Publisher’s Letter October 2011

Looming Questions

We just completed the 2012 Media Guide for the Journal of Healthcare Contracting and there is no shortage of trends and topics to discuss. Key topics for 2012 will include physician alignment, new models of distribution, regional contracting and how the progression of reform will impact the supply chain.

As hospitals and IDNs acquire physician’s practices, it will be interesting to see how this affects the purchasing patterns for physician offices. Will we see the product offerings narrow and standardization widely adopted? What products will be acceptable to physicians now that the IDNs or hospitals are the ones deciding what the physicians have access to?

Distribution models continue to be challenged and morph into formats that work for our nation’s IDNs, who seem to become more unique every day. Will we see the self-distribution model widely adopted and implemented, or will the reality be more of a re-distribution of products? Supply chain leaders want dearly for more control of their supply chain, and handling more of the movement of materials seems to accomplish that, but how do the financial models play out? Many think it will actually add cost to an IDN’s supply chain to move to self distribution.

Regional contracting continues to return great dividends to its participants. There are numerous examples of real savings that IDNs derived from participating in an RPC. Will we continue to see these models produce continued returns, or will their value diminish and contracting activities revert back to the national contracts? Many proponents of RPCs believe regional contracting is a simple return to the past, only with enough committed volume to get better pricing than national.

The biggest looming issue in our nation’s supply chain is how reform will impact what and how our nation’s hospitals and healthcare facilities purchase. I am confident this question will not be answered in 2012, but this time next year we will be a whole lot smarter. I believe we will see our IDNs and hospitals work feverishly so their facilities are capable of driving focus to the triple aim of reform: cost, quality and patient experience. Suppliers will have to contribute to this aim for success in a reform era supply chain.

I think we can all agree it is an incredibly dynamic time in our industry.

About the Author

John Pritchard

John Pritchard is the publisher of The Journal of Healthcare Contracting.