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Q&A with Michael Darling, VP Supply Chain, St. Luke’s Health System

by John W. Mitchell, Senior Correspondent | May 17, 2019
Business Affairs
From the May 2019 issue of HealthCare Business News magazine

We want our physicians and clinicians to understand what their cost basis is — even to the point that when they walk out of a surgery they know what the cost of surgery is. We're not there yet, but that's what we're striving for.

HCB News: How can a hospital determine what supply chain technology in which to invest?
MD: The supply chain technology journey is never done, and healthcare supply chain is still ten to 15 years behind when compared to Amazon or Alibaba or some of the others. As you’re looking at supply chain technology you also have to consider the rules and regulations, such as the Stark laws and vendor management, and looking at W9s and research FSA listings. It's very common in the healthcare supply chain that there are 10 or 15 other systems into which you have to integrate. At this time there isn't a single supply chain system that you can use.

There are three major technology considerations. One, we have to move to cloud-based systems so we can use more mobile technology for more real-time data. The second is to be very focused on working with a supply chain system provider to have full integration of the Materials Management Info System. The third, and most important consideration is reporting. You can get data from a lot of different places, but unless you can take that data and have meaningful outcomes and outputs from it, you're wasting your time on the front end.

HCB News: When you talk about making changes to supply chain protocols, which members of the hospital need a seat at the table?
MD: There are certain areas that we always go to get their input, such as finance, HTM, and biomedical engineering. All of our charge/revenue folks need to be involved because if we’re not going to get paid for it we have to consider that. Our legal department has to be involved too, to make sure our agreement templates are followed.

Then there’s the service line manager or the department leadership and physician champions in a given area. If you’re putting in something like a new MR then you need construction and facilities people involved to make sure you have the appropriate shielding in the room. In some cases, hospitality services need to be included. We don’t have these groups at every meeting, but these are some of the key areas to make sure our decisions are best for the entire system.

Sometimes bumps come up and you have to make changes, but if everyone knows how the decision was made it makes the process a whole lot easier.

HCB News: How will supply chain be different in five or ten years?
MD: At the end of the day, what drives supply chain — especially in the next five to ten years — is, “how do you use data to work with your clinicians and business partners to create best practices?” As we’re looking at equipment life cycle when do we need to replace? Or do we need to perform remote diagnostics to be able to set that up and automate that process?

Going forward, how do you measure use and outcomes? We’ll be moving away from needing as many staff members to manage that function. We’re going to be using more AI to drive true efficiency in these processes. It’s going to be exciting.

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John Masini

Single Vendor Contract

May 20, 2019 09:28

Very interesting and insightful read. As hospitals consolidate and health systems grow, I understand how administratively a decision may be made to create consistency with 1 vendor on products. Idea being - higher volume of orders with 1 vendor to leverage lower cost per unit...... But the issue this creates is that new technologies are blocked from evaluation. Health systems go into multi-year agreements with 1 vendor, but finding this agreement is reached without bringing competition into the mix. Not evaluating other's prices or clinical capabilities and not knowing if there is a better option out there. I've never understood why any department would want to eliminate competition altogether - in the end, competition is ALWAYS BEST FOR THE CUSTOMER.... And I do believe St. Luke's is exclusive with some capital equipment companies.

Not to challenge, but I've always been interested in understanding the other side's rationale. How do you know that what you order is best for patients and department if you only look at 1 option every time you buy?

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