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The future of the health care supply chain

by Sean Ruck, Contributing Editor | February 23, 2015
From the January/February 2015 issue of HealthCare Business News magazine

Bruce Johnson has been with supply chain organization GHX since 2000. Prior to that, he spent 12 years with GE Healthcare. He shared his thoughts on the obstacles the supply chain needs to overcome as well as what hospitals should keep in mind when trying to curb costs.

“When you talk about the challenges of the supply chain, I think it’s a continuation of some of the trends you’re seeing because of health care reform,” says Johnson. “When I meet with hospital executives, they’re looking at what they can do to dramatically improve their costs and quality.”

To cut costs hospitals are turning to information tied to clinical data. The goals: To better standardize care, to improve patient experience and outcomes — and to boost efficiency. But “dirty” data can make that tricky.

“There’s definitely a lot of data, but it’s not necessarily clean or normalized data. You’re trying to marry supply chain with clinical data. But there’s a step before that. You have to clean up and normalize it to have actionable data you can use,” he says. Johnson says the growing use of UDIs and requirements for their use being introduced by the FDA will help in that regard.

Tradition needs to move aside
Key to progress, he stresses, is overcoming any traditional lack of trust between providers and suppliers. Facilities able to build a healthy partnership between provider and supplier and increase transparency of interactions will be the most successful.

“Some of our customers are very adamant about the fact that health care is dealing with patient lives and you’ll never be able to directly compare the type of transparency in health care to that found in automotive or electronic industries, for example,” he stresses. “But a common theme among leaders — regardless of what your take is on that — everyone agrees that [the] status quo and going after just price cuts per unit won’t get things done. That’s where we’re seeing more progressive organizations looking at other cost drivers,” Johnson says.

“The cost-cutting and negotiating of the past, say, getting 10 cents off unit cost, isn’t going to get a hospital where it needs to go.” Instead, he says, they need to consider inefficiencies. “If we look at that, is it possible there could be a savings of $10 per unit with smarter planning?”

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