3 ways to understand healthcare supply chain in a changing market

When thinking of ways to reduce costs, improve efficiency and incorporate data into processes, three words come to mind: supply chain management.

In a May 31 webinar sponsored by Workday and presented by Becker's Hospital Review, Michael Darling, RN, vice president of supply chain at Saint Luke's Health System in Kansas City, Mo., Joe Colonna, vice president of supply chain at Atlanta-based Piedmont Healthcare System, and Win Fisher, national healthcare supply chain advisor at Workday, discussed the keys to optimize supply chain management for the provider and patient.

5 industry trends affecting supply chain management

Supply chain leaders are experiencing five main industry trends: consolidation, cost reduction, distribution and supplier model changes, and data-driven decision making.

Many health system leaders can attest to the continued decline of standalone hospitals. As health systems begin to manage a broader portfolio of nonacute sites, supply chain becomes increasingly complex and challenging to oversee. Additionally, as many of the nation's hospitals and health systems continue to experience a decline in revenues, administrators are continuing to target supply chain for cost reduction efforts. In 2017, researchers with the consulting firm Navigant identified an average total supply expense reduction opportunity of about 18 percent for more than 2,300 hospitals. The reduction opportunity represented a potential savings of $9.9 million per hospital.

In addition to the demand to cut costs, supply chain leaders face pressure to rethink traditional distribution and supplier models. As Amazon looks to strengthen its healthcare influence through the expansion of services in the medical supply chain, industry stakeholders are reconsidering traditional hospital-supplier relationships. Amazon, however, isn't the only new wave to hit hospitals. Data, analytics and technology are playing an increasingly important role in supply chain strategy. A 2018 Global Healthcare Exchange survey showed roughly 60 percent of respondents indicated data and analytics were the highest priority areas for improvement in the next year.

These changes and trends have pushed the role of supply chain management into new territory. Now, supply chain leaders are positioned to help lead their organizations to higher quality care with more efficient care delivery models. To ensure success amid this changing environment, healthcare leaders should place an emphasis on technology, business practices and customer service.

Supply chain and technology — responding to constant change

During the discussion, Mr. Fisher said technology plays a key role in facilitating change to the management of the healthcare supply chain.

"Because of the rapid pace [of change] and the level of innovation required, a lot of providers are looking to their technology to enable change," Mr. Fisher said.

Providers are looking to technology to address two specific needs, according to Mr. Fisher. The first is to add rigor and automation to their business processes, but at the same time for the technology to be dynamic and adaptive. Healthcare is an ever-changing landscape and providers are continuously looking for better processes, treatment models and supplies to bring patients the best care. Supply chain technology is key for providing patients with improved access to care. Supply chain management leaders are also turning to technology to provide innovation, meet quality standards and incorporate clinical data.

Supply chain as a business — adding new capabilities and competencies

Supply chain teams are looking to incorporate new capabilities into their operational and business processes, including real-time analytics. When discussing what capabilities Piedmont is developing, Mr. Colonna said he thinks "technology presents us with some short term and long-term opportunities as well as transactional opportunities to make processes more and more efficient … being able to collect the information from all the systems that allows you to produce the data in real-time is an invaluable resource."

For hospitals to measure the success of new initiatives, the work needs to be documented. Technology provides a streamlined system for documentation that is centralized and accessible to various parties. Using technology to document reasons for cost increases is also imperative amid cost cutting efforts. "Maybe there is a cost increase with a quality issue," Mr. Colonna said. "But, let's say the cost increase is supposed to be offset by a reduction in infections, with appropriate data we are able [determine] if the initiative resulted in the infection reductions without being penalized."

Supply chain and customer service — adapting to patient expectations

As patients shoulder larger shares of healthcare costs, the importance of price transparency has increased. To relate and communicate with patients more clearly about their healthcare, supply chain leaders are increasing focus on customer service. "If we look at the trends we are dealing with, we do have a more aware and knowledgeable community [when it comes to healthcare costs], and we do have a community that has greater access to [cost of care] information," Mr. Darling said. "Additionally, telehealth is becoming more prevalent tool when looking to reach out into communities."

Telehealth programs expand patient access to care in various ways. Beyond reaching patients remotely, telehealth is also a way for hospitals to retrieve data. "Technology is playing a huge part in customer engagement," Mr. Darling said. "From a supply chain perspective, we cannot put new technology on old processes and old data. First, we need to ensure our data is clean and useful and with that we need to look at business process."

Supply chain leaders must adapt to the changing healthcare environment to help lead their organizations forward. Strong leaders should continuously look ahead at what patients and providers need to ensure the best quality of care.

To learn more about Workday, click here.
To watch a recording of the webinar, click here.
To view webinar slides, click here.

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