The clinically driven supply chain: What is it?

The hospital supply chains continue to mature at a rapid pace and in recent years we have seen sophisticated sourcing and distribution networks being modeled from outside industries; however, as healthcare providers, our end game will always be a bit different – it will be someone's mother, father, child or perhaps even ourselves in good health as our end product.

So while we need the efficiencies and cost savings that can be gleaned from other industries, we must keep our focus on a Clinically Driven Supply Chain.

What exactly is a Clinically Driven Supply Chain? If you were to ask the Supply Chain leaders of 10 different healthcare organizations you would most likely get 10 different answers. Every organization is on a journey to answer that question in a form of what is best for them – and let's be honest, that might not be a bad answer. In the healthcare organization of tomorrow no two organizations will look the same, the labor market will be different (in terms of talent and ability to retain that talent), the payer mix and overall business challenges and profitability will be different and we will see shift in procedures performed based on that profitability and ability to retain talent.

The Association of Healthcare Resource Materials Managers (AHRMM) recently published a report "The 2015 AHRMM Cost, Quality, and Outcomes (CQO) Report; uncovering applications of the CQO movement throughout healthcare." As a member of the taskforce that compiled these real world examples of how organizations are using their operational data to improve their financial and clinical outcomes, I can tell you that there are hospitals out there that not only understand their procurement cost but they can tell you what the total cost to serve the patient was and if the product they select provided a better outcome to the patient. More importantly I think the report highlights that these organizations all may vary in size and complexity but that has not stopped them from incorporating clinical elements into their supply chain.

It's no longer the age-old story of beating the vendor up over the price of a product – that's not to say
this is no longer important – it's about understanding how the product is utilized, who is using it, how it is reimbursed and how it performs clinically throughout the patient encounter (and helps to prevent readmission). This story changes from understanding just purchase price from the enterprise resource planning (ERP) to analytics that integrate information from the ERP and clinical systems to provide a holistic view of the entire encounter and allows hospitals to make true informed decisions.

Another key component of a successful clinically driven supply chain is how Supply Chains are working to remove the caregivers from searching for supplies and equipment. In my job I get the luxury of visiting many different hospitals and sitting with the Vice Presidents and Directors, and in almost every discussion this is a goal they share with me: to remove the caregiver directly from the supply process. This is not a surprise because if you step back and consider that the clinician truly does spend on average 16 hours a week tracking down supplies and equipment, then the supply chain does in fact not only control the 30% of the hospital operating budget in the cost of the supplies that we have always historically owned, but they also have a direct tie-in to about 40% of the 50% of the labor budget as well!

This has many financial impacts to the hospital as well, not just in the labor efficiencies that can be brought in the process improvements, but in reimbursements that are tied into patient satisfaction through HCAHPS scores. Happy nurses with supplies and equipment conveniently and proactively in their hands, versus 200 feet in a supply closet or staring at an empty bin, turns out to be a much better financial option for the organization all around.

We see hospitals embracing technology through expanding the utilization of Point of Use technology, Kanban methodology (lean technology) and locked bedside carts all integrated to the ERP. In addition, we see hospitals looking to integrate the EMR and ERP to automate the physician orders to proactively deliver supplies to the patient room for procedures.

Interoperability and automation of systems is another key factor that will make a difference in a clinically driven supply chain. When caregivers need to be in a system, do we force them to perform double entry of products, or do we look for ways to architect the information flow to be automated? We all know that clinical documentation requirements have already increased time instead of saving it, so as we roll out new systems or processes related to the supply chain, do we design them with the end user in mind? Do we make it automated and easy to use with content pre built? Or, do we negatively impact the labor hours and reimbursement we discussed earlier?

As healthcare organizations and supply chain professionals continue to look to the future, it is evident that while we must take efficiencies and inspirations from other industries in order to modernize and be able to keep our doors open. However, it is also evident that we cannot lose sight of the reason we exist, our patients, and merging a clinically driven supply chain that encompasses a Clinical, Quality, Outcomes approach focused on automating and removing the caregiver from the process will be a challenge. What I do know is the talent that I meet with, network with at conferences, hear speak at industry events, read articles about and have discussions with on a regular basis is the best in any industry and is prepared for the challenge.

The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.​

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