Making the Supply Chain Your Competitive Advantage

35 years ago, healthcare supply chain was considered a functional department of box-movers. In recent years, the pendulum has swung as manufacturers, distributors, and providers are working together toward a better healthcare value chain – making supply chain a strategic factor in hospital success.

Perhaps the strongest driving factor in the supply chain evolution is the rise of bundled payments and the value-based care model. “Risk sharing, value-based reimbursement, exchanges, and consumers with new insurance are driving hospitals to be conservative with cash, to go after every opportunity to free capital, and to look at cash philosophy in a way they’ve never looked at it before. It’s a game-changing time now,” said Ruby Raley, Associate Vice President of Product Strategy at Edifecs.

The good news is that supply chain is the second largest budget category in healthcare organizations, and with Navigant estimating that hospitals overspend $10 million a year in the supply chain, there is a tremendous opportunity for cost savings.

The Strategic Sourcing Triangle

One way to approach this is through the lense of the Strategic Sourcing Strategy Triangle adapted from Pearlson and Saunders’ Information System Strategy Triangle. The goal is to create a clinically integrated supply chain. It begins with your business strategy; aligning your healthcare system with your medical staff. The people strategy brings clinicians into the supply chain and finally the information strategy is about accessing the right information using technology to speed up your processes, and effectively share data with your leadership and surgeons.

Business Strategy

A successful supply chain business strategy will take into consideration the roles of executive leaders, physicians, clinicians, finance and  clinical outcomes to deliver high quality, cost-conscious products and services that improve patient outcomes within an organization. This is about how the hospital aligns with physicians so everyone is in agreement about the organizational goals.  

“Alignment with physicians is critical for taking costs out of care.” – Steve Suhrheinrich, Co- Founder of Curvo

People Strategy

Dr. Gene Schneller, ASU professor of supply chain management says, “Physicians should learn the language and drivers of supply chain.” It’s just as important for the physicians to understand how supply chain works as well as anybody else.”  It’s about having clinicians who can talk to the supply chain from a surgeon’s perspective and speak to surgeons from the supply chain perspective, creating buy-in on both ends. People who can do this are known as the translators.  

Information Strategy

“This is the glue that keeps the people strategy and business strategy together. Data and technology give your supply chain the bandwidth to do more work on more projects. The supply chain sourcing process is about gathering data, identifying problems, and tracking and monitoring projects.” – Ben Peyronnin, customer value analyst at Curvo.

With data at your fingertips, you’ll win leadership and physician buy-in and your organization will reap the benefits of a clinically integrated supply chain. For more information on the Strategic Sourcing Strategy Triangle, contact us today.

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