by
Gus Iversen, Editor in Chief | June 01, 2022
From the June 2022 issue of HealthCare Business News magazine
HCB News: How are major IDNs currently responding to these shifts?
MD: Now more than ever, through transformational service delivery platforms, the C-suites are looking at supply chain to address multiple competing priorities, such as increasing service levels while containing costs; building resiliency and adaptability while increasing compliance and control; and focusing on growth while also ensuring sustainability and diversity across their supply chain footprint.
We’re an industry in transition. For example, ERP technologies are being migrated to the cloud, post-pandemic recovery is still impacting the service mix, consolidation of health systems is ongoing, margins are under constant pressure from inflation, and the healthcare service model is becoming more decentralized. Supply chain is now a strategic priority on most CEO and CFO’s go-forward plans, so there needs to be strategic thought about what healthcare transformation looks like in this evolving world.
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Fortunately, supply chain modernization is moving toward more adaptable, nimble, and responsive supply channels that improve customer experience while reducing the cost of care. Technology is proving to be a key enabler of the advancements needed to connect the ecosystem, promote collaboration, and deliver on emerging supply chain strategies to overcome these challenges.
HCB News: What are some of the key benchmarks that supply chain leaders should be mindful of during this response?
MD: There are operational and financial benchmarks that need to be top of mind for all decision-makers across the continuum of care.
Supply chain leaders need to drive better performance around contract utilization, which is ensuring supplies purchased are from active, valid contracts. They should also aim to increase compliance, which is ensuring that items purchased are from the correct source of supply at the right price.
Supply chain leaders must focus on increasing visibility into all the costs that go into patient care. It’s critical to consider the total cost at a procedural level and monitor how much of that cost is being recaptured through revenue; making sure there’s no leakage of cost. Ensuring minimal spend leakage simply means that all inputs into patient care are accurately documented, billed, and the health system is being appropriately reimbursed from the Payer.
Prodigo Solutions has analyzed more than $35 billion of supply chain spend to identify trends and performance gaps that erode the health systems’ pursuit of savings. As an industry, less than 40% of negotiated savings are realized over the life of the contract. The inability to operationalize thousands of available contracts and the complexity of terms and conditions tied to price incentives embedded in those contracts are key culprits to the erosion.
