SupplyChain Strategies & Solutions
IN THIS ISSUE Best Practices in Healthcare Supply Chain ..........................................6 Item Master Can Be Deceitful: Using a Virtual Item Master and Artificial Intelligence to Obtain Accurate Data ..........................8 Processes—Streamlining Layers of Work......10 Marching Towards the Sunrise: Healthcare Industry Gets Ready for GTIN® ..............14 There Is a Kink in the Supply Chain Link Dealing with Surplus Surgical Inventory ......18
JULY | AUGUST | 2012
Fast Forward to the Future of the Healthcare Supply Chain Florence Doyle, Vice President, Supply Chain Management, Catholic Health East, Newtown Square, Pennsylvania ealthcare reform, enough said. The shape it will take is not crystal clear; what is crystal clear is that change will occur at an accelerated rate no matter what the Supreme Court decides. Healthcare is too expensive and our outcomes are just not good enough.
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The focus for the healthcare organization will likely move from volume to value. We have always been responsible for delivering quality outcomes and high levels of service at a reasonable cost, but our accountability will likely now be correlated to pay for performance. With the advent of healthcare reform, over the next decade hospitals will experience an estimated 8-10% downward pressure on Medicare same case reimbursement and a declining ability to shift costs to commercial payers.
2012 Election Schedule ........................19 Switch: How to Change Things When Change Is Hard ....................................20 A MILESTONE ........................................22 Every Healthcare Supply Chain Has a Champion. Every Champion Has a Story. What’s Yours?....25 AHRMM12 — Are You Ready? ......................27
This major change will create an unrelenting focus on supply cost management. Exceptional supply chain professionals will seize the opportunity and leverage change to the best advantage of their organizations. In regards to the way we manage our supply chain, it will be a game changer and the clock speed will be accelerated.
What are the game changers? Supply chain leaders must accelerate and expand efforts to further manage and reduce expenses. This is a continuous process and we will never reach an end point as long as there are medical breakthroughs, technology developments with medical devices and pharmaceuticals, and evolving economic markets. Supply chain professionals must advocate that their healthcare organizations embrace the concept of centralizing the sourcing, contracting, and procurement for all supplies, equipment, and services. We need to learn from the non-healthcare sector and recognize that we can no longer afford disparate supply chains within the same organization. For example, we see progressive supply chain professionals taking responsibility for purchased services, which have not traditionally been under their domain. Examples include: professional services, travel, print/marketing, corporate services, real estate, energy, transportation/fleet, IT, telecom, and HR/benefits. We need to identify and optimize every opportunity to reduce costs while maintaining or improving quality. Most organizations understand their supply, equipment, and service costs but they don’t fully understand total supply chain costs, which include operational expenses associated with order management, receiving, distribution, inventory management, and the information systems that support these operations. It is estimated that total supply chain costs can represent 40-45% of a provider’s operating expenses. Continued on Page 3 u
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AHRMM Contacts President
Beverly Slate, CMRP, FAHRMM Director, Supply Chain Operations Memorial Health Care System Chattanooga, TN Email: Beverly_Slate@memorial.org Chair-Elect
Annette Pummel, CMRP Chief Operating Officer ACS (American Contract Systems) Bloomington, MN Email: apummel@amconsys.com Managing Editor
Agnes Lipowicz AHRMM, Chicago, IL Phone: (312) 422-3841 Email: alipowicz@aha.org Supply chain leaders must embrace the clinically integrated supply chain. With a multi-disciplinary and holistic approach by both clinicians and non-clinicians, we can move effectively to focus on cost and quality that is driven by evidence-based medicine. Reform will likely trigger a change in the way functions and teams are structured and the processes they oversee. Some organizations are further along the continuum than others. In my opinion, we will see a transition toward organizing a multi-disciplinary team of clinicians and non-clinicians around population and disease-specific management. Supply chain will need to be an active member of this team. Through collaboration, the standardization and utilization of products will be addressed. There will be a holistic approach to resource consumption and outcomes – in essence, value-based purchasing. The future is all about the data and integrated information. Organizations must have systems robust enough to capture enormous amounts of data and quickly translate and integrate it into useful decision making information. Data must be real-time and actionable to make clinical and financial decisions. Some project a migration to integrated data warehouses.
The healthcare supply chain has “left the building “… and we must meet the challenges of this new model. Traditionally, we have focused on the hospital, but with healthcare reform driving accountability across the continuum of care, we need to consider both the acute and non-acute care supply chains. The approach must be quicker, better, cheaper. We will need to drive our information systems to provide more functionality for the non-acute care segment at a reasonable cost. The unready, or those that choose to believe it is business as usual, will be exceedingly challenged to survive in a very different environment. Providers want more control; “he who has the information has the power.” The landscape is changing as it relates to the relationship of the provider to group purchasing organizations and distributors. We are seeing providers migrate to various derivatives of self-contracting and self-distribution.
Supply Chain Strategies & Solutions is the bimonthly membership newsletter of AHRMM. AHRMM welcomes unsolicited manuscripts, which will be used on both a content and space-available basis. Preferred article length is a maximum of 1,000 words.
Send editorial manuscripts to: AHRMM Attn: Managing Editor 155 N. Wacker Drive, Suite 400 Chicago, IL 60606 Phone: (312) 422-3841 Fax: (312) 422-4573 Email: alipowicz@aha.org Website: www.ahrmm.org For complete AHRMM staff listing and contact information, please visit www.ahrmm.org. Opinions expressed in these articles are those of the authors and do not necessarily reflect the opinions of AHRMM or the American Hospital Association (AHA). Reprinting or copying is prohibited without written consent from the Personal Membership Division of the AHA. ISSN 07949-6672 © Copyrighted 2012. Association for Healthcare Resource & Materials Management. All rights reserved.
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Demand & Supply versus Supply & Demand. We will need to get tighter control of our supply chain to more effectively and efficiently meet clinical needs while managing the cost of inventory. This will also be driven by emergency preparedness that, as a result of pandemics, needs to be addressed on a global level. Benchmarking networks will become more prevalent. For example, healthcare systems on the same materials management information systems will be able to establish benchmarking networks both internally and externally to their systems.
æ Comparative Effectiveness æ Electronic Health Records and Meaningful Use æ Unique Device Identification (FDA)
There are opportunities to gain a competitive edge for the future through the changes that healthcare reform will bring. Healthcare reform brings a greater meaning to “the whole is greater than the sum of its parts.” Integration on many fronts will be one key to success.
There is always an element of the unknown in any shift and healthcare reform will be no different. Other elements already in motion that will likely impact the future include: æ Accountable Care Organizations æ Mergers, alliances, consolidations æ Physician integration with healthcare systems/hospitals
Charles Darwin said, “It is not the strongest who survive, or the fastest. It is the one who can change the quickest.” The savvy supply chain professional will be engaged and continuously reading the changing environment. Those who will be successful will not hesitate to “fail forward” and be the trail-blazers by carefully calculating risks, while also making the errors and creating the solutions that early adopters are known for.æ
æ Payers are forming new relationships with providers æ Venture capitalists are entering the provider space æ Generic implants are being considered – after all, we eat generic foods and take generic drugs
AHRMM LEADERSHIP INSTITUTE – Sponsored by Cardinal Health Setting the Path for Future Leaders of the Healthcare Supply Chain
October 1–3, 2012 What You Can Expect æ Identify, develop, and appreciate the strengths and impact of your own personal leadership style. æ Learn directly from supply chain industry leaders utilizing “real-world” situations. æ Network and receive guidance from established healthcare supply chain leaders. æ Build your own network of supply chain leaders from across the country. æ Become a stronger, more well-rounded leader for the supply chain industry.
• Chicago, Illinois Who Should Attend æ Healthcare supply chain professionals with experience managing people and who are looking for tools to take the next step in their career. æ Individuals who have demonstrated leadership qualities and want to build/strengthen their skills. æ Supply chain professionals who will be the supply chain executives and leaders of tomorrow.
Learn More: www.ahrmm.org/leadership 4
V.6 | N.4 | Supply Chain Strategies & Solutions