The healthcare marketplace is changing faster than we can say the word CHANGE due to pressures and new government regulations. For instance, just last week the Center for Medicare and Medicaid announced that in 2017 it will compel hundreds of hospitals to accept experimental bundled payments for heart attacks, coronary artery bypass grafts, and treatment of hip or femoral fractures as a prelude to rolling out this reimbursement scheme to thousands of hospitals in the USA in the very near future. Wow, this is a game changer for our marketplace!
The Supply Chain of the Future Isn’t About Price
Three new reimbursement strategies (bundles payments, population health, and value-based purchasing) authorized by the Center for Medicare and Medicaid and The Affordable Care Act have changed the face of healthcare. No longer will healthcare organizations be reimbursed on a fee-for-service basis, but for a complete episode of care like the three modalities previously mentioned. This means that supply chain managers, too, will be accountable for their supplies, services, and technologies’ total supply cost of care. Remember this fact when planning for this eventuality; price is the smallest element of your supply expense, whereas utilization (total cost) is your highest category of expense for any commodity that you purchase.
Don’t Focus on the Past if you Want to Make a Great Leap Forward
For decades, supply chain managers have focused exclusively on price and standardization as their only tactics to reduce supply costs. With this said, we will always be searching for a better price and standardization opportunities. Yet, these are the cost management tools of the past, not the future. More importantly, these two cost-cutting tools won’t reduce your supply expense budget by 20% that is predicted as the survival benchmark of the future for all healthcare organizations.
The Healthcare Supply Chain of the Future
The supply chain of the future, driven by new risky reimbursement formulas, is going to look quite different than it does today. Price and standardization will be subservient to clinical supply utilization management initiatives, because anything that negatively affects your total cost of care will need to be eliminated, reduced, or reengineered as opposed to negotiated or commoditized.
Based on this stratagem, only through clinical supply utilization management can your supply chain make a great leap forward in reducing your healthcare organization’s supply expenses by 20%. To stick to only price and standardization tactics to contain your supply chain expenses in the future can and will be counterproductive in meeting your hospital, system, or IDN’s survival strategies.