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Home » Blogs » SCQ Forum » Building a More Resilient Healthcare Supply Chain

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Strategy

Chris Luoma is senior vice president of global product management at GHX.

Building a More Resilient Healthcare Supply Chain

By mixing technology innovation, best practices, and business strategies, healthcare providers are learning to build more resilient supply chains.

December 1, 2021
Chris Luoma
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As we look to 2022, with the knowledge gained after nearly two years of the COVID-19 pandemic, it’s clear healthcare providers are actively applying lessons learned to build more resilient supply chains. Here are four ways they’re working toward this important goal using a mix of technology innovation, best practices and business strategies.

1. Closing the gaps in procure-to-pay automation: Automated supply chain management is not a new concept. Supply chain leaders in other industries have set the standard when it comes to automating processes and streamlining delivery. Yet in healthcare the procure-to-pay process is one area that is ripe for further change. Many healthcare providers still rely on manual processes for managing invoices, including making multiple phone calls to address exceptions, manually searching contracts to match discrepancies and printing checks for delivery via the post office. A single error in a line item can lead to several phone calls as days and weeks pass while the invoice remains unpaid and the delivery of additional supplies may be delayed. 

By automating procure-to-pay, healthcare providers can eliminate manual process, helping to reduce errors and save time and costs. Along with freeing staff to work on more patient-centric activities, a touchless, automated approach in procure-to-pay also provides greater visibility into financials and improves vendor relationships by making invoicing and payment interactions between partners seamless. This leads to better decision making based on accurate and current insight on cash flow and cash management.  

For example, by automating invoice and payment processes, it’s easier for providers to leverage discounts offered by suppliers for early payment or bulk purchases. For suppliers, automation contributes to a more fluid supply chain by streamlining the payments process and the delivery of supplies. 

2. Employing a Cloud-Based Data Strategy: The challenge for healthcare isn’t a lack of data – it’s turning that data into insights through visibility and accessibility. Achieving optimal visibility requires a modern data strategy that takes advantage of advances in cloud-based ERP to help ensure data is accurate, current, and can be easily integrated and normalized across the operational systems of a healthcare provider.

While the healthcare industry’s move to cloud-based ERP systems has been underway for some time, the pandemic has accelerated it. With the ability to manage critical data throughout the organization, cloud-based ERP systems make it easier to see and manage information across financial, operational and clinical systems. This information spans accounts payable data, supply data and patient records. And it’s needed to make critical business decisions that can save costs and improve care. For example, knowing which medical supplies are most effective on a certain patient cohort and how to source them cost effectively can result in better patient outcomes and improved operational efficiencies.

As healthcare providers increase their reliance on cloud-based ERP systems, on-premise solutions will become more of a costly hindrance as critical information remains trapped in silos. This not only impacts the healthcare provider and its patients, but limits collaboration between the provider and its suppliers, causing a negative ripple effect throughout the supply chain.

3. Using Predictive Analytics to Support Strategic Planning: As outlined above, making critical supply chain data easily accessible is a top priority among healthcare providers. To make the most of that data, they’re applying predictive analytics. This advanced technology enables healthcare providers to pull historical data points and formulate potential outcomes. 

Essentially, predictive analytics turns data into actionable information. The most accurate predictions come from identifying the variables in the data and studying them to create models. The more data the model can pull from, the more accurate the prediction. 

For example, a data query could be, “If I purchase X product for 30% of my patients requiring replacement knee surgery over the next six months, the results are likely to be Y.” Predictive analytics offers the likely outcomes of the scenario based on a variety of data and insights that span providers, suppliers, patients, zip code and more. 

One prediction that is currently top-of-mind for healthcare providers is what the next potential supply shortage will be so they can take proactive steps to help avoid stockouts and delays. When applied to the healthcare supply chain, predictive analytics can help determine which products may be at risk and which alternatives are best suited to certain patient populations so providers can continue to deliver the best care at the most efficient cost.

With a modern data strategy and analytical tools, it’s easier to integrate additional data sources to get the most from predictive analytics. Done right, this helps lower supply costs without compromising patient care.

4. Sustaining a Clinically Integrated Supply Chain: Improving procure-to-pay, moving to a cloud-based ERP and employing predictive analytics are all building blocks as healthcare providers are moving toward a clinically integrated supply chain. By definition, according to the Association for Health Care Resource & Materials Management (AHRMM), “Clinical integration in health care supply chain is an interdisciplinary approach to deliver patient care with the highest value (high quality, best outcomes, and minimal waste at the lowest cost of care) that is achieved through assimilation and coordination of clinical and supply chain knowledge, data, and leadership toward care across the continuum that is safe, timely, evidenced-based, efficient, equitable, and patient focused.”

As healthcare providers invest in innovative technologies to support a clinically integrated supply chain, they must integrate their financial, operational and clinical systems. If they skip this step, they will be missing critical insights such as medication history, lab reports and patient progress notes that may have an impact on the resulting patient care. It also limits their ability to identify the factors that impact cost, quality and outcomes.  

Yet with a cloud-based ERP system, healthcare providers can support a clinically integrated supply chain by making critical financial, operational and clinical information available to all key stakeholders. For example, the data can shed light on which products work best under what conditions and how that information aligns with patient outcomes and financial objectives. This results in more strategic and value-based financial decisions that drive better patient outcomes and improve operational performance. 

The healthcare industry is striving to build a more resilient supply chain. Not just one that can withstand natural disasters and future healthcare crises, but one that balances improving patient health and operational excellence. While COVID-19 made it clear that change in the supply chain was necessary, steps currently being taken by providers and suppliers will vastly improve the way healthcare is managed and delivered every day. 

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