6 Trends Shaping Healthcare Supply Chain in 2018

When we hear “innovation” in the medical sector most people don’t think of the medical equipment supply chain. We think of life-saving treatments, cutting-edge therapies or ground-breaking pharmaceuticals. However, innovation is a term used more and more in the supply chain management sector. Why? Note how Kathryn Wengel, Worldwide VP and Chief Supply Chain Officer at Johnson & Johnson, summed up the supply chain’s intricate link with innovation, “Science and technology are merging in ways that are being reinvented every day, and our supply chain, along with our partners in Research & Development, is at the forefront of this change.” The healthcare supply chain is critical to lowering costs and improving patient outcomes. It’s directly linked to integral healthcare issues, such as the shift to a value-based care model, improved clinical performance, reducing risk and getting the most out of electronic health record integrations.

The healthcare environment has changed rapidly over the last decade. In turn, the supply chain has evolved to meet new demands. In fact, one report estimates the supply chain management market will hit $2.22 billion over the next four years. That’s a 53 percent increase from 2016. What’s driving this massive expansion? Consider six key trends.

Five Drivers of Innovation

1. Evolving Regulations

Evolving regulations have made compliance a top priority for healthcare facilities and administrators. From HIPAA regulations to the FDA’s Global UDI Database, which requires that medical devices be assigned a unique device identifier, suppliers and providers must keep up with ever-changing regulation. In order to avoid fines, suppliers and providers look to an automated supply chain to enforce a cost-effective, accurate and efficient supply chain strategy. Regulations put added pressure on hospitals to improve operational efficiency and profitability, and hospitals are meeting that challenge by investing in cloud-based supply chain management solutions.

2. A Clinically-Integrated Supply Chain

A “Clinically-integrated” supply chain is critical to success. Supply chain professionals and clinicians are working closely together, sharing ideas, comparing outcomes and making informed decisions. Physicians are leveraging a relationship with supply chain professionals for guidance on price points, outcomes and alternatives. Automation decreases order errors that cost providers and suppliers through inaccurate invoices, payments and products. An automated process allows providers and suppliers to catch discrepancies quickly, addressing issues in real time.

“In supply chain, without the involvement of the clinicians, we can only influence about 20 percent of the cost,” said Ron Werthman, senior vice president and chief financial offer for Johns Hopkins Medicine. “We can deal with price. We can’t deal with standardization and utilization — that has to be driven by the physicians,” continued Werthman. The collaboration between clinicians and supply chain professionals makes the supply chain directly involved in supporting patient care.

3. Big Data

The supply chain is benefiting from big data, and the need to reliably forecast supply chain outcomes is driving the increased need for reliable data. The 2017 Healthcare Supply Chain Trends Survey found that 94 percent of provider executives and 88 percent of supplier executives said the use of analytics is an area of primary focus for them. The survey specifically found analytics critical to identifying the following.

• Identifying supply chain performance benchmarks
• Integrating supply chain data with clinical data
• Improving data transparency across the supply chain

Data is critical to improving cost, quality and outcomes. Data helps suppliers and providers take a strategic, informed approach to supply chain management. Analytics not only improve the supply chain itself, but they are critical for evaluating outcomes and for making decisions about cost-cutting and savings initiatives. Data is improving efficiencies throughout the whole supplier-to-patient process, including clinical treatments, financial functions, billing, and value analysis. Cloud computing is playing a huge role in the expansion of this trend. The International Data Corp found that IT infrastructure spending for cloud deployment in healthcare will top $40 billion this year. Cloud computing enables healthcare to become a data-driven industry.

In addition, supply chain teams are leveraging the advantage of software such as PREDICT, which provides dashboards with strategic views into aggregated capital on all annual capital equipment requests and construction projects, including those managed by consulting planners. Access to this valuable data allows supply chain teams to aggregate purchases across multiple types of projects and hospitals to decrease costs.

4. The Changing Health of the Population

The changing health of the population is a huge trend driving supply chain innovation. According to the CDC, about half of the adult population in the U.S. have one or more chronic health conditions. How does this affect the supply chain? It is creating a more patient-centered supply chain, resulting in an environment where care can be given when and where the patient needs it, not always in the hospital. Automation allows for tracking in new customer settings, including the patient’s home or retail pharmacy. As this trend continues, healthcare delivery and the supply chain will become more integrated.

5. Value-based Reimbursement Models

Healthcare providers are taking on more risk under value-based reimbursement models, and they want to share some of that risk with suppliers. As a result, supply chain management teams are exploring risk-based contracting with suppliers.

6. The Internet of Things

According to Forbes, “The Internet of Medical Things (IoMT) is poised to transform how we keep people safe and healthy especially as the demand for solutions to lower healthcare costs increase in the coming years.” The Internet of Things is making increased visibility and connectivity throughout the supply chain possible by closely monitoring inventories, in turn, leading to less waste.

Innovation is Key to Reducing Costs

Supply chain automation is creating innovation in the industry never seen before. Automation allows a product to be traced from its origin all the way through individual patient outcomes. The data that is generated from tracing all those details is key to reducing costs. Advanced data analytics is enabling healthcare providers to make informed decisions about operations management and to accurately predict demand. How much is at stake? Supply Chain Dive estimates hospitals can save $9.9 million annually simply by improving their supply chains. How did they recommend hospitals do it? One key piece was “technology automation projects.” Further research found that 75 percent of hospitals still use a manual inventory management system. As a result, hospital supply chains are overspending. Is your organization one of them? Talk to the team at Attainia to learn more about how automation can improve your supply chain.