The Healthcare Hub

Using Supply Chain in New Ways to Help Reduce Costs in Healthcare

Friday, January 25, 2019

Supply chain remains the second largest expense for healthcare providers. A recent Navigant study showed U.S. hospitals could reduce annual supply expenses by roughly $23B in aggregate through improvements in supply chain operations, processes and product use – effective management of spend, inventory and operational processes are key to optimize spend management for any health system.

There have been significant improvements in automation, efficiency and standardization in the supply chain, but there is continued pressure to perform in the shift to value-based care. The importance of knowing the total cost of care and to be able to weigh that cost against clinical outcomes is critical. The key is in the integration of supply chain participants (materials management, clinicians, finance, etc.) and prioritizing for the increased strategic role of data — with three primary areas to address: clean data, standardized data and integration.

Product, or supply information data, finds its way into systems throughout the organization. Therefore, “bad data” at the origination has the potential to do damage at every point of contact. Inaccurate, incomplete or outdated information increases the risk for errors, can undermine confidence in decision making, and can inhibit the ability to accurately measure results. Maintaining accurate product data and keeping it in sync with internal systems is the first step to visibility, purchasing accuracy and revenue capture — keeping it in sync with third parties is another level of challenge.

Next, data standardization is key to communication across the industry and getting all of the various healthcare stakeholders to speak the same language. A virtual item master can serve as a single source of truth to drive consistency for clinical documentation, order processing, distribution and even GPO functions. Within standardization is consistent classification to support a true and accurate picture of expense by category and comparative analysis for contract opportunities.

Clean, standardized data that is further enriched with unique device identifiers (UDIs) or Global Trade Identification Numbers (GTINs) integrated into the systems that drive business is the end goal. This integration is where data begins to create value for order-to-cash, clinical documentation, or point-of-care supply scanning.  

Cloud-based technology platforms allow the various stakeholders to access and share data, automate business processes, and support the integrated supply chain. The turning point will be when we see clean, standardized data integrated throughout both the supply chain and clinical systems.

Read more in Supply Chain Brain from Chris Luoma, vice president, Market Management for GHX.