The Healthcare Hub

Get ON my cloud: Why healthcare needs a more holistic view of cloud computing

kconway@ghx.com — Wed, 11 Jan 2012 21:18:00 GMT

I have been pleased to see a number of reports, news releases and blog posts recently about the value of cloud computing in healthcare. One of my favorite bloggers, Tom Finn, with Healthcare Matters, recently wrote about the value of cloud-enabled supply chain management, noting “it’s not a matter of ‘if,’ but rather ‘how’ healthcare providers are going to implement ‘cloud computing’.” Tom also referenced a recent KLAS news release that says 71 percent of providers are deploying or plan to deploy cloud technology. All good news, but I have a concern. In both pieces, and I would argue in most cases, the cloud is being viewed too narrowly in healthcare.

Finn talks about how it can help the supply chain, while KLAS focuses primarily on how clinicians would use it. But the real value of the cloud is its ability to create opportunities for collaboration and data sharing in an environment that is arguably faster to deploy, cheaper and more flexible than traditional on-premise hardware solutions. And as Gartner recently pointed out, an organization’s data is often better protected in the cloud than on-site, where the majority of data breaches occur due to an individual’s actions, not a problem with technology. Faster, cheaper, more flexible and secure are certainly attributes that should resonate with healthcare leaders trying to transform their organizations and the industry in record time—and on a dime. Still, the key point many are missing is how the cloud can help create critical linkages across organizations and functions, providing the kind of visibility to data needed to begin delivering real value in healthcare.

As hospitals begin looking at the application of cloud-based solutions to meet the necessities of true healthcare reform, my hope is that they do not do so in traditional silos. Hospitals should look at how to develop an architecture, along with associated processes and policies, that can meet multiple needs, whether they’re clinical, financial, operational or even regulatory. Part of the challenge in healthcare is that we have looked at these problems distinctly, and as a result, we often deploy independent solutions in a manner that does not create economics of scale or the ability to learn from one another, and one another’s data.

Take demand management as an example. Lack of demand signals, internally within a hospital or healthcare system and/or between providers and suppliers, has resulted in excess inventory levels that increase healthcare costs for all.

Data sharing between supply chain, clinical and financial systems will become even more important as we move to a system based on value, not volume. If we define value (which will drive how hospitals will be reimbursed going forward) as the sum of cost plus quality, then the ability to capture data on the supplies used, especially implantables that can account for more than 50 percent of the cost of a procedure, is critical. Unfortunately, as hospitals scramble to meet stage-one criteria for meaningful use of EHRs, little attention has been paid to the inevitable future requirement that hospitals capture data on medical devices used in patient care.

Accurately capturing this data at the point of use is key to solving a number of pain points in healthcare, including ensuring accurate charge capture, managing inventory, demand forecasting, recall management and comparative effectiveness research. Who knows, this could just be the lever that finally raises the supply chain to the stature it deserves in healthcare.

More ...

Does Wall Street Need Its Vision Checked?

kconway@ghx.com — Thu, 01 Dec 2011 17:14:00 GMT

I was talking to a colleague the other day about how the economic challenges faced by both healthcare delivery systems and their vendors may actually create the impetus we need to better align goals across the supply chain. Misaligned incentives have been a major factor in the historic lack of trust between providers and suppliers, which has hampered their ability to lower the cost of doing business together and, in turn, the cost of healthcare. Unfortunately, Wall Street’s almost myopic focus on top-line growth could impede efforts by many healthcare suppliers to make the kinds of changes I believe are needed to position them for success in an era of healthcare reform.

While the Supreme Court Considers, the Supply Chain Rules

kconway@ghx.com — Thu, 17 Nov 2011 17:47:00 GMT

The US Supreme Court’s decision to review the constitutionality of the healthcare reform law will certainly create some good fodder for political pundits, with the oral arguments occurring during the height of the presidential campaign season, but it does little to address the more pressing question: how to lower the escalating cost of healthcare, without negatively impacting patient care and without waiting on the courts or the political process. No matter where they stand on the law, the hospital and healthcare delivery system executives I talk to all agree, they cannot wait; they have to take action to cut costs NOW.

COLLABORATION: Is it just a nice idea, or can it really deliver?

kconway@ghx.com — Thu, 27 Oct 2011 01:09:00 GMT

Those who have visited The Healthcare Hub before know I spend a fair amount of time talking about collaboration. I’m not alone in my interest in the topic. It’s showing up on agendas of industry conferences and on the research agendas of major analyst firms. The problem is, while most folks say they want to collaborate more, whether with others in their own organizations, or with their trading partners, few really know how to develop a truly collaborative relationship, and more importantly measure the results. Did it really make a difference, for both parties, and is it sustainable and repeatable?

I just finished reading a white paper on supply chain collaboration in healthcare, which provides some real life examples of successful collaborations(with results) and some guidelines on how to identify and engage with potential partners.

One thing the paper underscored is the real value of collaboration: rather than shifting costs from one part of the healthcare industry to another (something we have been doing for years), true collaboration is designed to deliver value for all involved. And when it comes to lowering healthcare costs, it’s really the only option we have left.

You can download the paper here, for free. I’d love to hear what you think about some of the examples in the paper, or better yet, please share your experiences – good or bad- with trying to create more collaboration in healthcare. Can it really deliver the results healthcare needs, or is it just a nice idea?

More ...

What Washington can learn from Chicago about healthcare reform

kconway@ghx.com — Fri, 07 Oct 2011 19:52:00 GMT

Something very special happened in Chicago this past week. A group of healthcare manufacturers and hospital executives came together and gave me hope, for the first time in a while, that we may actually find the answers to our current healthcare crisis through collaboration. And I got to thinking, “What if our lawmakers in Washington, who cannot seem to agree on anything including healthcare, could have listened to this conversation?”

What made today’s meeting so special is that when these two groups talk, it is usually about a topic on which they naturally disagree: price. Suppliers want to sell high, hospitals want to buy low. Instead, today, they focused on what they have in common and how they can help each other achieve their respective goals. Instead of complaining about supplier profit margins, the hospital executives around the table said repeatedly: I want my suppliers to make money; I want them to stay in business. At the same time, they called on the suppliers to help them keep their doors open in an era where the only real certainty is that they will be faced with lower reimbursements. (And remember, many of those hospitals are not making ends meet at current reimbursement levels.) Specifically, the providers asked the manufacturers to join them in building a single industry solution to solve many of the challenges that both parties face related to the sale, purchase and use of what are commonly referred to as physician preference items or PPI. PPI include items such as replacement hips and knees, spinal implants and cardiac stents, some of the most expensive and highly advanced products used in patient care today.

The hospital-supplier gathering occurred during the last two hours of an all-day meeting of an advisory board made up of 12 of the nation’s most prominent healthcare systems (representing several hundred hospitals) who are working with GHX to create just such a solution. The manufacturers were there to discuss developing a similar advisory board. Together, the members of the two advisory boards will participate in joint working groups with their provider counterparts to help ensure that the industry solution GHX builds delivers value to both providers and suppliers.

For those who question whether this level of industry collaboration is possible and can actually yield tangible results, I would offer that this week’s meeting is very reminiscent of the meetings held just over a decade ago when GHX was little more than a vision. Today, in the US alone, more than 70 percent of hospitals are using the GHX exchange to purchase the majority of their medical-surgical products, and transaction volume through the exchange continues to grow, more than 20 percent in the past year alone. By automating what were once highly manual processes (which is how PPI are handled today), those providers and suppliers are well on their way to achieving their goal of taking more than $5 billion out of the cost of healthcare in just five years’ time. When people and organizations come together and focus on their mutual objectives, not their differences, real transformative change is possible. Washington, are you listening?

More ...

Supply Chain to the C-Suite: “Do you think I’m sexy?”

kconway@ghx.com — Tue, 30 Aug 2011 15:28:00 GMT

When it comes to elevating the role of the supply chain in hospitals, we may be our own worst enemy. That was one of the takeaways from the most recent national executive survey on supply chain management presented at the 2011 AHRMM Conference in Boston. Recently, I had a chance to sit down with Jamie Kowalski, who has been researching perspectives about the healthcare supply chain for AHRMM – The American Hospital Association’s membership organization for supply chain professionals - for nearly 30 years. This year’s study, conducted in partnership with Marquette University, compares and contrasts how hospital executives and supply chain leaders view the strategic value and performance of the supply chain in their organizations. Generally, both parties agreed, the supply chain can have a positive impact on clinical and organizational performance. While the average scores were not bad, 3.6 to 3.8 out of a possible 5, respectively, Kowalski expressed disappointment that the overall scores were not higher. More importantly, the scores from supply chain leaders were not substantially higher than the executives. As Kowalski stated, and I would agree, if those closest to the supply chain do not recognize the strategic role their function plays, how can we convince those leading today’s healthcare organizations to give it the attention it deserves?

What may be of greater concern is the unwillingness of C-level executives to support the supply chain beyond words. Despite saying they consider the supply chain important (3.7 to 3.85 on a scale of 1 to 5), their willingness to invest in the supply chain was significantly lower (below 3 for CEOs and COOs with no direct supply chain involvement, only slightly higher for those with some connection). As for supply chain priorities, the biggest difference of opinion between the C-suite and supply chain leaders was related to “supply chain organizational competence” and “enhancing supply chain IT,” with executives ranking it lower, supply chain leaders higher.

I am hopeful the rankings for investment in supply chain IT get a boost from studies such as the one Oracle Healthcare Insights published last year, stating that “hospitals that invest in back office automation, and process improvements enjoy operating cost ratios that are 2 to 4 percent better than those of their peers.” Specifically, the study called on providers to increase investments in tools to enable electronic order exchange with suppliers (including the use of order acknowledgements and advanced ship notices) and automate processes around procurement, invoicing and catalog price updates.

The executives’ relatively low prioritization of supply chain competence, meanwhile, is not only out of sync with how high they ranked the supply chain’s importance, but also with their satisfaction (or lack thereof) with supply chain performance, which the CEOs and COO – both with and without supply chain involvement, ranked below 3. As a good friend of mine, Vance Moore, who is now vice president of operations for Sisters of Mercy Health System in St. Louis, often asks – if the supply chain represents 30 to 50 percent of a hospital’s operating budget, why aren’t we investing a proportionate amount in professional development. He attributes some of that to the lack of focus on the supply chain by professional associations. The study actually explores that topic, asking respondents why, as an example, the American College of Healthcare Executives (ACHE) devotes so little attention to the supply chain. A common response: the supply chain just isn’t sexy enough. Here’s what C-suite and supply chain leaders had to say when responding to an open-ended question about impediments to supply chain being on the ACHE Congress Agenda:

• Cs do not believe SC is Strategic

• SC not as important or sexy as other topics

• Cs believe SC is just purchasing and the GPO

• Cs do not see SC impact on healthcare, margins

• Cs lack of knowledge of SC; don’t know what they don’t know

• Focus is on revenue/ reimbursement

• SC not properly positioned by SC leaders

In our conversation, Kowalski and I both noted that a number of leading healthcare delivery organizations are beginning to elevate the stature of the supply chain, but they are apparently still in the minority. One group of folks who do seem to “get” the value of the supply chain are nurses working in areas such as the OR, CATH Lab and ICU. A couple of years ago, Kowalski asked critical care nurses what they thought of the role of the supply chain in improving patient care and safety. The response- more than 8.5 on a scale of 1 to 10, with 10 the highest. If supply chain leaders need a champion – and I would argue many do – I would suggest looking at how to align forces with the nurses.

To learn more about the study, both of the primary authors - Kowalski and Mark Cotteleer, director of the Center for Supply Chain Management at Marquette University - welcome your comments and questions. Kowalski can be reached at: jckcllc@att.net.. Cotteleer’s email is: mark.cotteleer@marquette.edu.

And to keep abreast of research such as this and other matters related to the advancement of the healthcare supply chain, consider becoming a member of AHRMM and attending its annual conference. Learn more at www.ahrmm.org.

More ...

The Cost-Quality Equation: A Three-Part Solution

kconway@ghx.com — Sat, 20 Aug 2011 20:24:00 GMT

In recent months, I have heard both hospitals and suppliers agreeing on a topic that has traditionally put them at odds, that is, their attempt to influence physician preference for items such as cardiac stents and replacement joints. These items are among the most expensive products, are associated with the most profitable service lines, and potentially have the greatest impact on patient care. Rather than putting the physician in the middle, there is growing recognition among hospital and supplier executives that they need to work together WITH physicians if we are going to achieve a more patient-centric healthcare system.

Under healthcare reform, physicians, hospitals and suppliers will all need more insight into both the clinical efficacy and cost of products used in patient care. In a reformed healthcare world, the combination of cost and quality will determine reimbursement payments, which, in many cases, will be bundled to be shared by hospitals, physicians and other care providers.

This was a major topic of discussion at an executive roundtable held at the 2011 GHX Supply Chain Summit. As Dale Locklair, vice president, Procurement and Construction at McLeod Health, commented:

“I don't know how we get to the point of locking arms, but right now it's a fight between the hospital supply chain and physicians, the supply chain and suppliers. If we continue in that same fight, and we do what we have always done, we’ll get what we’ve always got.”

The hospital executives in attendance agreed that data will be the driving factor - data around cost and outcomes - but they also concurred that getting to the data, especially in a manner that relates cost to quality, is a challenge. Many hospitals simply lack the IT capabilities to get supply chain data into the clinical arena. Lisa Thakur, corporate vice president of operations for Scripps Health, noted that while physicians are asking for information on cost, that data is not readily available at the time they are ordering products. When she has been able to share information with physicians, without telling them what to do, she says “It’s been shocking how fast they’ve changed their ordering practices.”

Another challenge is understanding the total cost of ownership (TCO) of a product, as opposed to just the sales price. TCO includes often overlooked factors such freight, rush charges and inventory carrying costs. Under healthcare reform, the total cost will also be impacted by the role quality plays in determining reimbursement levels. Orthopedic surgeons will be particularly interested in this piece of the puzzle; they will be among the first to share bundled payments with hospitals and a replacement joint can account for 50 to 80 percent of the cost of some procedures.

Understanding the impact that products have on quality is expected to be the most challenging. Certainly, outcomes are highly influenced by the unique characteristics of the patient, as well as the capabilities and experience of the clinician(s) performing the procedure. But even in the absence of these critical variables, hospital executives say their quality folks – many of whom are epidemiologists – have trouble finding good, conclusive evidence as to the superiority of one product over another.

Natalia Wilson, MD, MPH added a physician’s perspective to the conversation. Dr. Wilson is co-director of the ASU Health Sector Supply Chain Research Consortium and spends much of her time studying topics such as comparative effectiveness research, clinical registries and physician engagement. With increased federal funding for comparative effectiveness research, Dr. Wilson believes there will be more data that clinicians and supply chain professionals can use to have informed and collaborative discussions about the products used in patient care. “Physicians, in general, have had strained relationships with hospitals surrounding cost-containment initiatives,” she said, blaming trust issues on a historic lack of transparency. Good credible information coupled with a positive collaborative attitude, she believes, is crucial to start forging better relationships.

Nancy LeMaster, vice president of supply chain for BJC HealthCare, has seen that approach work. She described a meeting she had recently with four spine surgeons. By providing the physicians with factual data on the cost of various products, two of the four surgeons decided, on their own, to shift their selections “in order to help keep the hospital whole.” She added, “I never thought I would have a meeting like that.”

Another hospital executive noted that sometimes working with physicians to find the best product, regardless of price, can be the most economical decision. His premise is, if his system can get the physicians to agree on which is the best product and standardize on that product, the system can increase its volume and qualify for a better price.

Another interesting discussion centered on the role of the suppliers’ sales representatives. When the sales rep is mentioned, these kinds of conversations often deteriorate into complaints about vendors bypassing supply chain and talk about how to control their access to clinicians. But that, too, is changing. Hospital executives participating in the roundtable repeatedly referenced the additional services sales reps often provide. As Jay Kirkpatrick, CEO for HealthTrust Purchasing Group’s MidAmerica Region, stated: “Many hospitals today have reps that routinely perform hospital FTE duties. These duties can include moving products throughout the hospital, room prep, and ensuring instrumentation is taken to central sterilization for cleaning. All of these activities should be performed by hospital staff. It’s real easy to say, ‘Okay, we want your reps out,’ but hospitals better do their homework to understand the implications.”

Hospital executives are starting to ask suppliers for tiered pricing related to service levels. As one participant stated, ”Rather than saying, ‘I’m going to beat you up over the price of a patella,’ I’d rather sit down and talk about the services vendor representatives bring to the hospital. I want to know what the price of the product will be without those services, and if I can get those services performed by someone else, either affiliated with the hospital or another vendor.” But this discussion, too, will need to involve the physician, many of whom rely heavily on manufacturers’ representatives in the operating room.

What the roundtable discussion clearly demonstrated was that there is considerable interest and rationale for changing the model, but that transformation will not come easily or quickly. And it’s more than a change management or trust issue. Those who take this topic seriously are uncovering both process and technology issues that must be addressed. What’s heartening is that they are starting to focus on barriers, not for the purposes of blaming or criticizing the “other” side, but rather to understand how their respective expertise can overcome those challenges, and how each member of the hospital-supplier-physician triumvirate can achieve its objectives, while ultimately serving the need of the most important player, the patient.

More ...

Orlikoff on Healthcare: It's Killing America

kconway@ghx.com — Wed, 10 Aug 2011 21:42:00 GMT

I had the chance to hear Jamie Orlikoff, one of the better consultant-type speakers, at the AHRMM Conference yesterday. It was actually the third time I have heard Mr. Orlikoff speak, but each time I gain some new insights. His message is not necessarily new (Healthcare expenditures are on an unsustainable upward trajectory), but he positions the problem in a manner that – while certainly dire – should provide some clues as to how we got into this mess and what we need to do about it.

The biggest takeaway: despite the best of intentions, our healthcare system is doing a disservice to its customers, the patients. Consider these statistics that Mr. Orlikoff shared with the audience:

30% of what we spend on healthcare adds no clinical value (Orlikoff thinks it is closer to 50%)
4.4 million hospital admissions – at a cost of nearly $31 billion – are preventable
19.6% of Medicare patients are readmitted to the hospital within 30 days; 28.2% within 60 days, and only 10% of those readmissions are planned.
1 out of 7 hospitalized Medicare patients is harmed.

To hear Orlikoff tell it, hospitals are the 4^th leading cause of death and are bankrupting America. Perhaps an exaggeration, but certainly not a good PR story.

So, what’s to be done? Orlikoff says it’s up to the various parties in the healthcare industry to come together to stop the bleeding, literally and financially.

Orlikoff noted that healthcare expenditures are growing two to six times faster than rate of economic expansion, currently accounting for nearly 18% of the GDP, compared to less than 5% for defense spending. He added that the Pentagon’s fastest growing expense is, you guessed it, healthcare. Same is true for American companies struggling to compete in a global marketplace.

With the debt ceiling debate still stinging, Orlikoff said we need to carefully consider what a recent McKinsey study said about our options. With our debt at record levels, the report says we have just three choices:

1) Default on the debt

2) Hyperinflate our way out of the debt.

3) Tighten our belts and slowly dig out.

Given that options 1 and 2 are probably not really options, Orlikoff says we will be forced to find ways to cut how much we spend on healthcare. After all, as he so eloquently stated: If something cannot last forever, sooner or later it will stop.

More ...

The Supply Chain Name Game

kconway@ghx.com — Mon, 08 Aug 2011 23:21:00 GMT

Supply Chain Revolution is the theme for the 2011 AHRMM conference, being held this week in Boston. For those who may not know, AHRMM – which is part of the American Hospital Association – stands for the Association for Healthcare Resource & Materials Management. What’s worthy of note is the transition from use of the term “materials management” to “supply chain.” Just yesterday, I met a woman who said her health system had recently changed the name of her department – and her title – from materials management to supply chain. While it might sound like just semantics, I think the change is more significant. It reflects a growing appreciation for the scope and the role of the healthcare supply chain.

Today, at AHRMM, I had the opportunity to present some of the highlights from a new white paper on "Applying Supply Chain Best Practices in Healthcare." As I told the audience, when this topic came up in the past, even just a few years ago, I would be soundly reminded that “healthcare is different.” Yes, I agree; our end product is, ideally, a healthier patient, not a widget. Still many of the supply chain technologies, processes and concepts that have delivered benefits in other industries can be successfully adapted to meet the needs of healthcare. More importantly, I would contend healthcare can actually benefit even more than other industries, precisely because we are in the business of healing. Beyond operating cost reduction, supply chain optimization increases visibility into key data, data that hospitals can use to understand the impact that supplies have on not only the cost but also the quality of healthcare. And if you consider that, under healthcare reform, hospitals and other providers will be reimbursed based on the value they provide – a function of cost and quality – the supply chain will play an increasingly strategic role in measuring and reporting value.

This concept of appreciating the uniqueness of healthcare, while still looking to other industries for best practices seems to be gaining more traction. Consider just a couple of things that stood out when I picked up my conference materials. The first was a flyer for a new book: “Applying the Principles of Supply Chain Management in the Healthcare Provider Sector” by long time AHRMM collaborator Jamie Kowalski. And one of the most popular conference sessions – judging by over 200 pre-registered attendees – is entitled “What is so Unique about the Healthcare Supply Chain?” Clearly, names and opinions are changing.

More ...

Waiting for UDI

kconway@ghx.com — Wed, 22 Jun 2011 18:36:00 GMT

Quick update. We learned this week that the proposed UDI rule from the FDA (requiring manufacturers to assign a unique device identifier or UDI to their products) will likely not be out until August or early fall. While you are waiting, here’s something to do. Click here to watch/listen to a webinar featuring Jay Crowley, the FDA’s point person for UDI, on what manufacturers can expect in the proposed rule and what they can be doing NOW to prepare. Next month, Natalia Wilson, MD, will present a follow up webinar on the clinical relevancy of UDI. Scheduled for Tuesday, July 19 at 11 am eastern time, the webinar will be of value to both providers and manufacturers. Supply chain leaders at hospitals and healthcare systems are encouraged to invite their clinical counterparts; manufacturers should invite those responsible for evidence-based medicine. Click here to learn more about the webinar (it’s free) or to register.

More ...