Focal Points

Supply chain leaders delve into key trends at the Association of National Account Executives annual conference

jhc-oct16-anaeThinking ahead? Better be thinking in terms of value, outcomes and bundled payments, because that’s what your administrators are thinking about. That was a consistent message from supply chain speakers at the Association of National Account Executives annual conference this summer in Nashville. ANAE is an organization focused on professional development for corporate and national accounts executives calling on group purchasing organizations, regional purchasing organizations, IDNs, individual hospitals and other provider organizations.

Clinically integrated supply chain
Michael Schlosser, MD, MBA, FAANS, chief medical officer, HealthTrust, defined a clinically integrated supply chain as one that defines the value of a device or drug in terms of the Triple Aim – improved population health, better patient experience, and lower cost per capita.

“A clinically integrated supply chain incorporates all appropriate hospital parties into its processes,” said Schlosser. “It takes into consideration the roles of executive leaders, physicians, clinicians, finance, and clinical outcomes to deliver high quality, cost-conscious products and services that improve patient outcomes within an organization.” In such a situation, sourcing decisions are linked to product performance and value.

Of course, it calls for a culture change, one of collaboration among purchasers of products, decision-makers and manufacturers; and a demand for clinical evidence, including investment in data systems to study real-world outcomes.

HealthTrust’s Physician Advisors program engages more than 100 practicing physicians from 14 IDNs and 19 subspecialties in national contracting decisions, he added.

Supply chain transformation
Adventist Health System is focusing on clinical and operational transformations that will facilitate a change from today’s pay-for-volume payment structure to the emerging pay-for-value reimbursement systems, said Celeste West, vice president of supply chain. In order to do that, the supply chain must itself be transformed.

That transformed supply chain will feature a unified, systemwide approach to supply chain decisions around supplies, pharmaceuticals and purchased services; standardized ERP technology and processes; centralization of procurement-to-payment; and more, she said.

The Adventist supply chain team pursues three goals, added West:

  • Contract and sourcing decisions made at the system level based on data, cost, and literature rather than preference
  • Physician engagement in the decision-making process pertaining to clinical contracting categories
  • Contract decisions that are binding on all hospitals, and monitoring of compliance to contracts.

The cost drivers
Medicare continues to move toward alternative payment models, which link financial incentives to providers’ performance on a set of defined measures, explained Teresa Dail, RN, BSN, CMRP, chief supply chain officer for Vanderbilt University Medical Center. As Medicare and other payers do so, suppliers must change their approach to their provider customers, she said. They must:

  • Be willing to work across divisions within the supplier’s own corporate structure
  • Be willing to explore at-risk contracts with metrics that are easily measurable
  • Be willing to explore ways to reduce SG&A in partnership with provider organizations to further enhance the value proposition
  • Be willing to recognize that the traditional model to sell and serve may not be sustainable
  • Be willing to sign contracts that extend across all classes of trade
  • Be willing to recognize that health organizations are willing to pay for value in technology that will directly impact patient satisfaction, outcomes and quality metrics
  • Be willing to recognize that the pressure to lower the “base” of cost will continue from many, but offering solutions for total cost will be welcomed by more engaged providers

Winning in the bundled-payment game

In the world of bundled payment, quality matters, said Bill Kellar, CEO of Parallon Business Solutions. Providers need to monitor clinical and service performance metrics as they impact financial performance. What’s more, they need to adopt a different mindset, one in which “episode of care” extends beyond the patient’s hospital stay.

When it comes to orthopedic bundled payment programs, providers must:

  • Focus on reduction in unnecessary variation in implant utilization
  • Implement demand matching
  • Improve OR efficiency
  • Relate implant choices to clinically meaningful outcomes

The value analyst speaks
Value analysis professionals are healthcare’s “interpreter,” said Wanda Lane, RN, MaED, CVAHP, Regional One Health. They must address a lot of issues, including patient satisfaction, clinical preference, lean supply chain, increasing costs, decreasing reimbursement and increasing accountability.

To be successful in working with value analysis, suppliers should keep this acronym in mind: IDEALISM:

  • Identify key people, perceived needs
  • Develop information grid, relationships, plan
  • Educate yourself. Know the facility and the people
  • Ask about processes, goals, perceptions, etc.
  • Leverage: Contracts, data (e.g., long-term evaluations)
  • Invest: Learn what you don’t know, meet everyone possible, invest in evaluations.
  • Solutions: Bring solutions; be available; prepare the provider for challenges they may not see. Don’t share a problem without bringing a solution
  • Meet (or exceed) expectations. Deliver what you promised, and follow up to track results

Rx issues
In other sessions:

  • The ANAE conference featured a panel discussion on “Current pharmacy issues facing health systems/IDNs and hospitals today,” with Trina Kaylor, assistant vice president of pharmacy operations and expense management, HCA/HealthTrust/Parallon; and Joel Meckley vice president of supply chain, Geisinger Health System. Moderating was national accounts expert Fred Pane. Kaylor also presented “Developing a pharmacy strategy for a clinically integrated supply chain.”
  • Joel Meckley presented insights into Geisinger’s “Care Support Services: An integrated delivery network approach.”
  • Michael Louviere presented the “Ochsner Supply Chain Strategic Plan 2017-20.” In a nutshell, supply chain’s mission is: “To provide affordable medical care for patients while improving quality outcomes by creating innovative vendor partnerships and providing quality products at the best cost.”
  • Professor R. Lawrence Van Horn, PhD, Owen Graduate School of Management, Vanderbilt University, gave a presentation on “The changing nature of U.S. healthcare delivery and financing.” If U.S. healthcare has failed, it has done so in two ways, he said: First, the majority of medical care doesn’t create value, and second, much of the treatment delivered will never address a patient’s condition. Paying for healthcare is increasingly difficult for American consumers. The market will reward solutions that a typical household can afford and value, and a supply chain that solves providers’ problems will enjoy an advantage.
  • Philip Hampton, Lovelace Health System, traced the history of bundled payments from 1984 to today … and tomorrow.

To learn more about ANAE, go to

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