Data Fueling the Future of the Healthcare Supply Chain

We all know the power of data driven insights in healthcare. When it comes to supply chain, data can shed light on so much more than product costs. Advanced supply chain teams are using data to improve patient outcomes, engage stakeholders and standardize care.

PD: Outcomes have always been a guiding metric for clinical departments whose goal is to improve quality of care, including metrics like a reduction in central-line or surgical site infections. Only recently has supply chain embraced and begun to incorporate improved patient outcomes as a metric which drives product evaluations and selection. Today's contemporary value analysis, or comparative effectiveness model, encourages collaboration and communications across departments –essentially evolving to a true clinically integrated supply chain. Incorporating strong clinical research with financial data helps to drive evidence-based

decisions and then operationalize those decisions. So

instead of price being the deciding factor, leaders examine

performance and outcomes related to a product to get a full

view of the total cost perspective. Simply stated, moving

from a price to a profitability model.

One example of this process is examining open vs. a minimally

invasive prostatectomy. While the cost to perform the

minimally invasive surgery is higher, evidence clearly indicates

this can reduce length-of-stay -- translating into lower costs

for the organization and benefiting patients overall.

Premier's approach to committed programs takes in

account outcomes and quality when making contracting

decisions. Members of these programs are a part of mature

sourcing organizations who understand the need to look

just beyond the product cost.

PD: Strong clinical champions are necessary to transform practices and/or product selection required to advance supply chain decision-making which relies on comparative effectiveness data. Based on best practices from Premier's members, it's wise to engage physicians and clinicians in the process from the start and begin the dialogue with a data-driven approach from clinical and financial perspective to support real conversations. Clinical leaders and physicians embrace change through close collaboration. Physicians,

clinicians and quality teams should be informed on what the business goals are, such as aiming to reduce falls, catheter-associated

infections, reducing overall length-of-stay or readmissions. As they understand quality imperatives and economics driving this decision-making, it increases the likelihood clinical leaders will embrace the process and instill practice and product changes downstream to reduce variation, standardize care and create savings.

PD: This can be frustrating from a leadership perspective because the end result is often overpayment for expensive devices – for no real discernable reason. As an example, hospitals continue to pay different prices for the same hip and knee devices. While clinicians, supply chain leaders, surgeons, and quality professionals have made some headway in validating the efficacy and overall effectiveness of these products and procedures, there is still a lot of opportunity to wring out savings within these procedures. A 2018 Premier analysis found significant variation in total costs for joint replacement procedures, ranging from $5,000 on the low end to a high of $30,000.

The culprit? The variation in price from one location to another across the country. Premier's analysis found more than $40 million could be saved if pricing gaps for the same hip and knee devices were closed. Comparing pricing data from 350 hospitals, Premier identified a potential savings of $23.7 million on knee implants and $19.1 million on hip implants if all hospitals achieved the same pricing as those in the top 25th percentile. These resources combined with facility strategies including alignment of surgeons, clinical,

supply chain and quality professionals are invaluable in assisting leaders shift the paradigm from price to cost. Working with hundreds of hospitals, Premier has created a transparent financial picture for products and devices in terms of true value which helps foster robust and meaningful dialogue that can transform care delivery and the sourcing process.

To learn more, download Premier's Value Analysis guide at premierinc.com/valueanalysis.