Supply chain decisions become more strategic as costs, outcomes are weighed

The hospital supply chain is becoming more strategic and taking a more prominent role in guiding decisions that weigh clinical outcomes against the costs of medical supplies, devices and prescription drugs. But it still has a long way to go.

That sentiment was front and center at last week's Association for Healthcare Resource and Materials Management conference in San Diego. AHRMM, which is part of the American Hospital Association, represents healthcare supply chain professionals.

“The healthcare landscape is changing even more rapidly than it did in the past,” Christopher O'Connor, president of GNYHA Services and AHRMM's chair-elect, said during the opening session.

As hospitals deal with reimbursement cuts and other financial pressures, there has been a greater need to reduce how much healthcare providers spend on medical supplies and other services and equipment that often are handled by supply chain departments.

In addition to efforts that seek to reduce prices, hospital supply chain executives increasingly are addressing product utilization and standardization, as well as whether less expensive supplies are, in fact, clinically better and contribute to a reduction in overall costs.

AHRMM recently launched a new initiative that aims to boost attention to the intersection of cost, quality and outcomes, which was a common thread for many of the conference's speakers.

During one session, Brian Bravo, director of corporate resources and materials management at Broward Health, a four-hospital system based in Fort Lauderdale, Fla., said “real” data can help sway physicians to support the purchase of new or different products.

“We need to be more outcomes-driven,” said Bravo, whose system last year spent $196 million on medical supplies.

While some hospital executives say that the relationship between supply chain leaders and physicians has improved, many of those relationships remain tense, especially as more physicians have become employed by hospitals and health systems.

During another session, executives at UPMC, an 11-hospital system based in Pittsburgh, talked about how the system analyzed data for some of its most expensive service lines.

The UPMC team looked at data showing varying costs of total hip and knee replacement procedures at its facilities. Because the costs of the implants were the same at each UPMC hospital, the data indicated that many of the physicians who conduct fewer procedures had the highest costs and their patients had longer hospital stays. The data also found that physicians used blood transfusions in different ways, which had a significant impact on the total cost of the procedure.

The data analysis highlighted some of the challenges that supply chain professionals face when comparing procedure costs to Medicare provider charge data compiled and released earlier this year by the CMS, said David Hargraves, vice president of clinical supply chain for UPMC.

“There's no easy ability to tie charge (data) to actual cost,” he said.

Follow Jaimy Lee on Twitter: @MHjlee