Talk with anyone in the healthcare system and before long you’ll hear the same 2 words: reduce costs. With shifting market forces and competitive pressures, healthcare systems can no longer simply rely on contract and price management to tackle cost.
The difficult behind-the-scenes job of getting the right product, at the right time, in front of the right patients, at the right cost is historically a little unglamorous. But that’s changing quickly.
Healthcare providers are looking for every possible way to reduce costs and a key to these efforts is the drive to save money on supply chain costs.
It’s become more important than ever for organizations to look at spend in areas such as:
- Purchased services (laundry, IT, printing)
- Pharmacy
- Sustainability
- Environmental services
And with mergers and acquisitions, healthcare systems need to realize the value of consolidation and scale to leverage the advantages of the new facilities and drive standardization. How can supply chain leaders make sure supply chain rises to the top as one of the major priorities within a healthcare organization?
Here are 3 steps to take supply chain to the C-level:
1. Build relationships and align with physicians.
Supply chain leaders need to gain support from all areas of their healthcare system to truly impact spending. It’s critical to build relationships throughout the hospital, including nonclinical areas. Engaging physicians proactively and placing physicians in decision-making positions on analysis committees promotes buy-in from the medical staff.
For example, Henry Ford Health System in Detroit, Mich., broke down the barriers in physician preference by involving employed physicians, the medical group and private practice physicians in the decision-making about physician preference items. This opened up the dialogue for physicians to discuss practice and utilization of products that they hadn’t had the opportunity to discuss prior. And even if there is a disagreement, there’s a better understanding about why they disagree. It’s about finding a common ground to facilitate discussion.
2. Focus on clinical integration and enhanced value analysis.
The supply chain needs to be integrated with the entire care delivery process.
A high-performing supply chain delivers the right product, at the right time, at the right cost – resulting in improved outcomes and greater efficiency. Combined with a robust value analysis process, hospitals can better determine whether they are getting the right product at the right prices.
For example, McLaren Health Care in Flint, Mich., combined their resources into one centralized place in order to make informed decisions and uncover opportunities. In doing so, they’ve been able to speed the value analysis process into a 90-day cycle time and simplify/standardize the evaluation and selection of products and services purchased annually.
3. Automate and standardize the supply chain.
Automation in the supply chain is a must. Without automation, inefficiencies and overspending can be the norm. Procurement management systems can provide real-time information while enhancing supply chain accuracy and expediting the workflow process.
Looking at all data sources (both internal and external) can help to change the decision making about the products and services chosen in the healthcare system.
For example, Fairview Health Services in Minneapolis, Minn., created a business intelligence department in order to look at the healthcare intervention as a whole, instead of just the discussion around price. They moved away from looking at contracts bids and cost in isolation and focused on the entire impact of the product. As a result, they’ve been able to look at the total cost of care and the healthcare intervention as a whole.
Getting a reduction in purchase price of a product by $2.50 isn’t going to provide the required impact to the entire healthcare organization. Supply chain leaders should understand the big picture and be able to illustrate the impact to the entire healthcare system. To make an impact today and in the future, supply chain leaders must have support at the C-level.
It’s an exciting time for supply chain and innovative, creative leaders have the opportunity to impact their organizations like never before.
This post appeared initially on Action for Better Healthcare.