s resolutions to start addressing these challenges and positioning their supply chains as strategic assets. Making big changes can seem overwhelming, but by committing to these four resolutions, supply chain leaders will be off to a great start.
• New Year’s Resolution # 1: Identify the problems – and opportunities – in your supply chain
• 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
• New Year’s Resolution #3: Gain buy-in and advocacy from key stakeholders
• New Year’s Resolution # 4: Explore methodologies to achieve your supply chain vision
Q: How can a supply chain leader take the first step in identifying supply chain problems?
A: This will look different for every healthcare provider. Reducing costs is an urgent goal for all hospitals, especially because the supply chain (and the products it moves) comprises the second largest expense for most IDNs. So it’s safe to say there’s value to be unlocked in every supply chain. The challenge for supply chain leaders here will be to prioritize their cost-reduction efforts.
Consider the last time you evaluated your inventory management IQ – that is, how informed and efficient your supply chain is. Answers to this brief evaluation can help you understand your current supply chain capabilities and identify gaps that create unnecessary costs.
To find out what your inventory management IQ is, take this short online quiz.
• Does your hospital have the right amount of inventory on hand – never over or understocked?
• Does your system accurately capture all changes on the patient record?
• Do you ever worry about finding recalled or expired products on shelf?
• Does your system track medical devices through to the point of use?
• Does your hospital accurately anticipate product demand based on trends?
• Does your system leverage data and analytics to improve inventory management practices?
• Can your facility staff easily and quickly do routine inventory maintenance tasks?
• Does your hospital use paper-and-pencil methods for documentation or purchasing?
• Can your clinical staff easily and quickly find the proper supplies?
Q: Once key opportunities are identified, what are some ways supply chain leaders can articulate a vision for the future while gaining advocacy among key groups?
A: 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.
After evaluating your inventory IQ online, you will receive customized information on your supply chain and how to improve and automate your processes to help you do just that.
The vision will likely look different for each IDN – but it should paint a picture of what it would look like to eliminate waste, stock outs, and the need for clinicians to spend time tracking down products in your facility. It should also demonstrate the projected bottom-line benefits of ensuring charge capture and end-to-end visibility for every single product.
Once the future vision is developed, communicate the benefits of your solutions: Explain the hard and soft costs associated to your colleagues and how a better solution can reduce or eliminate those costs.
Then, identify the departments that need to be involved – usually finance, IT, procedural leads, clinicians, supply chain and purchasing. Illustrate what’s in it for each department in your facility and, finally, cultivate champions who will rally around your initiative.
Q: What are some steps supply chain leaders can take to bring the vision to life?
First, avoid reinventing the wheel. Seek out proven, successful strategies that have worked at other IDNs and hospitals. Bring in external support for an outside perspective that can help you make your case. Each IDN’s supply chain action plan and inventory IQ will be different, but the most successful ones are likely to incorporate proven best practices that have worked at other facilities.
Second, engage connected technology solutions that can help bring your vision to life. Tomorrow’s supply chains will require tools that enable automated data capture and advanced analytics. Providing those kinds of actionable insights will help hospital leaders make smarter, more informed decisions that can reduce the total cost of care.
Finally, don’t go at it alone. Even the best, most experienced supply chain leaders have only 24 hours in a day. Seek experts who can guide the process and bring to bear the kind of proven best practices and effective technologies that move visions into reality, fast.