The continuing pursuit of value-based healthcare is at the crux of many of the trends that will impact the healthcare supply chain in 2019.
Look a little deeper and you’ll see that those trends are also driven by the need for technology investments and process change. The goal is to capture more precise and comprehensive data on what delivers better quality care at a more affordable cost.
Further complicating this challenge is a realization that different care pathways work better for different kinds of patients, depending not only on their disease state and co-morbidities, but also other risk factors such as genetics, behavior, and socioeconomic status. The latter is leading more healthcare systems to develop programs that address the social determinants of health, such as whether someone has adequate housing, transportation and food. Dr. Andrea Fineberg, former medical director for health and wellness at Geisinger Health System, believes supply-chain professionals will assume increasing roles in supporting such programs, as care focuses more on primary and secondary prevention.
Reducing clinical variation is a top three issue for most hospital and healthcare system leaders. Variation in product usage serves as a primary contributor to differences in both costs and quality, even within the same organization. This is especially true for supply-intensive procedures such as orthopedics, spine and cardiovascular care. Minimizing variation starts by understanding exactly which products and services were consumed in the delivery of care — by patient, condition, physician and facility — with what kind of results, such as length of stay, infection and complication rates, readmissions, and patient-reported outcomes. All of this can inform efforts to redesign and standardize care pathways for different types of patients.
In 2018, we began to see more supply-chain leaders help provide this baseline data for care pathway redesign, as documented in the 2018 Cost-Quality-Outcomes Report on the Clinically Integrated Supply Chain published by the Association for Healthcare Resource and Materials Management.
Better clinical supply documentation also facilitates patient cost accounting, which in turn can help hospitals scrutinize the relationship between how much they pay for products, how much they charge for those products, and the reimbursement for the procedures in which they are used. These relationships take on even greater significance now that hospitals are required by the Center for Medicare and Medicaid Services (CMS) to publish their prices online. While many question whether posting the billing codes and often unintelligible abbreviations from hospital chargemasters will provide any real clarity for consumers, the move no doubt will fuel competitive pressures around pricing, and the drive to lower the actual costs of providing care.
At the same time, greater granularity of information about product consumption will help advance the pursuit of demand sensing, which can deliver value for both healthcare delivery organizations and their suppliers. While still fairly nascent in healthcare, Gartner reports, more providers seeking better visibility and control over their own inventory levels. Astute suppliers will capitalize on these trends by engaging with their customers to better forecast demand, which in other industries has proven to reduce stockouts and lower costs associated with expired or obsolete inventory.
Some are already working with their customers and technology partners to ensure that the data they provide to comply with the U.S. Food and Drug Administration’s unique device identification (UDI) rule can be used effectively in the healthcare delivery environment. A few health systems have even begun sharing outcomes along with consumption data with suppliers, to help them see how their products are performing in routine clinical practice.
Value-based care will also sustain the strong pace of mergers and acquisitions in 2019. Hospitals will continue to seek more market power to negotiate with payors, increased patient volume to manage risk, lower costs of capital and increased non-acute care delivery sites. Along the way, supply chain will support consolidation and standardization of purchasing across newly merged organizations, to realize the benefits of greater purchasing power.
Despite a continued high level of hospital M&A activity, it’s expected to pale in comparison to vertical integration, such as the recently approved CVS-Aetna merger and the newly inked deal between Microsoft and Walgreens. The latter is seen by many as not only a direct response to Amazon’s growing presence in healthcare, but also rising recognition of the potential to use digital patient health data to identify what patients need, and support new ways of delivering those products and services. But once again, it’s the need for good data on what works best, and on which patients, that will enable the full realization of the value of digital health and predictive analytics.
With all of these trends comes an increasing demand for information technology to support better integration, data and analytics, which is validated by nearly half of all respondents to a recent Capital One healthcare survey, predicting that health information technology will be the fastest area of growth in 2019. Health IT in 2019 will be called on to address a wide range of issues, from the ongoing need for contract price alignment to the exploration of potential use cases for blockchain. On the contract front, 2019 will see multiple stakeholders involved in contracting continuing to work together to maximize the use of organizational identifiers and collaborative platforms.
As for blockchain, some fear the considerable hype of the past couple years will lead to disillusionment, while others are steadfastly exploring how distributed ledgers can change healthcare processes and the willingness of various parties to come together to share very specific data, even in the absence of trust. Blockchain is not another technology that can improve existing processes. It is fundamentally designed to change how work is done and data is shared. In that sense, blockchain suffers from many of the same problems that healthcare does: a willingness to disrupt the status quo to deliver better value for all stakeholders, but especially for patients.
Karen Conway is vice president of healthcare value for GHX.
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