Driving Out Costs Through Healthcare Supply Chain Transformation

• Tina Vatanka Murphy, President & CEO

The only way to fix what's broken in healthcare is through transformative change. Those hospitals and healthcare systems that have successfully cut costs and are generating greater revenue are the ones that have looked at the big picture, broken away from old practices and fundamentally changed the way they are doing business.

The only way to fix what's broken in healthcare is through transformative change. Those hospitals and healthcare systems that have successfully cut costs and are generating greater revenue are the ones that have looked at the big picture, broken away from old practices and fundamentally changed the way they are doing business.

Because the supply chain crosses organizational boundaries, transformational change requires collaboration between trading partners. Progressive healthcare providers and the suppliers from which they purchase products are taking a hard look at how they engage with one another to identify those activities that generate inefficiency and waste for each other. Rather than more traditional approaches that have shifted costs from one party to the other, these more collaborative approaches take costs out of the system. To achieve this, these trading partners need visibility to accurate data.

As the largest connected network of hospitals, healthcare systems and suppliers in healthcare, GHX has the opportunity to support many of these initiatives. Through this work, we have identified seven steps to healthcare supply chain transformation.

1. It All Begins at the Top
   Significant improvements in business processes, technologies and data cannot take place in a silo, supply chain leaders need the C-suite to serve as champions for holistic change and build support for it among others within the organization.
2. Start with a Goal and a Vision
   Healthcare organizations that have successfully cut costs and improved efficiency through their supply chains all began with a vision that was aligned with organizational objectives. Supply chain leaders need to be bold and demonstrate to the C-suite how they can have a positive impact on their organizations' bottom lines.
3. Break out of the Silos
   Traditionally, the various departments within healthcare organizations have functioned in separate silos, as they do in many other indus­tries. Breaking down the silos by putting people with different backgrounds and perspec­tives together and enabling them to understand each other's issues is a critical component of supply chain transformation.
4. Leverage Technology as an Enabler
   Through its work with hospitals and the suppliers from which they purchase the majority of their supplies, GHX has found that the following technologies are necessary for successful supply chain transformation: 
• Purchasing automation 
• Contract price alignment 
• Content management 
• Requisitioning workflow and price control/ contract compliance 
• Invoice and payment automation 
• Business intelligence and reporting across all levels of the organization
5. Do Business a Different Way
   Leading organizations look at things more pragmatically, focusing on the implications of supply chain transformation for the entire organization. Most importantly, they recognize that the benefits of technology can only be fully achieved by incorporating process changes into the transformation.
6. Align to Win
   Successful supply chain transformation requires strict alignment of resources throughout an organization to ensure proper execution. This includes alignment with IT, clinicians, administration and other key stakeholders to ensure new supply chain initiatives integrate seamlessly with existing technologies and processes.
7. Change Management Is Imperative
   A key component for the success of any supply chain transformation initiative is gaining buy-in from everyone involved. The most successful organizations invest in communicating the value, testing the solution, creating the right initial experience for users and sustaining the change. And that requires a robust change management and communication effort.

Read Vatanka Murphy's article, Driving Out Costs Through Healthcare Supply Chain Transformation, published in the December 2014, issue of Healthcare Global magazine.
http://issuu.com/healthcareglobal/docs/healthcare_global_-_december_2014/8?e=12458068/10213102

Tina Vatanka Murphy

President & CEO