Publisher’s Letter

Variation is the Enemy of Quality

I have the good fortune of talking to Supply Chain Leaders every day about their tireless pursuit of reducing costs, increasing quality and enhancing patient experience. Since the financial crisis that started in 2007-2008, the fixation on cost reduction has been the primary measurement of which all their actions and achievements seem to have been measured. In fact, when Supply Chain Leaders would present at industry seminars, be interviewed in this magazine or even in casual conversations, yearly savings goals were almost always mentioned.

Recently I have heard a new pursuit move into the forefront of conversations – reducing variation. Some of the initiatives Supply Chain Leaders have undertaken are pretty obvious, like reducing SKUs so the same products can be expected across the system, or setting up congruent care settings at all the locations in a system. The commonality with products and equipment certainly can lend to better care.

The pursuit of quality often times takes investment, and I think our nation’s health systems are starting to spend more to achieve better quality. For example, one area I am seeing this happen is with IDNs setting up and supporting Consolidated Service Centers, and/or self-distribution warehouses. For years, I have tried to make the numbers work on self-distribution as a cost saving initiative for IDNs, but it’s hard to make it work at typical distributors margins. But what better way to reduce product variation than to control what is available to the facilities from their own distribution center?

I certainly don’t think self-distribution is for all systems, nor do I think it is becoming much more common than it was a few years ago, but for some systems it does seem to be an investment in variation reduction. Actually, I think it is refreshing to see investments to do things better in the pursuit of better, higher quality care. For far too long it has felt like “commoditization” was the answer to cost reduction.

It will be interesting to watch how else better quality is pursed in the years to come. Thanks for reading this issue of The Journal of Healthcare Contracting.

About the Author

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