- Engaging clinical staff is key to adding value to healthcare supply chain management, according to three supply chain leaders at MaineHealth, a recent ECRI Institute Healthcare Supply Chain Achievement award recipient.
The healthcare network containing 11 hospitals, 350 physician practices, and various post-acute care facilities with over $500 million in annual supply chain spend prides itself on using a clinically-focused healthcare supply chain management strategy.
“One of the things that differentiates us from a lot of other supply chain teams is that our mission is to understand what clinicians need to practice medicine and understanding those needs so we can negotiate the best value that we can to support clinical activities,” Kelly McLaughlin, MaineHealth’s Director of Contract Management and Procurement, recently told RevCycleIntelligence.com.
“By engaging them upfront around that dialogue, we have a lot of success,” she added.
With a collaborative management strategy, the healthcare network saved about $18 million in 2015 and grew savings to $27 million by 2016, stated MaineHealth’s Vice President of Supply Chain Luis Soto.
Incorporating the clinician’s voice in healthcare supply chain management may be the missing puzzle piece for many hospitals and health systems. Only one-third of healthcare decision-makers reported that their hospital’s healthcare supply chain management strategy was very effective, a 2015 survey showed.
Another 85 percent stated that reducing healthcare supply chain waste and costs topped their healthcare organization’s priority lists.
But healthcare supply chain management optimization has not come easy for most hospitals and health systems. Reducing supply chain costs continues to rank high on hospital and health system priority lists in 2017, according to a recent Premier survey.
“Putting two people together who speak the same language and also have the same focus on the patient is important.”
To support MaineHealth’s journey to healthcare supply chain management efficiency, the health system placed five full-time nurses on a value analysis team.
“We also have a Director of Value Analysis who is a nurse as well,” McLaughlin said. “The nurses are really partners with the contracting and sourcing staff and with everything that we do.”
The nurses help to facilitate everything from supply and capital equipment procurement to supply organization and upgrades. As a result, MaineHealth’s healthcare supply chain management process became more value-based.
“We use our value analysis nurses to help coordinate evaluations of equipment,” she explained. “They help us develop evaluation tools so we can record objective data on the results of the evaluation. They help us with organizing training and implementation activities, identifying what training is needed as we transition supplies and equipment or upgrade technology, and scheduling those activities. They help us get supplies for clinical evaluations.”
The nursing-based value analysis team is also critical for helping practices across the healthcare network update their supply chain, MaineHealth’s Manager of Strategic Capital Sourcing Hillary Berry added.
“They also help us in developing the quotes, too,” she said. “Some of the smaller practices may not know some of the newest technologies. Our nursing staff are very up-to-date on all of that. If we have questions on something that they perhaps need to take a look at or should review, they assist with that.”
Much of MaineHealth’s success with healthcare supply chain management stemmed from incorporating users of clinical supplies and equipment in the procurement discussions.
But using procurement professionals rather than clinicians for medical supply purchases trended over the last five years, Bain & Company recently reported. Procurement staff selected supplies based on financial and pricing data rather than value analysis, which led to frequent clashes with clinicians.
“Our belief is that if a clinical conversation is needed about supplies or equipment and that conversation is best coordinated by another clinician,” McLaughlin maintained. “It could be something as simple as we have an item that is back-ordered and we need approval for a substitution. One of our nurses would speak to a nurse who is an end-user and talk through the options.”
“Putting two people together who speak the same language and also have the same focus on the patient is important,” she continued.
“It’s not just all about what you pay at the pump or the price of the commodity. But it’s taking into consideration any additional value.”
Incorporating the clinician’s voice allows the healthcare network to create a value-based healthcare supply chain based on patient and cost outcomes.
“We strongly emphasize the value equation, which is value equals quality plus service divided by cost. It’s not just all about what you pay at the pump or the price of the commodity,” said Soto. “But it’s taking into consideration any additional value coming from a particular capital equipment, warranty service, response time, and the long-term commitment and partnership of the vendor.”
In addition to clinical engagement, MaineHealth leaders also attributed the system’s healthcare supply chain management efficiency to increased stakeholder collaboration.
“We have a collaborative model in our supply chain in which we use clinical resources and analytics resources more than your traditional contracting resources,” McLaughlin stated. “We also use it more on the backside, the distribution and logistics part, in order to make a flow through to the stakeholders.”
The project-based nature of the healthcare network’s supply chain encourages leaders to work with staff and providers across departments to ensure each project succeeds.
“A project might be looking at a category of spend because we have a contract up for renewal or there might be a new need that we have identified, a new clinical practice that we need to negotiate supplies for, or an acquisition of capital equipment for our facilities,” she said. “Different folks on teams play different roles. That’s a key part of the way we work.”
MaineHealth also places an Outside Supply Chain Resource staff at each affiliated hospital to bolster stakeholder collaboration.
“They report up through supply chain management,” Soto explained. “That’s important to know, too, because some integrated delivery networks do not have that level of reach within their hospitals. Even though we’re not a corporation, we work collaboratively with our member hospitals. They all individually have their own board and C-suite folks. We have the folks embedded in those facilities for support.”
The MaineHealth leaders also agreed that a key healthcare supply chain management optimization driver was the integration of supply chain data in their EHR system.
“You need to look at standardization across your health system and the implications of getting information appropriately into the medical record have made us up our game.”
“Across the country, as hospitals have moved to EHRs, it’s become complex in terms of developing capital quotes and tying in all these software-driven systems and equipment, so we integrate with the EHR,” Soto explained.
“One of the things that highlighted our recognition for this award was the tremendous growth of our capital,” McLaughlin added. “You don’t just buy pieces of equipment in a vacuum anymore. You need to look at standardization across your health system and the implications of getting information appropriately into the medical record have made us up our game.”
Healthcare supply chain standardization is key to reducing overall costs. Provider preference items account for up to 61 percent of healthcare supply chain spending.
However, health systems and hospitals may encounter obstacles with standardization without integrating their supply chain and EHR systems. EHRs usually contain an item master that communicates supply chain information to providers and other users.
But without proper integration, item master data can be inaccurate and outdated and providers may fail to properly document supply chain information, a recent GHX report explained.
Healthcare organizations seeking healthcare supply chain management improvement should not overlook the value of health IT, the MaineHealth leaders noted.
“Other healthcare systems should always focus on is technology because that’s the forefront of what we do. Improving the process flow, looking at logistics to improve that,” Soto advised.
McLaughlin also recommended that health systems use their staff wisely to fill healthcare supply chain management gaps.
“Just supporting where we have wind and being flexible with where you focus your resources,” she said. “You’re not always able to add additional bodies. Sometimes you have to shift the bodies from one bucket to another.”
For example, Berry’s Strategic Capital Sourcing team started as a one-person show. But reassigning staff from other supply chain departments grew the team without adding too much to overall budget.
“Some of the growth in her team has come from positions in other parts of the business where I felt like we could consolidate and to move them to where the business was moving is really an important thing to do,” she stated.
Increasing flexibility with human capital and regularly considering the next step are crucial to optimizing healthcare supply chain management.
“We’re constantly talking about what do we need today, what do our customers need, where is the business going,” she concluded. “We try to support that. That flexibility and long-term planning about what you’re doing with your human capital resources is a really important part of being successful.”