Moving strategies forward in an age of disruption
Innovation is typically viewed as the application of a better solution that meets new requirements or market needs. Upon further review, the definition of innovation is also an incremental improvement of an existing thing or an improved way of doing things.
Supply chain management is a myriad of management practices, with multiple areas for incremental improvement/innovation. Optimization of supply chain management practices can occur in acquisition cost and standardization activities, as well as in improving utilization via process improvement, standardizing clinical practice, and waste avoidance.
Improved supply chain management skills, and supply chain optimization strategy and activities are needed today more than ever before. In a SYFT sponsored survey reported in 2020, 97% of hospital leaders agreed optimization could reduce costs. Methods to reduce costs include proactively identifying cost savings opportunities by tracking inventory more efficiently, tracking and comparing cost-per-case outcomes, identify and report surgical supply use variance, and discussing variance with surgeons.
In the same survey, 75% of respondents agreed the same optimization efforts would improve quality of care through time savings and efficiency improvements, cost savings, happier physicians and staff, a reduction in expired supplies, and improved recall management (SYFT, 2020).
Value-based purchasing
Value-based purchasing is a driver for optimizing supply chain practices. Value-based purchasing is the process that considers (1) safe and effective products, (2) products judged as superior and covered by payments (3) products accepted and prescribed by physicians and, (4) products preferred and utilized by consumers.
In a 2018 CAPS RESEARCH study, 88% of the respondents said “improving data transparency across the supply chain” was a defining factor associated with value-based purchasing and important for consideration over the next five years. However, price transparency, without accompanying evidence regarding quality, could lead to decisions detrimental to both providers of care and patients.
Managing spend and achieving value in supply chain decision making requires data sets to address all purchasing decisions. Creating a comprehensive analytics platform that begins with the request to buy and supports and analyzes both proactively and retrospectively all sourcing activity is fundamental in value management and allows progression to clinical equivalency and a focus on outcomes. When coupled with clinical evidence we have robust data sets to support decision making for all types of decisions, whether the focus is demand, cost, standardization, or outcomes.
Supply chain optimization has several critical success factors. The ability to understand current state (spend) is imperative in standardization efforts, but is merely the first step in successfully achieving sustainable savings and “success,” as defined by maintained or improved patient outcomes.
Supply chain optimization means understanding your current state, focusing upon specific areas of improvement, and then getting the job done. Statistics show that most innovations fail as a result of the lack of implementation and follow through. Innovation is not just about coming up with some fancy new way to do things but rather a consistent and incremental improvement strategy on the things we do every day.
What I have recognized over the past several months is that is we do not lack the ability, but we do often lack agility in getting things done. I have seen organizations move strategies forward in a matter of weeks that would have taken years pre-Covid. What have you been focused upon in regard to optimizing your supply chain innovative abilities?
Dee Donatelli, R.N., CMRP, CVAHP, has more than 40 years of experience in the healthcare industry as a registered nurse, supply chain executive and consultant. Donatelli has held leadership positions in hospitals, consulting firms, distributors and GPOs. Donatelli is a past president of the Association of Healthcare Value Analysis Professionals (AHVAP) and is the current Chair of the Association for Healthcare Resource and Materials Management (AHRMM). An Bellwether Class of 2015 inductee, she also serves on Bellwether League’s Board of Directors. Donatelli currently serves as VP of Professional Services at TractManager and as Principal, Dee Donatelli Consulting, LLC. She can be reached at Dee@DeeDonatelli.com.