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Healthcare Business Solutions
December 14th, 2017

From Dave’s Desk: Themes from 2017 and Thoughts on the Year Ahead

When I think back on the past year, and forward to the year ahead, it’s clear that the train has left the station when it comes to healthcare innovation. Our industry is charging full steam ahead with change and there will be many different stops along the way. It will be interesting to see what those stops will look like in 2018, and beyond. In my final blog post of 2017, I share my thoughts on the reframing of innovation in healthcare and the major themes that have emerged from my conversations with providers and suppliers alike.  

When I think about innovation from a Cook Medical perspective, we’ve spent the past 50+ years on product innovation, geared heavily toward patients, procedures and physicians. And while product innovation remains important and must continue, I would suggest that innovation is much broader and bigger than that.

Although providers and suppliers tend to focus on the products they are selling/buying, there are many other opportunities to innovate, including business process optimization. These new areas of innovation are fundamentally changing the way providers and suppliers interact. As business partners collaborate more broadly and deeply to help solve each other’s problems, there is a distinct shift from traditional transactional relationships to partnerships.

During my conversations with providers and suppliers during 2017, the topic of value-based medicine was on everyone’s minds and lips. The shift from fee for service to value-based care delivery is rapidly compelling the adoption of new and creative payment models. This is having a significant impact on all supply chain stakeholders – through to the patients.

At the 2017 MEDTECH Commercial Leaders Forum USA, Thomas S. Campanella, Director of HealthCare MBA & Professor of Health Economics at Baldwin Wallace University, described how the things for which we pay – and the things for which we don’t pay – have profoundly shaped the business of healthcare. From 1983 until 2000, healthcare payments were based on diagnosis-related groups (DRG). It was in essence “cost plus” reimbursement. Patients had full a la carte menus and could essentially access any type of care, from any physician and facility at any time.

But today, with 10k+ Baby Boomers turning aged 65 every day, that model doesn’t work anymore. Healthcare providers have had no choice but to control costs by restricting access and choice. Care networks are much narrower with patients having a limited menu of physicians and facilities from which to choose. Furthermore, care is moving outside of costly acute care hospitals and into less expensive outpatient settings – all the way out to the patients’ homes.

Cost containment is also driving healthcare organizations to adopt bundled payment models. Healthcare providers that have shifted to a single payment model where they are reimbursed for an episode of care are reevaluating how and where they treat patients. Many are establishing centers of excellence focused on specific specialties or conditions, as opposed to a traditional community hospital that offers a full range of services. In the future a patient needing a hip replacement might go to one location specializing in orthopedics, while a patient with a heart condition would go to a separate location focused on cardiology. This has the potential to fundamentally impact care delivery and will be an interesting trend to watch.

As the healthcare industry innovates it must not only consider its products, processes and physical locations, but also its people. I had the tremendous honor of serving as a panelist in a Women’s Leadership roundtable discussion at the Strategic Marketplace Initiative (SMI) Fall Forum on October, 24 2017.

Nancy J. LeMaster, former VP of Supply Chain Operations at BJC HealthCare, served as the moderator, and my fellow panelists were Tina Murphy, senior VP Global Product & Corporate Development for GHX; Jane Pleasants, VP of Supply Chain for Duke University and Health System; and Laura Kowalczyk, JD, MPH, senior associate VP for Supply Chain Services and Operations at the University of Alabama at Birmingham (UAB) Hospital. The event was well attended by both men and women who were keenly interested in exploring what we can do as an industry to help women succeed.

The panel led to a broader discussion on the need for greater racial and ethnic diversity in healthcare leadership. It became clear that many of the challenges that women face apply to other groups as well – those with different backgrounds, cultures and experiences. I have talked with African Americans, Indians and Asians who have voiced concerns and obstacles similar to those posed by women in healthcare. While their experiences are not exactly the same, some of the same solutions could help them be successful in an industry that desperately needs their help.

The reality today is that there is a significant portion of the population that is not well represented in our boardrooms. As we move forward into 2018 and beyond, we should all think about how our leadership teams will look in the future. If we can shift the paradigm it would be a major win not just for those individuals who advance into leadership positions, but also for our industry as a whole.

 How do you feel about innovation in healthcare? Share your thoughts with me on Twitter and LinkedIn.

Dave Reed is currently Vice President of Healthcare Solutions for Cook Medical. With over 35 years of life science industry expertise, Dave holds an MBA from California Miramar University and serves on the board of the Strategic Marketplace Initiative (SMI) is a past member of the Indiana University Kelly School of Business Supply Chain Academy Advisory Board and is a professional member of the Association of Healthcare Resource & Materials Management (AHRMM).