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Value-based Supply Chain Management Techniques for Healthcare

Today, healthcare sector is not merely amongst the fastest growing ones in the industry, but also facing rapid and enormous transformations .This is because it is undergoing a paradigm shift from the conventional ‘fee-for service model’ to a more ‘value-based reimbursement realm’ . Thereby all Healthcare Consulting Firms(HCFs)  should guide Health Care Providers (HCPs) to  focus on Health Care Supply Chain(HCSC).

Supply Chain Consulting (SCC) essentially deals with optimizing the holistic flow of relationships between suppliers and customers for efficiently delivering low cost but high quality goods and supplies along the entire chain starting from point of purchase to point of use. With respect to healthcare, outcome–based efforts have to transcend to silos of quality and error-free patient-care by HCPs and incorporate the inputs of all HCFs.


Need for HCSC
With pace of innovation growing exponentially and presence of dramatic demographic shifts, all HCPs are challenged to make reforms to top quality standard patient care at minimal costs. This focus on value- based care calls for looking beyond ‘cost and inventory streamlining’ from   a short time perspective and   foreseeing what exactly   drives optimal results on Health Information Management (HIM) the long run. Thus it has direct implications across all entities of HCSC.

Challenges faced
 
  • The human elements of the HCSC links such as physicians, chemists, manufacturers and distributors are failing to communicate cohesively and productively.
  • Risk sharing, value-based reimbursement, exchanges   and consumers with new insurance are driving hospitals to implement stringent cash conservation measures.
  • HCPs have both capital and human financial tied up in all kinds of software initiatives and regulatory/governance mechanisms.
  • The rising cost of pharmaceuticals is eroding margins.
  • HCPs are facing the increased demands of consumerism and are managing significant volumes of cash cycle issues, write offs, write downs and payment plans than ever before.
  • Combination of multiple and complex  patient expectations of pricing accuracy, greater levels of transparency and communication, the dissemination of actionable data, and more revenue cycle accountability  is calling for a disciplinary  approach in HCSC.

Measures for making HCSC ‘Value Based’
Primary Measures
  • Empowering all stakeholders in HCSC including physicians - HCPs and HCFs can make enormous impact by empowering physicians in collaborative contracting decisions, and by moving away from conventional price norms and readily available contracts. Physicians certainly best comprehend what clinical technologies are required to provide quality patient outcomes. Therefore HCPs should engage in productive dialogue with them to leverage on this information and allow them to take ownership in product sourcing decisions for maximizing supply chain value.
  • Developing good rapport and interdependence with vendors and suppliers - HCPs should recognize their interdependence with vendors and suppliers and explore ways to help discover shared value by gaining preferred pricing on clinical items and medical equipment. Since their market share is determined multi-dimensionally, progressive suppliers are responding to this shift by sharing risk to prove their ability to drive lower cost and high-quality care. By establishing a true partnership approach, they should be supported with meaningful incentives designed around clinical and cost-effective utilization. Also, focus should be given on vendor integration with hospitals systems for providing better business intelligence capabilities and getting more accurate data for inventory optimization programs.
  • Linking contracts to outcomes for making targeted and sophisticated total cost assessments -Usually, hospitals focus on   patient’s immediate stay durations, and physicians follow their recovery. HCPs and insurers subsequently follow their long-term health trajectory. The key to unlocking outcomes-based contracting is linking these silos of knowledge by tracking not merely tangible procedural costs (like operating room time/personnel costs), but also episode-of-care cost and lifetime costs.  This information accurately captures the impact of all supply chain decisions ranging from likelihood of readmission to revision.
  • Focus on processes – This can be done by bringing automation to HCSC and eliminating manual processes for generating useful data that may be analysed later for improved purchasing and forecasting decisions. Continued investment in automation and data analytics in HIM and a consistent drive towards greater data transparency and reliance on more streamlined standards also helps to mend broken supply chain links.

Other Measures
  • HCPs must reframe their supply chain management policies and priorities to ensure that they can leverage new technologies to cut extraneous costs with minimized wastage and recycled resources where permissible. 
  • HCPs should establish joint revenue cycles and supply chain approaches for increasing claims management and reimbursement accuracy and make data capture seamless for improving financial efficiencies across the complete supply chain.
  • HCPs must also work diligently to develop core competencies for making accurate estimations about inventory and prevent expenditures that occur with little or no justification.

Conclusion:

In order to succeed in this new era of evolving healthcare reforms, HCPs should evaluate their supply chain management techniques to make it value-based and consider acquisition of data analytics tools. This   prepares them for a future, where every clinical resource/equipment and thereby the cost incurred, may be tracked, managed and used effectively.

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