Technology helps providers lower supply chain costs

by | Sep 25, 2012

Doctors today get a lot more feedback than they used to. The public rates them on the Web. Payers scrutinize their charges and make controversial adjustments in reimbursement. And power software evaluates their performance through a vast array of analytical algorithms.

The good news for doctors is that they’re not the only targets of all this feedback. Now the very technologies and products they use are being analyzed as never before.

The result is lower costs and higher-quality outcomes that are driving providers to use the best and most cost-effective solutions.

Supply-chain executives are championing these efforts throughout healthcare.

One such executive is Joe Arruda, vice president of supply operations at Indiana University Health. “A lot of things that we’ve been doing at IU Health have been really around providing better visibility in how products are utilized,” Arruda says. “We work very closely with our surgeons to show them market share, product shifts, cost by procedure, [and cost] by physician, and it really enlightens them.”

On a regular basis, supply-chain analysts sit down with physicians to look at outcome data by product. If they can’t spot a better outcome on their preferred products, doctors support management during price renegotiation with vendors.

Now, those outcome metrics are being brought into a data warehouse for real-time access, Arruda says. “The challenge has been [that] a lot of times… when you’re trying to go from the old product to new product, many times behaviors will change, where doctors will decide not to support that product you said you were going to move to,” he says.

“Or there could be a new product that comes onto the market, therefore what you said you thought you were going to save may not be realized.”

With a new metric called price-per-unit, IU Health’s data warehouse can track each product by its UNSPSC code.

For the uninitiated, UNSPSC stands for United Nations Standard Products and Services Code, a taxonomy of products and services used in eCommerce. Supply chain technology is far bigger than healthcare, and doesn’t just have big implications for getting the highest-quality products at the lowest prices.

“Our team, [in] real-time will be able to track price per unit daily, and be able to see, are we realizing the savings that we’ve put forth?” Arruda says. “If the price of the unit starts going up, we’ll be able to click on it, and it can denote or identify what are the top products that are contributing to that movement,” he explains.

“Maybe there’s new technology coming in we didn’t know about. Then we can be more proactive on reaching out to the physicians and the facilities to say hey, wait a second here, we agreed upon this product and intervened, or if there’s a new technology that has better outcomes, we can be more proactive to reengage the physicians. If the price per unit’s going down, that’s justifying validation that we’re realizing what we said we’re going to do.”

On top of the upgraded Lawson-based requisitioning software powered by this data warehouse, IU Health built its own E-Requisition tool, an Amazon-like Web site that presents clinicians with pictures of the items they are ordering, whether or not the item is IU Health’s preferred item in that product category, or, if it is a non-preferred item, a link to the preferred item.”

For instance, if a provider searches for a glove, IU Health’s preferred product tool will sort to the top, displaying along with pictures, descriptions, custom long descriptions, and additional information on that item, says IU Health data warehouse director Ben Hougland.

Arruda notes that in the next few years, doctor-rating Web sites will get even more specific, not only about the quality of each physician’s care, but also about the selection of products they use. “Similar to Consumer Reports, how well the hospitals do in providing those services and controlling their costs will [determine] whether they get referrals or not, Arruda says.

“That’s where it’s going, which is a good thing, because overall, it’s going to challenge us as providers and to the community to be efficient, to reduce redundancy of services, as well as aligning our clinical pathways of how we provide care,” he says.

Support personnel are also being held accountable by the new real-time realities of the supply chain. Management will know exactly how long it takes supplies to travel from the loading dock to the hospital floor. All part of the efficiency healthcare must achieve in this challenging economic environment.

So if you get a chance to make it out to AHRMM, dig into the details of the new healthcare supply chain technology. Expect to see it everywhere in your organization, if it isn’t already there.


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