Healthcare Cost Solutions, LLC

Medical supplies represent the second highest expense to your health care organization – typically between 20 to 25 percent of hospital operating expenses.

Clinically Driven Resource Planning:

• Delivers supplies, equipment and services delivered

  1. to the Right place
  2. at the Right time
  3. in the Right quantity
  4. at the Right cost (lowest available total cost to meet quality outcomes)
  5. in the Right quality
  6. producing the Right quality outcome

• Creates efficiencies
• Reduces total delivered costs
• Improves resource management

Ideally, the enterprise-wide supply chain would have all processes coordinated and supported by state of the art technology, driven by clinical outcomes and evidence based medicine.

A common perception is that physicians will oppose transforming the supply chain because they resist changing their practices and limiting their access to supplies. The fact is that a physician’s education is founded on science, and physicians therefore tend to respond favorably to a scientific, fact-based justification for proposed changes. Thus, if they can be shown empirical evidence that a supply chain redesign will produce streamlined processes, improve outcomes, and reduce expense, they will likely support the initiative.

To optimize supply chain performance, create a structure to address supply chain issues that is integrated into the organization’s overall agenda and has board-level sponsorship. Executive position that encompasses supply chain competencies, leadership skills, appropriate budgetary responsibilities, and accountability for supply chain performance. This executive should be charged with measuring and monitoring progress using quantitative performance metrics.

Supply chain integration should be driven:

• Strategically, based on organizational goals and market position
• Tactically by enabling technology and enforcement of common policies and procedures across the organization

The creation of intricate and innovative relationships among different stakeholders across the supply chain, including patients, providers, payers, and suppliers, is critical to the overall success of a clinically driven supply chain. Without collaboration with and clinical integration among major stakeholders, unecessary and avoidable product variability occur.

Product variability often results from too much differentiation among products, which tends to occur when decisions about which products to purchase are based solely on the recommendations of individuals who have significant technical knowledge of what the products are supposed to do. Although such knowledge is important, the unfortunate consequence may be an overemphasis on tiny distinctions among products. Systematic analysis of product options, in which product users play an important part assists in neutralizing this effect. The product assessment process becomes focused on narrowing the choice to those products that are the highest quality and that promote the best outcome. The object should not be to reduce choice, but to make the choice more rationale.

One of the logical outcomes of such a process may be the development of a supply formulary. To develop a supply formulary, all products and services need to be analyzed based on cost, utilization, and most importantly, the ability to support high quality patient care. The supply formulary must meet the needs of clinicians, patients, and other users. There has to be a strong commitment from physicians and others to succeed in establishment, maintenance and compliance with a supply formulary much like the pharmaceutical formulary used within the healthcare setting. The process of determining what goes on the supply formulary must be driven by end users and be based on functional and clinical preferences that are quantified and support evidence based medicine and care. A panel should be assembled with representation from these various end user groups to determine requirements, review product choices and finalize product preferences. The panel is often adapted from the value analysis team or product standardization committee membership to best suit a provider’s organizational size and structure. By creating an environment in which all stakeholders perspectives are considered, a hospital can ensure that products and services are clinically reviewed, build credibility within the system, encourage the sharing of information among caregivers, and secure full cooperation from clinical staff.

When addressing supply utilization, it is important to review data that can provide an understanding of the practice associated with each product. Implementing protocols and policies for the appropriate use of products will help to optimize utilization. When developing it is helpful to review regulatory agencies standards of care and the recommended best practices from professional organizations. When focusing on demand, the object is to identify the best product for accomplishing a given task or procedure again having clear guidelines in place for product selection will help steer the selection away from high cost products that do not ensure an outcome that is any better than could be achieved using a lower cost product.

Enhancing supply catalog maintenance and control

• Proper requisitioning and procurement
• Product management-formulary development and maintenance, compliance, clinical involvement, standardization, and demand-matching

Physician involvement is essential to transforming the supply chain – What’s the most benefit to me-- more capital or more nurses? You must demonstrate a willingness to establish the right product and contract, with their needs in mind and with consideration given to best outcome. You want to engage physicians early and throughout the process. Physicians and clinicians must be engaged in the intiative at the time product selections are being made not after the fact. Consider the variety of clinical specialists, including those likely to resist change. Remember to demonstrate good listening skills, as buried in the emotional component of many objections, is usually a fact based footnote from which to establish the first steps to researching and resolving the underlying issues which stand in the way. By providing physicians with accurate data and product and peer review information, you can break through barriers and establish an objective platform from which to work.