How Physicians Can Improve Supply Chain Decision-Making

Physician leaders are being challenged, as never before, to help to bend the curve of escalating costs and to improve quality.  As they look for opportunities, a significant number have identified the health care supply chain as a candidate to achieve these objectives.  This becomes especially apparent as they are made aware of the fact that for hospitals, the supply chain is the second largest cost after labor and that failure in the supply chain also impedes the ability of the hospital to carry out patient care.

Physician leaders are also recognizing that medical devices, especially in areas such as cardiology, spine and orthopedics, represent enormous costs, but also savings opportunities to the hospital.  In many cases, the ability to achieve savings in this area is held up by clinician resistance to change.  The objective of standardizing products across a hospital system conflicts with many physicians’ desires for individual medical independence, otherwise known as ‘physician preference’.  Thus, managing supplies in a coordinated and efficient way for a hospital has become challenging both technically and interpersonally.  However, when these conflicts are resolved, effective supply chain management (SCM) becomes a powerful tool for the improvement of healthcare system performance.

These supply chain functional responsibilities are subservient to the activities that precede purchasing action – sorting through the myriad of competing products to assure that one is delivering the standard of care through product choice.  Thus, physician executives working directly with supply chain leadership to understand how supply chain management is organizing the product selection and product securing decision making process is critical. To this end, actions that physician leaders can pursue include:

  • Leading discussions in strategic decisions about product selection. One interesting area is the use of reprocessed items – an area where great savings can be achieved – but also an area in where there may be resistance due to clinician belief about the quality of reprocessed items.
  • Collaborating with supply chain leadership and physician product-line leaders to form standing value analysis and technology assessment teams to scrutinize the extent to which products are equivalent and thus candidates for standardization.
  • Supporting the development of data to assess product brand equivalency – with the goal of reducing the number of suppliers and achieving resultant improved negotiation opportunities.
  • Influencing physician colleagues to recognize opportunities for excellence through product standardization and improved supply chain management. This recognizes that physician SC engagement extends beyond “executive” roles to those who can take a leadership role in providing thoughtful considerations about the materials they use.
  • Advocating for the integration materials and medical information systems to support product safety and efficacy efforts. This is especially important in the physician preference area and supported by the recent presence of unique device identification for Class 3 products.

The failure of physicians to participate in supply chain decisions opens the organization to a variety of risks.  One risk is the organization becoming overly dependent on suppliers for information.  Pursuing a program focused on value-based purchasing avoids such risks, especially as it involves a wide range of physicians to communicate the organizations resolve for excellence in this area to the community of suppliers.

Posted by: Jim & Gene


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