Supply chain efficiency solutions are necessary for hospitals and IDNs to survive in today’s challenging healthcare environment
By Guillermo Ramas, vice president of strategy and product development, Novation
In today’s increasingly demanding healthcare environment, streamlining the supply chain process and ensuring access to relevant information is key to maximizing the value in procurement operations. Solutions that allow IDNs to acquire, codify, and interpret data and support the creation of actionable information in a timely manner are paramount to success.
These solutions have to address the diverse components of the supply chain with the same clarity of focus. Whether they are confirming a purchase order, uncovering insight in market pricing in medical products or addressing utilization and physician alignment, IDNs must have tools that support organizing datasets into manageable information while it’s still relevant.
Any of the component efficiency solutions, such as electronic data interchange (EDI), radio-frequency identification (RFID), contract management software and many others, are all good things. The truly vital solutions are ones that can pass that litmus test and demonstrate cost savings for the organization.
The solutions that have been gaining widespread acceptance, such as EDI, are clearly helping hospitals improve the purchasing process. But, the importance here is with resource alignment. Purchasing departments that once were unable to do more than the daily order management are now able to move beyond resource-intensive administrative tasks, like phone/fax confirmations, and address the more strategic issues like price management.
Contract management solutions have taken the papers out of the file cabinet and provided visibility to these relevant agreements. Electronic tracking, processing of commitment and participation agreements have also enhanced the process flow. But again, the true importance of this evolution to a more electronic-based system is that volatility of market pricing has made contract analysis a premium activity.
Likewise, standardization, such as United Nations Standard Products and Services Code (UNSPSC) and other data initiatives, are allowing for data transparency just as it is becoming critical.
The environment 10 years ago was clearly different. The intensity of price management and cost savings wasn’t nearly what it is today. Healthcare’s supply chain did not exist in a vacuum and as other industry supply chains became more dynamic and complex, so did the healthcare supply chain.
The logistical improvements from retail or the data categorization from automotive have impacted the healthcare supply chain. Hospitals succeeded and quality clinical care was delivered because they were meeting the demands of that supply chain. But that supply chain doesn’t exist anymore. The hospitals that are adaptive and meeting the challenges of an increasingly unpredictable supply chain are continuing to deliver excellent health care.
Hospitals are facing some of the most challenging times that they have ever seen. Institutions are closing, cutting back on care and facing shortages of every kind imaginable. Assisting hospitals to work with leaner workforces and keeping products coming in the door are essential to delivering efficient healthcare. Maintaining and cutting costs amid rampant price increases are important to ensuring quality care for patients.
Driving cost savings for hospital systems
The value of early efficiencies was not a direct cost savings, but rather the ability to re-direct resources to cost-savings initiatives. These early efficiency solutions, like electronic requisitioning, opened the way for the robust cost-savings analytic solutions.
However, there can be difficulties when the overall strategy or vision isn’t identified by the hospital team early on. They need to be asking, “If I change this part of the supply chain, what does that mean downstream and how can that be beneficial?” Hospitals that start with a vision are able to see that when tactical steps do not have an immediate bottom-line cost impact, they may still facilitate cost-savings solutions down the road.
Giving hospitals the ability to benchmark pricing against the market empowers them with information. Gone are the days when hospitals were like islands, unable to get information to make informed decisions.
The healthcare supply chain has become very demanding on hospital resources, and we need solutions that address that by improving purchasing activities already in place and providing a clear and easy path to adoption and cost savings. This has been a significant driver in VHA’s strategy. With the majority of our solutions being Web-based, they require no special software or hardware. This has allowed an easy adoption from an IT perspective. We have also dedicated resources to ensuring that the usability aspect is not overlooked. The hospital user base is very inconsistent in skills and aptitude, so we have focused on delivering applications that require minimal training with clarity of purpose and expected outcome.
There is no reason to expect the dynamic or volatile nature of the current healthcare supply chain to end. Increasing complexity and intense scrutiny will continue to elevate these aspects, and we will need to continue to develop solutions to address this. In the future, we should see increased integration of mobile applications and platforms.
The revolutionary solutions, however, will focus on predictive analytics, always with an eye toward usability and intuitiveness. Easy access to information across the purchasing continuum will support applications that seamlessly integrate supply decisions with clinical outcomes and quality of care. We should expect our solutions to transform data into insight that tells us – and the hospital systems – what it is that we don’t know.