More than ever before, supply chain managers need to collaborate and elevate their influence.
The outcome of the 2012 presidential election ensured the forward motion of the Patient Protection and Affordable Care Act, creating unprecedented productivity imperatives for healthcare providers. From the onslaught of the newly insured to decreased reimbursements, the not-so-new normal for supply chain managers requires a spirit of collaboration.
What is the New Normal?
As we enter the seventh year after the great recession and financial crisis of 2008, the healthcare environment is on a path to doing more with less. Providers must do more procedures with less reimbursement, effectively treat greater severity in less time, see more patients with fewer staff, increase quality while reducing costs and maintain an increasing workload on a smaller budget. These are daunting tasks.
A 5-Item Improvement Checklist
Whether large or small, providers have a common work list, with tasks sharing the common thread of a patient focus and a need for collaboration. As the industry awaits the next wave of regulations and rulemaking from the Centers for Medicare and Medicaid Services, everyone is diligently working on improving:
1. Quality
2. Patient Safety
3. Patient Flow
4. Patient Satisfaction
5. Coding and Charge Capture
Improving the quality of care remains the top priority, and doing so requires a focus on safety and error avoidance. Many facilities are employing Lean Six Sigma and other workflow techniques to design more efficient patient care pathways that reduce delays and unneeded waiting.
An efficient care episode has the quadruple benefits of increasing quality, reducing likelihood of harm, bettering throughput and efficiency, and enhancing patient satisfaction. It’s important to build a strong IT infrastructure to empower a well-designed care pathway, and coding and charge capture must be dialed in to support the process.
Beyond Arbitrage: The Collaboration Imperative
The bulk of supply chain managers’ work is concerned with what can be fairly characterized as arbitrage: exploiting market inefficiency to acquire a commodity at a price advantage. This function will never cease, and HealthTrust members are experts at utilizing contracts, negotiating and achieving savings goals.
However, the providers’ work list in the new normal requires even more. Because it’s difficult to chart the progress and savings that result from large projects, it’s important to achieve some quick wins throughout the process. Supply chain managers can make these wins happen with tools and processes that rationalize incremental improvements and sustain improvement.
For example, value analysis can be focused on processes as well as devices, so that the results of process change can be more readily quantifiable. Similarly, benchmarking and spend analysis tied to clinical and operational processes can be expanded to include next-link labor and utilization factors.
By using best practice tools familiar to supply chain managers, the focus of process improvement—the patient and the quality of the care episode—can be more clearly rationalized. The tools and techniques used to achieve pricing-related value can be repurposed to achieve broader quality-related value.
For supply chain leaders to deliver value to an organization, they need to increase their collaborative effectiveness with colleagues on an integrated care team, which includes clinical and administrative department heads, physicians, other supply chain stakeholders and even suppliers.
What’s Next?
The pending changes confronting providers increase both the influence of supply chain leaders and the need for them to cultivate a more collaborative atmosphere. Among these changes:
1. As the Sustainable Growth Rate Physician Pay-Fix is reached and implemented, additional fee cuts will be implemented.
Congress must reduce the deficit and map the course of healthcare reform on a renewed footing. One of the biggest areas of reform not yet implemented is the now nearly $400 billion cost of the physician fee schedule adjustment. Adjusting physicians’ fees is unpopular and risky. Therefore, it’s likely that additional fee schedule offsets that affect devices, drugs and inpatient/outpatient fees will be proposed and implemented. Providers will need to be ready to digest additional fee reductions, some of which are yet to be proposed.
For supply chain leaders to deliver value, they need to increase their collaborative effectiveness with an organization’s integrated care team
2. Mergers and consolidations in the provider and supplier domains will continue.
Many facilities are severely challenged in the current environment. Some are failing to reduce costs and improve quality enough to avoid reimbursement cuts from value-based purchasing and episode-based payment schemes. Many of these facilities are likely to attempt mergers, increasing the likelihood that the landscape for providers will remain intensely competitive. Similarly, suppliers are seeking to gain scale by acquiring rivals to consolidate markets. A concentration of power or scale in any market increases risks for participants, as alternatives and substitutes dwindle.
3. The transition toward consumerism in healthcare will accelerate.
The acceleration of consumerism is perhaps the most influential change affecting healthcare in the near future. Engaged patients, empowered by mandated insurance coverage, will continue to reshape the provider landscape. They’ll focus activity on building brands and enhancing patient experiences.
The path forward might be clearer, but certainly no easier. More than ever before, supply chain managers need to collaborate and elevate their influence.
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