Executive Briefings

How Supply Chain Is Driving Change in Healthcare

The Affordable Care Act is having a huge impact on the healthcare industry. And supply-chain is at the leading edge of the transformation. Vance Moore, vice president of operations with Mercy, talks about how the discipline is helping healthcare providers to adapt.

Moore’s journey to supply-chain management in healthcare was a lengthy one. He was educated as an industrial engineer, and worked for some years for a tire company. “Almost as an experiment,” he joined Baxter Healthcare, spending large amounts of time with providers. Then he was invited to join Mercy.

Since then, he’s seen dramatic changes in the industry, driven in part by passage of the Affordable Care Act. Among the key trends is a significant drop in reimbursements. At the same time, many people are shopping for healthcare on the new exchanges. “When you do that,” says Moore, “you become good consumers.” Providers are being forced to compete on service as well as price.

The supply chain carries a “tremendous” responsibility to contribute to cost containment. In addition, it must adjust to a future where the emphasis is on preventive care, instead of treating patients once they’ve become ill.

The nature of the customer is changing as well. Communication now extends all the way to patient care and outcomes. “In the future,” says Moore, “no doubt you’ll be using a smartphone or other device to monitor your bodily functions. We’ll be monitoring remotely and notifying you when we see an exception to what is normal.”

The biggest challenge facing healthcare supply chains today is their sheer complexity. Just one of Mercy’s vendors might have a catalog with 30,000 items. The proliferation of SKUs is “just tremendous for a supply-chain leader to be able to grasp,” Moore says.

Mercy’s supply chain is based on four “pillars”: tying supply chain to the strategy of the organization, getting control and understanding of all relevant data, getting control over the movement of goods and inventory locations, and stressing the importance of relationships. “If we build in trust up and downstream,” says Moore, “everything becomes easier.”

To view the video in its entirety, click here

Moore’s journey to supply-chain management in healthcare was a lengthy one. He was educated as an industrial engineer, and worked for some years for a tire company. “Almost as an experiment,” he joined Baxter Healthcare, spending large amounts of time with providers. Then he was invited to join Mercy.

Since then, he’s seen dramatic changes in the industry, driven in part by passage of the Affordable Care Act. Among the key trends is a significant drop in reimbursements. At the same time, many people are shopping for healthcare on the new exchanges. “When you do that,” says Moore, “you become good consumers.” Providers are being forced to compete on service as well as price.

The supply chain carries a “tremendous” responsibility to contribute to cost containment. In addition, it must adjust to a future where the emphasis is on preventive care, instead of treating patients once they’ve become ill.

The nature of the customer is changing as well. Communication now extends all the way to patient care and outcomes. “In the future,” says Moore, “no doubt you’ll be using a smartphone or other device to monitor your bodily functions. We’ll be monitoring remotely and notifying you when we see an exception to what is normal.”

The biggest challenge facing healthcare supply chains today is their sheer complexity. Just one of Mercy’s vendors might have a catalog with 30,000 items. The proliferation of SKUs is “just tremendous for a supply-chain leader to be able to grasp,” Moore says.

Mercy’s supply chain is based on four “pillars”: tying supply chain to the strategy of the organization, getting control and understanding of all relevant data, getting control over the movement of goods and inventory locations, and stressing the importance of relationships. “If we build in trust up and downstream,” says Moore, “everything becomes easier.”

To view the video in its entirety, click here