I was intrigued by a few central themes that emerged during two recent industry events: the Association for Healthcare Resource & Materials Management (AHRMM) Conference & Exhibition and the Fall IDN Summit. These themes all pointed to the role of supply chain in accelerating the change necessary to effectively and efficiently provide good clinical outcomes that bend the cost curve.
More and more I hear healthcare organizations talking about their need to calculate total cost of ownership (TCO) with regards to their investments. While there are many different opinions on the definition of TCO, it really comes down to value. Did a product or service deliver value equal to the price paid for it, did it perform to the expected level, and did it produce the predicted outcomes?
I’ve been in this industry for 40 years. There was a period of time before regulation when things were like the Wild West: suppliers were introducing products to the market at high frequency and letting providers decide if they were high in value. Those days are gone. Today, suppliers must provide clinical evidence that demonstrates the value that their products deliver to healthcare organizations, clinicians, and patients. Leading health systems and hospitals are now using supplier data, in conjunction with their own data, to make more educated, data-driven purchasing decisions.
Healthcare provider organizations are also turning to their business partners for data and analytics in order to calculate TCO and help guide product selection. While the historic role of group purchasing organizations (GPOs) was one of contracting (and this remains a core competency) hospitals and health systems are now looking to their GPOs for analytics, advisory services, sourcing, and supply chain capabilities.
An example of this changing role is supplier scorecards. While they have been around for a long time, there is an increase in analytical data moving between healthcare business partners. GPOs provide metrics that providers, suppliers, and distributors can use to assess each other’s performance and determine if each party in a relationship is living up to its end of the bargain.
This trend toward greater supply chain data collection and analysis has been increasing as healthcare organizations attempt to drive more care out of high-cost acute care facilities and into more affordable alternate sites, such as ambulatory care centers, physicians’ offices, and all the way out to patients’ homes. From a supply chain perspective, hospitals and health systems must determine how to effectively and efficiently deliver therapies, drugs, and supplies to patients in these new care settings. There is a lot to be learned, understood, and measured to ensure we are providing optimal care at the lowest possible cost. Furthermore, patients as healthcare consumers are increasingly demanding these changes.
It is an exciting time to be in healthcare, and I believe care delivery will look very different 10 years from now than it does today. How we quantify value, how we think about cost, ownership, and outcomes, and the ability to treat the patient further and further away from the hospital requires all parties in the healthcare supply chain to work collaboratively together and engage in greater data sharing. It’s exciting to attend industry events like AHRMM17 and the IDN Summit and talk with people who are pushing the envelope and looking for partners to help them do that.
We can’t be afraid that healthcare is changing—we have to embrace it. By quantifying value in care delivery, and doing so through the patient’s lens, we get closer and closer to where we need to be as an industry—providing good care in a cost-effective manner to help people live healthy and active lives.
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).