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.

Friday, October 7, 2011

What Washington can learn from Chicago about healthcare reform

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?

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Karen Conway

Vice President, Healthcare Value