The secret recipes for success in the dynamic healthcare environment: 5 Qs with Cardinal Health's senior vice president of strategic corporate accounts

Several trends, including declining reimbursements and population health imperatives, are forcing care into cheaper settings — a shift that will place additional pressure on health system margins.

However, there are ways for health system leaders to prepare for this shift to the outpatient setting and succeed in the dynamic healthcare market, explained Robert Rajalingam, senior vice president of strategic corporate accounts and enterprise marketing at Dublin, Ohio-based Cardinal Health.

Mr. Rajalingam spoke with Becker's Hospital Review about the changing healthcare landscape and how forming a partnership with a supplier and establishing a strategy to manage care in non-acute settings are the secret recipes to success in the new value-based care era.

Editor's Note: Responses have been lightly edited for length and clarity.

Question: What changes can health systems expect as consumerism enters healthcare?

Robert Rajalingam: While many of the challenges are still coming into focus because we are early in this shift to consumerism, what we do know is patients are taking more ownership of their healthcare. This is largely due to the increase of out-of-pocket payments, which has spiked nearly 20 percent over the past five years and has the potential to grow even faster over the next five. As a result, consumers are being far more careful and deliberate while selecting their care and the demand for healthcare services has become far more elastic. This reality creates challenges for health systems because patients are demanding lower cost options while also expecting more personalized, coordinated care.

Despite these challenges, there are ways for health systems to stay on top of this push toward consumerism. As a supplier, Cardinal Health shares the imperative to improve the care experience for both patients and healthcare professionals. We do this by partnering with health systems, aligning our goals and putting our customer's needs first. After establishing a relationship, we combine our logistics and supply chain expertise with a health system's clinical expertise to coordinate, streamline and right-size care to help our customers realize cost savings in the supply chain.

Q: What other trends are posing challenges to health systems?

RR: The shift of care into outpatient settings and shrinking reimbursement rates continue to compress margins, which is forcing systems to find ways to diversify their revenue streams and increase day-to-day efficiencies.

The systems that are operationally unprepared to manage their patient population and support care delivery in new settings will not only struggle to take advantage of the quality and cost promise of in-home and post-acute care scenarios, but will also run the risk of increasing readmissions.

However, we believe there is an opportunity for health systems to increase efficiency within the acute setting and extend these efficiencies into the post-acute and in-home settings with a cost effective, coordinated supply chain that supports great clinical care and patient outcomes from hospital to home.

Q: How has your business approach or value proposition evolved as customers seek out strategic partners vs. transactional vendors/suppliers?

RR: Its no secret that health systems have a growing list of challenges they must face. To meet the needs of the health systems we serve and tackle those challenges, Cardinal Health has focused on building out a broader set of product and service capabilities to deliver more efficiency across the continuum of care. In addition, we have focused on coordinating our full enterprise offerings for the benefit of our customers.

In this new era, where finances are tied to quality outcomes and providers are challenged with producing efficiency and improving the patient experience across the entire continuum of care, health systems need a partner rather than a transactional supplier. We believe health systems need a partner who can flex distribution, products, services and solutions at any point in the patient journey, as well as a partner who can deliver a range of services from basic logistics all the way to clinically and operationally-driven, evidence-based consultation.

We believe Cardinal Health has the scale, breadth, depth and expertise to power our customers' missions by bringing together unmatched solutions from across our enterprise to achieve both operational and clinical success.

Q: Quality is historically seen as more important than cost or the "non-negotiable." Is there ever a time when this isn't the case?

RR: No. Quality is always the foremost indicator of success. We would challenge any notion that this isn’t the case.

The problem comes from how the industry frames "cost verses quality" as an either-or proposition. The industry has been seeing this as a zero-sum game.

We believe that this problem instead needs to be reframed as "lower cost can lead to higher quality." Providers and vendors must ask: "How can we lower costs overall, but in ways that also enable better quality healthcare?"

We realize there isn't a simple answer to this question, but we believe that the chance to reduce costs while enabling better care delivery often begins with elevating supply chain capabilities. For example, no one will deny that cheap products are bad for care, but great products aren't what deliver great care, either. Great clinicians do. So we think enabling better healthcare begins with giving clinicians the right products at the right time. This is where scale, breadth and connections across the continuum bring tremendous value, but not at the expense of care delivery. In fact, a better supply chain supports better care.

Q: What are the most critical changes hospitals need to make now to face the future effectively?

RR: Since non-acute cases are growing at a rate of three to four times that of hospital inpatient cases, healthcare leaders need to establish a strategy to manage care in post-acute, long-term and at-home environments. Care migration away from inpatient settings to cheaper care sites is a permanent, structural trend that will exacerbate already deteriorating hospital and health system margins. The threat of disruption through reimbursements and population health imperatives is catalyzing this evolution. As a result, systems must deploy a strategy to enable value-based care, including operations, people and supply changes that extend out of the hospital.

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