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.

Thursday, June 28, 2012

The US Supreme Court Answers the Wrong Question

The US Supreme answered the question about the constitutionality of the Affordable Care Act (ACA) today, but despite all the hoopla, the ruling did little if nothing to address the more pressing question: How to lower the cost of healthcare, without sacrificing quality. With the presidential election season in full swing, I do not expect the political wrangling over healthcare reform to go away. If anything, it will likely heat up, with opponents now focusing their attention on the November elections. In the meantime, while the political battles rage, those directly involved in healthcare are busy fighting the real war. 

Long before today’s decision, healthcare executives told me it really did not matter what the high court decided, they were already making major changes to move to a delivery system that focuses on value, not volume. The phrase I heard more than once: "The train has already left the station." Today’s ruling does give them some more assurance that they should keep moving forward on work they are doing to meet the specific requirements of healthcare reform, although there is only so much certainly with anything coming out of Washington. Even if the balance of power in Washington DC remains the same, the ACA is likely to be tweaked as we learn more about what works and what doesn’t among the myriad of demonstration projects spawned by the law.

I have been most impressed with the new operating models and partnerships coming out of the private sector, involving acute and non-acute care providers, physicians, commercial payers, suppliers, retailers and employers, among others. As they seek new and innovative ways to deliver quality care at a lower cost, many organizations are looking at how they can standardize data and processes, share information and avoid duplication of both effort and technology. No longer can healthcare afford to proliferate an environment where everyone does things a little differently or uses disparate technology that does not communicate with someone else’s systems (take the challenges many providers are experiencing with their respective electronic medical systems). In some cases, consolidation in the industry will drive this change. In other cases, organizations that are not, and never will be, part of the same entity are seeking to innovate through collaboration. Certainly it’s harder when organizations do not share the same leadership or profit and loss statement, but they recognize it is in their collective best interest.

A perfect example of this is the work being done by providers and suppliers to automate the implantable devices supply chain. Research that GHX has conducted over the past few years has quantified that the highly manual, disjointed and often duplicative processes around how implantable devices are ordered, delivered, documented and paid for cost providers and suppliers more than $5 billion a year. A group of provider and supplier organizations – including representatives from a wide variety of functions, including clinical, supply chain, IT, financial, sales, and contracting – are working with GHX to identify process improvements and technology solutions to lower these costs. At a recent implantable devices supply chain special interest group, participants identified the top three barriers to more automation in this area. The top three were all items that require multiple parties to help solve the problem:

  • Price/contracts complexity 
  • Lack of standards
  • Understanding each other’s processes

The majority of the participants also indicated that they would prefer to solve this problem as an industry, vs. coming up with solutions that are trading partner specific.

The good news is providers and suppliers that have not typically worked well together are starting to recognize the value of collaboration. This is an essential first step. The reality is, there is still a lot of work to do to solve this problem. My hope is that those responsible for shaping healthcare policy will take a lesson from these organizations. Working together to solve common problems, not differences of opinion, is the best, if not the only way, to go.

To learn more about the Implantable Devices Supply Chain Special Interest Group, contact Doug Winter at 

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Karen Conway

Vice President, Healthcare Value