UPMC is enlisting the help of IBM's Watson computing system to launch an independent company tasked with managing providers' supply-related spending.
The Pittsburgh-based academic medical center and renowned supply-chain leader will own the majority of the for-profit company named Pensiamo, which will manage a hospital's entire supply-chain operation, including sourcing, contracting, purchasing and payment for drugs and supplies. Pensiamo will offer supply-chain strategies based on insights derived from Watson's cognitive analytic abilities. Armonk, N.Y.-based IBM be a minority owner.
The new company is further evidence of providers' growing interest in scrutinizing their second biggest cost after labor. But Pensiamo, which means "we think" in Italian, is the first to apply technology to its decisions. Watson previously has driven clinical insights, but this its first foray into healthcare supply chain and the first time it connects clinical and operational insights.
The marriage brings together a provider known for its massive, innovative supply-chain operation and the computing abilities of IBM, which has managed over $7 billion of supply spending in several non-healthcare industries.
Watson will provide advanced analytics to inform and automate a number of processes, including purchasing. The system will grab from structured data like electronic medical records, published clinical research and even unstructured data such as physician notes. The goal is more efficient decision-making.
The system could also offer assistance in many other business processes, including logistics and helping with predictive planning for ordering and distribution of supplies across a health system. And Watson won't just alert employees to problems like a forthcoming product shortage – it could also hypothesize a solution to the problem, such as using or purchasing alternative products or moving product from other locations, said Dave Liederbach, a vice president within IBM Watson Health. In the case of a nationwide drug shortage, that process could take much longer in a manual, non-computerized fashion because supply-chain professionals would have to call clinicians and vendors to find alternatives.