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Managing Change in the Healthcare Supply Chain

ROI was founded 15 years ago to help Mercy Health Systems reduce overall supply chain expenses and improve patient care. Greg Goddard, project director for supply chain operations, discusses ROI's business model and how changes in U.S. healthcare are impacting the supply chain.

Managing Change in the Healthcare Supply Chain

Changes in the U.S. healthcare system, driven by the Affordable Care Act, are having a big impact on the healthcare market, says Goddard. “There is a lot of consolidation happening now and healthcare providers are looking for ways to improve operating margins and decrease reimbursement,” he says. At the same time, supply costs are rising and supply chain providers are having to take a proactive role to help keep these costs in check. “Part of this is about helping them find the right vendors and the right cost structures. The reimbursement model has changed significantly and the supply chain needs to play an integral role in finding solutions,” he says.

Goddard explains that changes have resulted in reimbursement levels that are less-than-anticipated. “So we are stepping back and asking what we need to do to ensure that we continue to help our customers provide the best quality care, while remaining viable,” he says.

Mercy and ROI are developing strategies around what reimbursement models may look like in the future, Goddard says. “ROI has undergone extensive lean training and we are certifying workers in lean concepts. We are looking for ways to reduce the overall cost of patient care.”

One way is through its strong relationship with suppliers, he says. “ROI has its own purchasing organization and, as result, our contracts with suppliers allow them to leverage our centralized distribution network so they can get products to us in the most cost-effective way,” he says. “When looking at the products we want to carry and the suppliers we want to work with, it is not just about price, but about the overall value proposition for both companies. If there is not an advantage to both us and the supplier, we may not want to enter into that relationship.”

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