Future of health system supply chain

Transforming Today’s Healthcare Supply Chain

Recently, I read a blog post in Healthcare Finance News that focused on the transformation of the healthcare supply chain.  The authors discussed how different healthcare organizations were utilizing a number of technologies to enhance the effectiveness of their supply chain.

A clear focus on the value chain can deliver a significant return on investment. The authors point out that too often, hospitals utilize their own “homegrown” tools such as Excel spreadsheets, which can compartmentalize data and make it difficult, or nearly impossible to forecast or predict changes in supply chain demand.

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Survival of the Fittest: Is Your Healthcare Organization Adapting?

Integration is a topic I am very interested in. It is a large part of what we do and I pay close attention to integration-related discussions and articles. Recently, I came across this HealthLeaders interview with Joe Gifford, MD, the CEO of the Providence-Swedish Health Alliance, which speaks to this very topic.

With the continual changes the healthcare industry has experienced, the mantra of “adapt or die,” has been heard before. But according to Mr. Gifford, that analogy to evolution biology really rings true. His take? Only organizations that take chances (adapt) will survive.

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Lessons Learned From Wal-Mart: What hospitals can learn about reinvention

A recent article in Becker’s Hospital Review began: When a successful innovator like Wal-Mart is urgently reinventing itself, America’s hospital executives should take note.

Indeed.

For years, Wal-Mart has been the envy of retailers, driven by a huge buyer base, new technology and a very tight supply chain. But things began to shift and the economy wasn’t the only reason that the retail giant had five straight quarters of negative U.S. sales and six quarters of declining store traffic. There were weaknesses in Wal-Mart’s basic business model, which had always worked, until they didn’t. 

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You Get What You Pay For – There is More to Cost Than Price

Financial viability is the order of the day for hospitals and health systems. However, when looking for savings, a service or item that is the cheapest is not necessarily the lowest cost.

A recent HealthLeaders’ article, “Find Deeper Healthcare Supply Chain Savings,” which I referenced last week, looked at what a number of systems are doing in order to reduce costs in their supply chain. Main Line Health (MLH), a 1,295-bed health system with $1.4 billion in annual operating revenue was featured in the article because it has undergone an organization-wide initiative to reduce supply chain spending.

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When the Low Hanging Fruit Has Been Picked, What’s Next? Value!

New reimbursement models have forced hospitals and health systems to go after all of the low hanging expenses they can. But cost-cutting alone—stuff and staff—will not produce the total savings needed. A recent article in HealthLeaders points out that successful healthcare organizations are taking a much closer look at their supply chain in order to create strategic savings opportunities.

In the article, Steve Cashton, director of purchasing and contracting at Boston-based Beth Israel Deaconess Medical Center (BIDMC), a teaching hospital of Harvard Medical School, says, “You really can’t cut your way to success by reducing staff so we started looking at where we can improve our margins with the supply chain.”

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Stretching Outside of the Four Hospital Walls

Not long ago, adding more patient beds was the principle capital expenditure for many health systems and hospitals. But in today’s environment of value-based care, that has changed.

Healthcare leaders are shifting their capital strategies. According to “Reevaluating capital spending strategies”, from Healthcare Finance News, “As healthcare reimbursement shifts from a system that rewards quantity of care to quality of care, the onus is on the CFO to determine where best to allocate financial resources.”

Now, in order to provide care outside of traditional settings, systems focus on outpatient care and deploy capital to acquire physician practices that grow their reach.  Systems are also more prudent about equipment purchases and work to share equipment between facilities.

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Integration: Early in the game of healthcare reform

At the recent annual J.P. Morgan Healthcare Conference in San Francisco—“where Wall Street meets healthcare to talk business,” according to HealthLeaders the themes ranged from preparing for the newly insured to continuing the expansion of clinically integrated networks. The conference included both for-profit and not-for-profit health systems discussing what had helped make them successful in this early stage of healthcare reform.

Clinical integration is a hot topic for any healthcare system, regardless of profit status in this early stage of healthcare reform. And that’s because success is dependent on it. As Chicago-based Advocate Health Care executive vice president Lee B. Sacks MD noted at the conference, “Clinical integration has allowed us to advance in value-based care.”

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“Skate to Where the Puck Will Be” to Improve Healthcare System Integration

MedSpeed recently published a report on the roundtable we facilitated at the 2013 Fall IDN Summit in Phoenix, AZ, the fourth in a series of symposiums we’ve conducted with healthcare supply chain leaders. We learned that most IDNs are engaged in—and some are much further along—the process of trying to figure out how to really act as integrated systems.

We discussed the strategic role that the supply chain plays in system integration, and the tangible benefits that transportation can provide for improved integration across a system. The conclusion was that an effective, reliable, centralized healthcare transportation network can help expanding systems stay physically connected.

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Integration is critically important, yet many healthcare organizations aren’t prepared

We are well aware that the healthcare industry is in a time of tremendous consolidation with a greater than 50% increase in consolidation just since 2009. Since that activity is expected to continue through 2014, we wanted to get a sense for how successfully hospitals and health systems have been at integrating new facilities. To do that, MedSpeed conducted a survey in conjunction with HealthLeaders Media’s Leadership Council.

The survey polled 138 senior leaders across the healthcare spectrum, including hospitals, health systems, physician practices and payer organizations. Of those surveyed, 73% said that physically integrating materials and supplies is either “critically important” or “important” to their organization’s success in providing quality care.

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CFOs and the Supply Chain: A winning strategy

Over the past couple of years, in this space you’ve seen the discussion about supply chain as a strategic asset for healthcare organizations, and how important it is that those in the C-suite understand and view it as such.  A recent Dow Jones/Deloitte Risk & Compliance Journal report titled “How CFOs Are Reshaping Supply Chains” makes this case very compellingly.

The report notes that while both chief risk officers (CROs) and chief financial officers (CFOs) have long been involved with supply chain oversight, finance chiefs—with their eyes on cost controls, risk management and the levers of working capital—are increasingly involving themselves.

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