The COVID-19 pandemic compressed a decade of healthcare transformation into mere months.
Healthcare leaders have been challenged with rethinking every aspect of the business, from how care is delivered to planning for the workforce needs of the future. At the same time, consumers continue to be a driving force in shaping healthcare’s mission. Today’s healthcare consumer wants an affordable, accessible and personalized experience, in which healthcare providers match the right procedures, drugs and devices to a patient’s individual needs.
This confluence of events has placed even greater pressure on healthcare organizations to deliver high-quality service, but at a lower cost and on a patient’s terms. As we continue down the value-based care path, one overlooked opportunity is the redesign of the healthcare supply chain.
During the pandemic, supply chain leaders worked the front lines alongside clinicians, suppliers and other stakeholders to address questions around resiliency, product availability and safe substitutions. We also saw supply chain teams assume increased responsibility to drive savings initiatives that would offset the costs incurred during the pandemic, ensuring that healthcare organizations could continue to serve their communities. In short, the pandemic demonstrated the untapped power of the healthcare ecosystem, and more importantly, supply chain’s critical role as a change agent.
As the industry plans for its future, we have an opportunity to harness this ingenuity to address the challenges associated with the shift to value-based care. In particular, the industry can and should lean on supply chain expertise and resourcefulness. For supply chain professionals, the near-term focus should be on the redesign of the healthcare supply chain, coupling proven supply chain approaches with advanced technology and automated processes to create a modern supply chain system capable of successfully supporting a value-based care model — one that increasingly revolves around improved patient satisfaction, safety and outcomes.
Here are a few ways modern supply chain management will play an increasingly critical role in supporting the goals of value-based care:
Data will become a competitive advantage. Value-based care requires healthcare organizations and physicians to assume more financial risk for patient outcomes. That makes it essential to understand the total cost of care. For years, supply costs have been a blind spot for many healthcare organizations, yet they are fundamental to understanding the total cost of care. Without this data, hospitals struggle to accurately evaluate profit margins for a particular service line, or identify opportunities for cost savings and performance improvement initiatives.
In a value-based care environment, supply chain data must become ubiquitous. Organizations must gather accurate cost, utilization and outcomes data to drive informed decision-making and understand the full cost associated with managing patient care. In addition, organizations must ensure this information doesn’t reside solely in the enterprise resource planning (ERP) system. The data needs to be shared across multiple hospital operating systems. It’s imperative to tap into the wealth of healthcare data to understand how a product is used, and directly link the use of that product to patient outcomes.
Outcomes will be improved by aligning stakeholder interests. One of the aims of value-based care is to reduce clinical variation and drive better patient outcomes while achieving the overall financial goals of the organization. Reducing unwarranted variation starts with engaging clinicians in the redesign of care, and taking steps to standardize product use. Evidence and clinical outcomes data give supply chain teams and clinicians real-time insight regarding the impact of unwarranted variation on outcomes and total cost of care. This insight can be combined with clinical expertise to make data-based decisions on how to standardize product use, order sets and clinical pathways. This will enable healthcare organizations to achieve financial savings without affecting patient outcomes and satisfaction.
Better results will be co-produced with patients. In a value-based system, patient-reported outcomes and real-world evidence require knowing more than just the technical outcome of a procedure. Providers must also consider a patient’s ability to remain healthy and sustain a higher quality of life beyond the hospital’s walls. Physicians and their supply chain partners must work with patients to understand social determinants of health, such as food security, health coverage and available transportation and, ultimately, extend care from the hospital into the community to better support individual needs more fluidly.
Centralized value analysis will reduce variation and improve outcomes. There’s a growing need to evaluate the efficacy of new products as healthcare providers look to better understand the costs and quality of products being used in the delivery of care. This will require organizations to take a more advanced and system-level approach to value analysis. By centralizing the process, organizations can improve consistency and efficiency as they look at individual service lines and evaluate utilization, price, clinical efficacy and product safety. Value analysis teams can use this data to collaborate with operational and clinical leaders to make decisions that will reduce variation, yet still produce optimal patient outcomes.
Risk will be shared with supplier partners. It’s a simple fact that the healthcare industry works better when all stakeholders collaborate to produce better outcomes. As health systems become responsible for taking on more capitated risk for managing populations, it’s important for healthcare providers to engage suppliers with opportunities to align performance-based contracts and share both the upside and downside of risk. Performance-based contracts allow health systems to move from contracting for the lowest price to working with manufacturers that can deliver the best patient outcomes. As the industry moves in this direction, supply chain teams play a pivotal role in identifying strategic partners that will analyze data sets across patient populations to find opportunities to improve care.
Despite its many hardships, COVID-19 has presented the healthcare industry with an opportunity to reset and build a better and more financially sound future. Modernizing the supply chain is a critical step in the industry’s ongoing transformation. Organizations that optimize their supply chains will realize greater revenue growth through improved reimbursement, better costs savings and improved risk mitigation, all while improving the patient experience and outcomes.
Steve Jackson is general manager of exchange services with GHX.