As the industry remains at a crossroads, many are looking to their supply chains to help drive change. And by turning their supply chains into a "strategic asset," organizations can have success controlling costs and increasing business efficiencies, according a recent whitepaper by healthcare management company GHX.
"Never before has the business case for transformation in the healthcare supply chain been so persuasive," read the report. "While the future is unclear, most agree that at least some things are certain. Healthcare costs must come down. Hospitals and other care providers will be reimbursed on value, not volume. And hospitals will need to survive on Medicare reimbursement levels."
Teran Andes, executive director and general manager of exchange services at GHX, breaks down six additional keys to seeing supply chain success.
1. Executive support. Andes explained that strong executive support is key, and it all begins with vision from the top. He said organizations he worked with in the past identified not only the need to change, but also the hard work that would come with that change. "[They asked] how they would need to move forward as an organization," he said. "[They knew] it would be hard, but the cost of not acting was way too high and would impact the people they served." In turn, he said, leadership was critical and set the tone for the entire organization. "To have leadership support that says 'Yes, we're going to drive change,' is critical because whenever you change - technology, processes, people - it's hard, and it's not something that, as humans, we want to do."
[See also: Supply Chain Management: Q&A with Steven Chyung.]
2. Alignment to organizational objectives. Creating a vision that is aligned with organizational objectives is the next step to driving change, said Andes. "And a big part of that is a measure for success. Success is not just an emotive state - it's an objective state," he said. "It's about asking 'How do we set forth those measures of success and say yes, we've saved money. Yes, we've reduced time and effort.'" Making success visible to members of the organization is also crucial to keep things moving. Andes referenced past partners, who used savings of $14 million a year as a measure of how they were doing. "We kept looking at that as a United Way [Goal] Thermometer of how we were doing and how we were making a difference in the organization," he said. "So it was very critical."
3. A holistic approach across departments. Andes looked to the relationship between those who manage finances and those who manage the supply chain to explain the importance of a holistic approach in an organization. "It's interesting," he said. "When you come from a financial end, you don't think about supply chain - you don't think about unintended consequences. So as someone in finance, you want to say 'Great, I need a requisition. I want to approve that requisition,' because you want control." It's logical and intuitive, Andes continued, to want to reduce spend. However, he warned against blanket purchase orders and said it's actually a loss of control. "We highlighted this and brought parties to the table and said 'What is the overall objective?'" he said. "And the overarching goal is to reduce costs." By creating processes that gave visibility across functions, Andes said, it's easier to stick to a common goal of reducing costs. "So for supply chain, it's fast replenishment on contract and on formulary," he said. "And for finance, it's how do you slow things down when not on contract and when it's truly discretionary."
4. The right technology. "You can craft the greatest manual processes in the world, but you need technology enablers to make them real," said Andes. With IT, he said, it's about supporting ideas and making them both easy and simple. He referenced a popular online retailer as a system to aspire to. "If you're a nurse or a buyer and it's really easy for you to submit a requisition and the system sees it's on formulary and on contract, then that's great," he said. "You're as delighted as going to Amazon and finding the right thing for you." On the finance end, the right IT can help to "not put in front of them those things that are on contract and on formulary and highlighting for them those things that do need their attention," he added. "That's great; it makes it easy and it drives adoption. IT, when implemented correctly, can powerful."
[See also: Supply chain costs in the crosshairs.]
5. Robust processes and training. Training, like change, is hard, said Andes, but it helps individuals better understand goals and objectives. "Training is critical because it helps them understand what the mission is," he said. "They may not know [your organization] has a budget deficit and [they need to] understand why their day-to-day actions make a difference in the larger picture." Training should be simple, he continued, and should illustrate easy-to-make changes that can happen on a daily basis. "Training and change takes time and repetition," he said. "The best organizations find ways of training, whether physician or online. They can also bring in partners to provide long term support and sustain the change."
6. Change management and communication. "It's easy for people to get caught up in the emotions and the passions of the moment, which can last for six, 12, 18 months, but what happens two years from now?" said Andes. "That's the hard part, in my opinion." To illustrate his point, Andes added winning the Super Bowl the first time around is difficult in and of itself. "But winning the second, the third, the fourth and constantly getting better - that's hard," he said. He looked back to his first point of executive leadership and maintaining a vision for the organization. "It's about sustaining and driving change," he said. "It's critical and it doesn't stop when the project ends. In my experience, once you implement the change, that's when it starts and the next set of years determine if you're successful."
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