Supply Chain Visibility at Becker’s Annual Meeting

The recent Becker’s Hospital Review Annual meeting in Chicago was invigorating and thought-provoking, with many presentations from CEOs of many leading healthcare systems. I wanted to share an overview of three breakout sessions that spoke specifically to Healthcare Supply Chain.

Can’t Deliver Care Without Stuff: Emerging Strategies for Supply Chain Management was a discussion with Brent Johnson, VP Supply Chain and Chief Procurement Officer at Intermountain Healthcare in Salt Lake City, UT. Brent comes from outside the healthcare industry. When he came into healthcare supply chain at Intermountain he was shocked at how, as an industry, healthcare managed its supply chain so casually, because “you know, outside healthcare, supply chain is seen as STRATEGIC to the organizational performance.”

This is supported by the fact that supply chain accounts for over 40% of the spend of any healthcare system and can deliver savings of up to 10-20% to the bottom line — when managed effectively. In his observation, there are some immediate actions leadership can take to improve supply chain effectiveness:

1. Hire talent. Brent has found that the investment in MBA talent has a direct correlation to the better financial performance of his entire team.
2. He has observed a shift in IDN leadership recognition of supply chain as a critical performance element. However, he cautions that we balance the focus on the delivery of care with the business opportunity that comes with robust supply chain management and execution. Solid business performance is necessary to sustaining any care delivery mission.
3. He advocates the “basic strategies of supply chain to get your arms around all non-labor spend”, with a focus on the standardization of med/surg products and suppliers across your care delivery network as a key first step.
4. Centralize as much as you can, especially as the delivery of care is decentralized. Intermountain has moved in this direction with the opening of the Kem C. Gardner Supply Chain Center that houses or manages a wide range of centralized operations including: Supplies, Accounts Payable, IT Services, Clinical Engineering, Pharmacy Services and Telehealth, among other functions.

It is a focus on people, process and technology that continue to move them forward in a “passionate pursuit and delivery of industry best-practices to enhance every dimension of healthcare.”

Supply Chain Direct to the Bottom Line was a presentation by Dee Donatelli, RN, BSN, MBA and current President of the Association of Healthcare Value Analysis Professionals (AHVAP). Dee presented a methodology that has been used at Hayes Medical around Evidence-Based Value Analysis. Walking through a case study for the standardization of surgical mesh product for hernia repair, Dee illustrated how an organization was able to narrow the choices to those that truly met clinical outcomes. Key takeaways include:

1. Systematic process creates a forum that physicians understand and appreciate
2. Focus first on high-cost supply chain products
3. Include multiple stakeholders in the process, especially executives and physicians
4. Track and monitor the financial, operational and clinical goals and outcomes
5. Communicate the sustained savings, usage patterns and improved outcomes, both financial and clinical

ACOs and the Impact on Supply Chain was a collaborative presentation by Dennis Othman, CMRP, Senior Director at Strategic Marketplace Initiative (SMI) and Tom Lubotsky, FACHE, VP Supply Chain & Clinical Resource Management, Advocate Health System.

Dennis spoke to the 5 elements of accountable care that impact supply chain. These are: Physician integration, alignment of incentives, clinical integration, information management and supply chain engagement. Each element provides an opportunity for enhanced supply chain management:

1. As physicians are folded into healthcare organization staffing, the need to support the broader organizational goals of care delivery will be more prevalent. This will include the development of care pathways that support product standardization and streamlining.
2. Since we are moving from a volume-based care delivery model to an outcomes-based delivery model, we know the impacts fall differently to different stake holders. All parties to care delivery will need to understand their role in supporting the organizational goals, including their choices in supply and therapies used.
3. Highly integrated organizations have protocols and formularies that will drive standardized care across multiple sites that, in turn, support more predictable outcomes.
4. IT is critical to helping manage the information needed to support meaningful outcomes, measures and performance.
5. Supply chain supports all these areas as well as providing a foundation for cost, quality and outcomes.

Tom then spoke to a strategic program and journey the Advocate has been on since 2004, specifically related to aligning of incentives for physicians in order to achieve organizational goals around the “best health outcomes while building lifelong relationships with the people we serve.” By leveraging a pluralistic physician approach with an advanced evidence-based medical model, they have been able to realize their Value of better health outcomes at a lower cost to achieve those outcomes. The physicians have enjoyed a financial incentive that helps drive compliance. It was an enlightening and very future-focused program presentation.