A Broader Focus for Tomorrow's MMs

Source: IMDA Update - February 2013

IMDA members know that materials management executives have always been strong on price. But today's - and tomorrow's - healthcare delivery system demands that supply chain professionals take a broader look at product and service acquisition, one that not only encompasses price, but total cost of ownership, quality, and even outcomes. The Association for Healthcare Resource & Materials Management (AHRMM), the professional association for healthcare supply chain executives, is hoping to help.

AHRMM recently launched a three-year initiative which, it hopes, will shape the future state of the healthcare supply chain profession. Called the Cost, Quality, and Outcomes (CQO) Movement, the initiative will provide training and education to help supply chain professionals make the correlation between cost, quality, and outcomes.

IMDA President Tony Marmo of Martab Medical applauded AHRMM's decision. "IMDA is pleased to learn of AHRMM's intent to launch the Cost-Quality-Outcomes training and educational program for its members," he said. "This initiative fits well with the mission of IMDA members, that is, the successful introduction, implementation, and utilization of new and innovative technologies that reduce costs while improving the quality of healthcare."

Crossing silos

"Hospitals and healthcare systems need to understand total costs - cost of ownership of supplies, cost of procedures, cost of delivered care, which are all inextricably linked to quality and outcomes, which in turn determine reimbursement levels," said AHRMM in a statement. "Supply chain is particularly well-suited to assume a leadership role in this area, as it already occupies a cross-disciplinary role within hospitals and health systems. No other hospital function crosses institutional silos as frequently or as thoroughly as supply chain management."

As part of CQO, AHRMM intends to prepare supply chain executives and professionals to:

• Decipher and leverage complex analytics.
• Understand the impact various payment policies—including accountable care, bundled payments, value-based purchasing and other programs -- will have on reimbursement.
• Create discussion, build consensus, and, when appropriate, motivate change around clinical preference items.
• Anticipate and swiftly respond to disruptions in the supply chain—such as drug shortages—so patient care is not disrupted.
• Understand the impact of all medical supplies, devices, and pharmaceuticals on patient outcomes and reimbursement.

The CQO educational program will be rolled out over a three-year period. Year 1 (2013) will focus on cost and quality, Year 2 (2014) on reimbursement and outcomes, and Year 3 (2015) on the continuum of care.

The need to move forward

"Historically, supply chain looked at cost, utilization patterns, optimizing contracts, managing inventory," said Beverly Slate, Director, Supply Chain Operations, Memorial Health Care System, Chattanooga, Tenn., AHRMM immediate past president, speaking with IMDA Update. "And we still need to be proficient in these skills. But the need for our hospitals and organizations as we move forward is to step into that space where cost, quality, and outcomes intersect."

Suppliers calling on supply chain executives will need to be prepared to answer how products will impact the patient outcome, reduce length of stay, or better manage costs, said Slate. For example, supply chain executives will be looking for peer-reviewed data - not merely vendor-funded studies - on technologies. "This doesn't mean we're blocking new technology," she said. "However, we need evidence to substantiate the product's impact on cost, quality, and outcomes. We want vendors to know we will be asking for that information.

What's more, supply chain executives will be asking vendors to go at risk relative to their assertions about how products or new technologies improve patient outcomes," she said. "This will also have applicability in non-acute-care settings, that is, the continuum of care," said Slate, who herself came from a physician office background. "[Supply chain professionals] will have to be able to work outside our four walls, because those walls are going to change."