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UPMC and IBM to advance health care supply chain management

by Christina Hwang, Contributing Reporter | July 13, 2016
Business Affairs Health IT
UPMC's Pensiamo and IBM's Watson
to drive better decision processes
The University of Pittsburgh Medical Center (UPMC) and IBM recently announced a collaboration in which they hope to use IBM’s Watson Health to change the health care supply chain management landscape.

UPMC created the independent company, Pensiamo, to help hospitals improve their supply chain performance through a source-to-pay offering.

Pensiamo will apply UPMC’s health care supply chain experience and IBM will contribute with Watson and also utilize its procurement services expertise — such as travel, technology, construction, telecommunications, facilities, and labor — to improve efficiencies.
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“Using cognitive analytics tools, including Watson, will allow us to mine vast amounts of research, financial and clinical data to make smarter decisions on product selection, demand planning, and cost analysis, to name a few areas,” Jim Szilagy, CEO of Pensiamo and former chief supply chain officer of UPMC, told HCB News.

“The end result will be significant supply chain cost savings for hospitals and health systems that are under tremendous pressure to deliver affordable, high-quality care,” he said.

In a video that was published last year by IBM Watson, Watson is described as a cognitive computing system that allows people to create a “profoundly new type of value” in finding answers and insights that are stored in large amounts of data.



Szilagy poses a real life example of how Watson could be used and said that it could better help providers manage drug shortages by quickly identifying alternatives or determining how utilization could be reduced for what patient groups.

“This might allow us to get to alternative drugs faster, before those are in short supply. Currently, this kind of analysis involves a lot of manual labor and is much slower,” he said.

According to the announcement, supply chain costs are the second largest and fastest growing expense behind labor costs for health care providers, and the Institute of Medicine estimates that approximately one-third of health care spending is “waste.”

“This is a breakthrough the industry has been waiting for — unlocking new insights from the volumes of structured and unstructured data existing on medical products and treatments — and will drive better decisions across the purchasing process,” said Jesus Mantas, general manger of business consulting at IBM, in a statement.

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