The Healthcare Hub

GHX provides a wide range of perspectives on how greater collaboration and visibility across the supply chain can improve both clinical and financial performance in healthcare.

Monday, April 18, 2011

GHX Supply Chain Summit – A Common Ground for Healthcare

The 2011 Healthcare Supply Chain Summit kicked off today, highlighted by an executive roundtable discussion featuring suppliers and providers from North America and Europe. The discussion began with a focus on the challenges faced by hospital and health system supply chain leaders in the US, after which Chris Slater, head of supplies for Leeds Teaching Hospital in the UK, commented, “It’s amazing how the issues we face are really the same,” noting that providers in Europe and North America all need to cope with rising supply chain costs in an environment of little or no growth in revenue. There was also general agreement among the providers that their response to the economic challenges has to change. As Slater put it, we need to find ways to lower our internal costs and to use technology to help providers and suppliers alike. Another provider – from the US – put it a bit more bluntly: “We’ve got to control costs, but the days of beating up the suppler for lower pricing are gone.”

The focus on similarities vs. differences continued when the discussion turned to the lack of IT resources – whether funding, systems or skills – for the supply chain. Again, Slater noted the dearth of tools to help supply chain leaders develop the business case for more IT investment in supply chain, to which one of the suppliers noted, “We’ve got the same issue when we try to make the business case for focusing on reducing the cost to serve customers, as opposed to just focusing on the price paid for products.

While the topics discussed during the afternoon were not necessarily new, like the issue around price – some of the perspectives and recommended approaches were.

For example, all generally agreed that physicians and other clinicians will and should play an important role in determining the products used in patient care. But as one participant noted, suppliers and providers have each been competing over who has the most influence over physician choice, which has put the two groups at odds. Natalia Wilson, MD, added, it can also end up alienating physicians, which is the exact opposite of what the groups are trying to accomplish. The suggestion was made to look at changing the focus to building a three-way partnership between providers, physicians and suppliers, all toward the goal of finding the most clinically and cost effective way to deliver patient care.

Here’s a sampling of some of the other topics discussed

  • Under healthcare reform suppliers will need to focus more on their margins than top line growth, a challenge for publicly traded suppliers who live in a world where Wall Street still focuses primarily on top line growth. Mooraj says there is reason to be optimistic, noting that financial analysts he speaks with are looking at changing their market valuation models.  
  • The leadership skills required for the next generation of healthcare are changing, with a need for more focus on change management, process improvement, and operational excellence. 
  • There needs to be a greater focus on data visibility and sharing, to enable suppliers to better plan for customer demand. Mooraj noted that just a few years ago, no one was interested in talking about demand planning in healthcare. Today, he sees increasing interest among both providers and suppliers who recognize that excess inventory is a huge cost for all involved.

Following the Summit, GHX will prepare a report on the discussion, outlining the topics discussed in more detail, in hopes of creating a roadmap for creation of new models for healthcare.

Stay tuned for more on this and on the GHX Summit. You can also follow the Summit on Twitter at #GHXSummit. Tomorrow the highlight will be former Senate Majority Leaders Bill Frist and Tom Daschle discussing their efforts to create a bipartisan approach to healthcare reform.
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Karen Conway

Vice President, Healthcare Value