Smarter Supply Chain Management: Four Ways to Increase Clinical Integration

In healthcare, it’s critical to have the “right stuff” at the right time. But the daunting challenge for supply chain management today lies in not only acquiring the equipment and supplies needed for high-quality patient care—but also improving value, reducing cost and integrating clinician input.

The desire is certainly there. Research from an operating room (OR) supply chain survey showed that 97% of respondents believe supply chain management is an important part of achieving their organization’s goals; 64% had concerns about wasted or overused supplies; and 66% could remember an instance when a physician in their system lacked the supplies they needed to perform a procedure. The majority of clinicians (77%) said they would like to have a bigger role in supply chain decision-making, while two-thirds of the supply chain leaders surveyed said they could use better visibility into clinical operations.

Much in line with these statistics—and wanting to contribute to healthcare in a broader context—Jimmy Chung, MD, shifted his career as a physician to focus more on supply chain management. Now associate vice president of perioperative portfolio at Providence St. Joseph Health, Dr. Chung shared that, traditionally, there is “a huge gap between how physicians work with supplies and how supply chain actually works. As a physician, I think it's important for us to all understand what's driving the need for clinical integration. It’s the variation in practice, the high cost and the poor outcomes.”

According to a Navigant report, it’s estimated that hospitals waste more than $25.4 billion on the supply chain. With the right improvements, individual hospitals could save as much $11 million per year.

With all this in mind, here are four tips to help your organization improve its supply chain management through clinical integration.

1. Use Data for Evidence-Based Decisions

The missing link in clinical integration within supply chain has been data on patient outcomes and safety related to variations in practice and use of products. That kind of data is not always available—especially for new and emerging health technologies. But decisions to adopt new products or services demand good clinical evidence, especially in context of the Affordable Care Act and the larger mission within healthcare today.

“Ultimately, healthcare is driving toward the quadruple aim of balancing cost, quality, outcomes and finances. Achieving this means the business of healthcare needs to become a data-driven environment; only this will truly bend the cost curve,” said Bruce Johnson of GHX. “Quantifying this is hard, but we envision an environment where a patient can consult with a provider and know in real time, the best care pathways, including the right clinical supplies and implants to achieve the best outcomes,” Johnson concluded.

Well-versed in supply chain management, Bob Taylor, senior vice president of supply chain at RWJ Barnabas Health, sees a large opportunity to take supply chain utilization data and cook that back into an evidence-based, decision-making process—and even feed it back into research and development to improve products.

“If I'm using a product and the product has no differentiation from its competitive product, then perhaps it's a commodity and perhaps it should be priced like a commodity,” said Taylor. “Or the information may show us that there's an improved clinical outcome, whether that's a reduced length of stay, less time in the operating room, less anesthesia, less readmissions or less complications. That's where we want to contract and those are the things we want to purchase, even if we pay more.”

Data and physicians both play a key role in enhancing supply chain value. Chung gave the example that surgeons who operate on hernias have a personal preference for their choice of mesh, yet if the data shows no difference between the mesh made by five different companies, that product should be a commodity purchased from a sole source at a reduced cost.

“If 80% of the surgeons are using the item that's on contract and you've got maybe one or two other surgeons not using it, the physicians can take leadership and say, ‘You know what? The data doesn't support usage of this other vendor and it's just costing us a lot. So let's talk about that.’ Start a dialogue and educate staff using data to show how standardizing supplies or reducing the variation within those supplies, can lead to better outcomes.

Clinical data is the key enabler in supply chain management evolving in the new digital environment moving toward personalized health management. “You start with raw data, then you extract relevant data. Then you make it into something actionable and then it becomes information, and then you can tell a story with it,” shared Dr. Chung.

“That actionable data then becomes information, and you can go to your chief medical officer, your chief quality officer and your medical directors and say, ‘Hey, you know, our outcomes and post-op infections are getting better because our glucose management is better.’ And then you can tell that story to your CEO. They can say, ‘Hey, we have better patient care using our data. We've done a really good work.’ It's a great story to tell,” said Chung.

2. Look at Various Factors When Purchasing—Including Cost and Clinical Outcomes

By shifting the strategy behind supply chain management and integrating it into the clinical process, clinicians actively participate and use data to improve clinical and financial objectives.

“It's not just a focus on price, but it's a combination of the product’s cost, the patient clinical outcomes, and the financial outcomes, to make sure the reimbursement is favorable for those things that we're doing,” said Taylor. “The entire healthcare industry needs to make sure that we're not trying to each optimize our own silo, but we really look at this horizontally across the entire care platform to figure out how to do this in the best possible manner for the benefit of the patient.”

Anne Snowdon, BScN, MSc, PhD, FAAN, director, clinical research with HIMSS said healthcare organizations should ask themselves, “‘To what degree are we capturing the care we’re providing to patients, the products we’re using and mapping it to outcomes?’ In other words, what care is achieving the best outcomes for which groups of patients and under which conditions can the best be achieved?”

In terms of selecting and using the right products on the right patients, Snowdon notes that devices come onto the market to help patients achieve a better quality of life, whether a pacemaker or a medical mesh—but health systems need to track and trace what products were used for which patients, and identify if it helped or caused harm. By achieving a clinically integrated supply chain, health organizations can use their data to see what’s working best and under what conditions to “make sure that every patient gets the best outcome possible for their particular health challenge.”

Watch Snowdon talk with HIMSS TV on the Clinically Integrated Supply Outcomes Model and how it aims to improve quality and safety through the integration of supply chain and clinical data in healthcare organizations.

3. Encourage Collaboration with Stakeholders

With evidence-based decisions in supply chain management, Taylor sees the need to make sure that stakeholders across the hospital are involved in those decisions.

He shared that at his organization, they use committees, collaboratives and councils, set up horizontally across the enterprise, so all are represented. “Some are ad-hoc and some are permanent. As supply chain, we are represented on each team. We try to connect the needs of the clinicians back to what's available in the marketplace and make sure that we're contracting for those things that satisfy the clinical need. We're also making sure that the contracts are understood by the clinicians because it does go both ways.”

Taylor’s organization also formed what they call integrated leadership groups to allow physician groups to provide input on their preference items. Rather than trying to negotiate a contract and then take it to the physicians, they sit with physicians on a quarterly basis and ask in a structured setting, “What are we trying to accomplish? What's the problem we're trying to solve? Let's look at all of the potential solutions and figure out what solution meets both the patient and the physician and the organization’s needs in the best possible way and aggregate.”

Dr. Chung acknowledges there is a history of misunderstanding around clinical integration and supply chain, with clinicians oftentimes seeing it as merely transactional. He shared that as a practicing doctor, he did not know to talk to supply chain. “I never once in my practice called [supply chain] and said, ‘Hey, let's talk about getting this product.’ I just told the OR… then they talked to supply chain and supply chain tries to find the best price for it. Obviously, that's not the best financial model. You're going to end up buying things that maybe nobody else uses.”

But more and more, Dr. Chung sees overlap between supply chain and physicians. Today, his organization invites surgeons to request for proposal meetings to ask for input on devices. “Eventually we want to be in this kind of a scenario where clinicians and supply chain is basically one unit.”

4. Consider the Care Continuum

In the current healthcare environment, clinical integration into supply chain management has become more critical than ever. “We are now getting reimbursed for the continuum of care, not for what just takes place in the four walls of the hospital,” said Taylor. “We’re being reimbursed based on outcomes or in some cases, penalized, based on outcomes and readmissions, and those have to be very important parts of our decision-making process at this point. We see a lot of activity going from the inpatient to the outpatient, and from the outpatient to the home, and we want to make sure supply chain is included in the non-acute settings.”

Taylor sees the need to look at disease prevention and health promotion, engaging external relationships in the community, including government programs that can be a benefit to the patient on a post-acute setting. “We want to look at what are the existing and needed resources that are available and how do we partner with those? How do we partner with the clinical and social service folks who are in communities to make sure that we're offering holistic care for the patient?”

Dr. Chung agreed, “You want to look at the total cost of care, not just the price of the product or the cost of that particular hospitalization, but across the entire episode.”