Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

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Reimbursement Strain Spurs Supply Chain Management Strategy

By Jacqueline DiChiara

- Controlling costs within the healthcare industry is an ongoing endeavor. As RevCycleIntelligence.com recently reported, leading healthcare experts advocate for the harmonious assimilation of revenue cycle management and supply chain management to maximize revenue stream, reinforce hospital sustainability, and enhance decision-based operations.

Supply chain management

Healthcare executives’ cost management concerns within the healthcare industry are on the decline, confirms the seventh annual UPS Pain in the (Supply) Chain survey. From a global perspective, 64 percent of healthcare supply chain leaders expressed distress about cost management in 2011. Three years later in 2014, only 44 percent of healthcare executives expressed such alarm.

Change to supply chain management within the healthcare industry is slow, confirms the study. It is feasible lower cost concerns relate to an industry-wide skepticism that cost restraint issues will be a long term hindrance. “The pressure to contain costs is a constant in the healthcare industry. Regulatory reform and changing reimbursement models are likely reasons cost management continues to be a top supply chain issue,” the study asserts.

Regulatory reform and profit pressures continue to propel cost management trends, the study maintains. Healthcare executives actively seek newfangled approaches regarding technology investments and a focus on partnerships with logistics and distribution providers to effectively tackle cost management within their supply chains.

Twelve percent of healthcare executives cite changing reimbursement levels as a leading supply chain management concern. Forty-seven percent of healthcare executives nationwide claim managing supply chain costs is a primary challenge. Forty-three percent of global healthcare executives confirm this attitude.

According to Durral R. Gilbert, Premier President of Supply Chain Services via HealthItAnalytics.com, health systems need to address variation across their systems to drive down expenses. Seventeen percent of hospital executives cite non-EHR health IT acquisitions as a main strategy for supply chain improvement.

“With sequestration, Affordable Care Act changes and other legislation, hospitals have been incurring billions of dollars in payment cuts with much more to come,” Gilbert states. “For many providers, barely breaking even under Medicare is equivalent to success these days.”

Healthcare executives' top three cost management strategies 

According to the study, healthcare executives utilize the following three chief strategies to help contain costs:

  • Logistics and distribution partnerships (78 percent)
  • IT investment (66 percent)
  • Outsourced transportation management (62 percent)

"The good news is that executives are seeing success in addressing these issues through increasingly sophisticated technology solutions, accessing regulatory expertise and forming strategic partnerships with third-party logistics providers. We've also seen these trends and insights in practice throughout our business model worldwide," states Robin Hooker, Director of Global Strategy at UPS Healthcare Logistics. "Globally, we are seeing consistency in the top supply chain pain points year over year, and we anticipate continued elevation in concern levels over regulatory compliance and product protection as supply chains grow in complexity and length,"

Elongation of supply chain is perhaps a needed focus. As RevCycleIntelligence.com reported earlier, practices that perform well focus on specific factors within the collectively executed revenue cycle – including supply chain management.

“The winners in tomorrow’s healthcare marketplace will be the companies that have created agile, efficient, and flexible supply chains,” the study maintains. “Now is the time for companies to take action, to make the strategic supply chain changes that will allow them to capitalize on untapped opportunities. Not acting could be the greatest risk of all.”

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