Harnessing the value of clinical integration in CQO

Highlights from AHRMM’s recent summit & 2019 CQO Report with John Young, M.D., MBA, Chief Medical Officer, HealthTrust

Within the last decade, the role of the healthcare supply chain has shifted into high gear to become a driving force for change throughout the industry.

Because supply chain professionals touch all areas of healthcare, they are uniquely positioned to lead the way in the Cost, Quality & Outcomes (CQO) movement, which was initiated by the Association for Health Care Resource & Materials Management (AHRMM) in 2013.

Recognizing the opportunity for efficiency

How did supply chain become front and center? The Affordable Care Act (ACA) set things in motion. It shifted how hospitals and health systems are reimbursed for care and secured a coordinated care model where the patient is at the center. With these changes came an opportunity for supply chain professionals to take their expertise and expand on it to enhance quality, lower costs and improve outcomes.

John Young, M.D.

“Healthcare supply chains haven’t always been as sophisticated as they are now,” says John Young, M.D., MBA, Chief Medical Officer at HealthTrust. He says that in the past, they were more transactional in nature and less connected to the clinical decision-making process. But as hospitals have grown, and with the emergence of new technology (with subsequent escalating costs), hospitals began to focus on the opportunities within the supply chain. “With physician preference items driving a significant component of cost, streamlining and systematizing purchasing decisions became crucial to the overall financial health of the organization,” says Dr. Young.

Clinicians are problem solvers by nature and want to be involved in the strategic development of a plan. Getting their input and buy-in early in the process allows for a smoother transition.”
–John Young, M.D., MBA

Many procedure-based services are moving to the outpatient environment, and this will certainly lead to more cost pressures and the need to further drive standardization. This is where the aggregation efforts of GPOs can provide significant value. “Aggregating spend across multiple facilities within a health system, or across the large footprint of a GPO, can leverage buying power and create more cost-effective strategies,” explains Dr. Young. Product formularies in the areas of medical devices and pharmaceuticals will increasingly become more standardized and benefit the outpatient delivery sites. “Many outpatient or ambulatory sites have their own unique EMR systems that will need to be integrated into the system’s data warehouse structure to benchmark performance.”

Emphasizing collaboration

AHRMM’s recently published CQO Report and summit meeting both emphasized clinical integration as the key to surviving and thriving in today’s ever-changing healthcare environment. It defines clinical integration as using a collaborative approach to deliver patient care with the highest value, which translates to optimal CQO. The report highlights six healthcare organizations at various stages of supply chain maturity, and it reveals the challenges and successes they experienced on their journey to a clinically integrated supply chain.

“One of the biggest challenges is obtaining accurate information,” says Dr. Young. “This includes cost data and clinical outcomes, so that transparent conversations can happen with physicians and other key stakeholders about the best way to approach cost, quality and outcomes in a fiduciary way.” He notes that while many systems have fully integrated their supply chain functions with operations, financial and clinical input, there are others still struggling with formalizing this type of governance structure.

Supply chain professionals must work to embed themselves with the clinical teams they serve in order to better solve problems. “Supply chain plays a critical role in the overall financial health of an IDN,” says Dr. Young. Because of this, he says, “Cost and clinical data need to be combined to define a procedure profile that clinicians can both understand and act on.”

Once data is organized in an actionable way, teams can use existing service line structures or create multidisciplinary councils to focus on CQO to establish trust and drive change.

Case studies exemplify progress

One of the report’s case studies involved a facility that had been working to implement a new hygiene and barrier product in order to reduce the risk of hospital-associated infections (HAIs). (In the U.S., HAIs lead to tens of thousands of patient deaths and billions of dollars in costs annually.) One of the factors that made a positive difference in their process for implementing new products was getting early buy-in from the nurses who would be using the product.

“Involving clinicians early in the process is a critical step,” says Dr. Young. “First, they are the subject matter experts who use the products on a daily basis. Second, there are always unintended consequences with change that the end-user can help anticipate. And finally, all clinicians are problem solvers by nature and want to be involved in the strategic development of a plan. Getting their input and buy-in early in the process allows for a smoother transition through change, and importantly, sustaining that change.”

Another case study involved a NICU in a large U.S. children’s hospital that decided to change diaper brands to reduce cost—without properly evaluating the new product or involving end users (NICU nurses). The new diapers ended up causing skin irritations in some of the babies, which needed to be medically addressed, and also led to increased costs and longer lengths of stay, creating a negative impact for patients.

These outcomes could have been avoided if clinical staff had been more involved in the process. “Our approach here at HealthTrust is to run all proposed strategic plans related to contracting categories through one of our clinical advisory boards,” says Dr. Young. These clinical boards consist of member representation and provide important feedback on the product and approach. “The clinical boards won’t send something to the supply chain board for contract award unless it has been fully vetted and supported by clinicians who represent end-users at our member facilities.”

As two of the 2019 CQO Report’s case studies show, physician buy-in is paramount to achieving hospital- or system-wide value analysis. It’s important for physicians to see that improving cost doesn’t have to mean that quality of care or outcomes suffer. “Physicians understand tradeoffs,” says Dr. Young. By sharing economic realities with them, he says that physicians can help shape a strategy that maintains quality and drives unwanted variation and waste out of the system. “As new technology emerges, engaging physicians in the cost discussion as a component of CQO is just another factor that needs to be considered as part of the health of their service line and the system as a whole. This is mutually beneficial to them as well as the patients they care for every day.”

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