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, August 8, 2011

The Supply Chain Name Game

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.

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Karen Conway

Vice President, Healthcare Value