Repeat: Change is good.

You may or may not support the Affordable Care Act. But like it or not, it is causing some dynamic changes in our healthcare system. Look at the articles in this month’s issue.

For example, reducing hospital readmissions is a clear cut imperative. But the implications are profound. In fact, to do it right, readmission reduction calls for breaking down the walls that exist between inpatient and outpatient providers. So, you find home care providers calling on patients in the hospital to make sure their transition to outpatient care is smooth. Drugstore chains are beginning to send pharmacists into hospitals to make sure patients about to be discharged understand their medication regimen. And hospital staff are making sure that patients about to be discharged have firm follow-up appointments with their doctor.

Take a look at this month’s Executive Interview with William O’Connor, senior vice president of Provider Supply Chain Partners in Pittsburgh. This healthcare supply chain company has ambitious supply-chain-related plans, including group purchasing, distribution services and biomedical engineering. But it has one more distinguishing characteristic – it is owned by an insurer, Highmark, an independent licensee of the Blue Cross and Blue Shield Association. That’s a sign of the times, and one that we’ll explore in future issues.

One more thing from this month’s magazine. At the recent Market Insights conference, IDN CEO-turned-consultant Mark Dixon redefined what “scale” means for today’s – and tomorrow’s – healthcare providers. To be successful, net revenues of $500 million or even a billion dollars might not be enough to ensure success in the healthcare market, he said. “You need to be in the $5 billion to $7 billion range to have enough scale for these [accountable care organizations] and new models.”

We are indeed witnessing the passing of this cottage industry called healthcare. You’ve seen your hospitals merge to form IDNs; they’ve bought physician practices and partnered with other providers and insurers to form accountable care organizations. As a recent article in American Medical News pointed out, some of the biggest brand names in healthcare delivery – Mayo Clinic, MD Anderson Cancer Center and Duke University Health System – are deciding it’s not enough to be a prestigious place in the distance. They’re staking their claim in cities around the country. They are becoming national organizations. We’ve seen this on the for-profit side. But this is new for non-profits.

Not surprisingly, the stakes in this new environment are higher for supply chain professionals. Bigger budgets and bigger responsibilities call for greater leadership skills, customer-service skills and financial acumen. New ways of dealing with suppliers is part of the mix as well.
It’s all good. At least, a lot of it is. As Dixon pointed out, through value-based purchasing, the government is attempting to reimburse providers NOT on the basis of how many procedures they perform, but on how well they can improve outcomes, reduce readmissions and hospital-acquired conditions, and improve patient experience. “Finally, we’re going to be held accountable for our mission, that is, to improve the health of the communities we serve. This is a good thing. We’re finally being paid to do good work and provide value.”

About the Author

Mark Thill
Mark Thill is the Editor of The Journal of Healthcare Contracting and has been reporting on healthcare supply chain issues since 1985. He is a graduate of Dominican University in River Forest, Ill., and he received a master's degree in journalism from Northwestern University in Evanston, Ill.
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