Care delivery data key to lowering supply chain costs

Hospital supply chain costs are rising faster than labor expenses, and are projected to surpass them by 2022, said Karen Conway, executive director of industry relations at GHX, which works with providers on supply chain management. Yet, many systems lack information on what it actually costs them to deliver care, including how much money is being lost to waste. “Supply chain sits at the intersection of cost, quality and outcomes,” she said. “To do supply chain, you have to have data.”

Supply chain costs represent up to 45% of operating costs for providers, second only to labor, noted Conway, who spoke at a session Monday at the Healthcare Financial Management Association's Annual National Institute in Las Vegas.

Some systems are conducting their own comparative effectiveness studies to better understand their costs and negotiate better prices with manufacturers.

Dignity Health is one of four health systems that are members of a joint venture known as SharedClarity, which focuses on compiling that data. The fifth member is insurer UnitedHealthcare, which has provided its extensive claims data to use in analyzing treatment patterns and outcomes.

The venture's current focus is on controlling medical-device costs.

Dignity has been evaluating about 30 device categories. The San Francisco-based system created a clinical review team to assess the medical literature on these devices and also surveyed physicians about their experiences with the products. When the data is lacking or when its clinical experience doesn't match the peer-reviewed studies, Dignity will perform its own independent, customized studies on the devices.

Once it has the data, its contracting team develops a strategy and begins negotiating with payers. At this point, it is negotiating two sets of prices: one for use across its hospitals and a separate price for UnitedHealthcare members.

The savings for Dignity will be in the “significant double digits,” said Mark West, president of SharedClarity.

Dignity is a member of group purchasing organization Premier, but the GPO hasn't typically focused on physician preference items, said Richard Roth, Dignity's vice president of strategic innovation. “I think it works hand-in-hand with what they do for the other purchased services,” he said. “For the devices, you really need the clinical data and the longitudinal data.”

Earlier this year, SharedClarity awarded its first contracts for drug-eluting stents to Abbott Laboratories and Medtronic. Member McLaren Health Care Corp. estimated at the time that its 10 hospitals will save 40% on stents this year as a result of the contracts.

Medical-device manufacturers have been facing many of the same pressures as providers, including lower utilization and a shift to medical, rather than surgical, management of many conditions.

Follow Beth Kutscher on Twitter: @MHbkutscher

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