Supply Chain - May/June 2015 - (Page 6)
Where Are We Now?
Healthcare Reform and Supply Chain
B r e n t p e t t y, C M r p, n A t i o n A l H e A lt H C A r e A C C o u n t s M A n A g e r ,
lexMArk internAtionAl, inC., Bristol, VirginiA
return to our old tactics where price reduction often was enough
in adding margin to our bottom line. Where utilization reviews
were sufficient in our quality improvement and variation in both
clinical and business practices were often overlooked as a major
cost driver. Our efforts over the past 24 months are grounded
in sustainable initiatives and our core competencies remain in
focus as CQO becomes operationalized.
After years of attention to cost-cutting in traditional aspects of
healthcare supply chain, today more than ever we are at a critical
pivot point in meeting aggressive cost management cutbacks. As
the American Hospital Association Environmental Scan reminds
us: "Providers will be under tremendous pressure due to lowered
reimbursement rates and increased patient volumes from health
insurance exchanges and expanding Medicaid rolls." Most supply
chains are approaching this challenge by targeting to reduce costs
(not price) by 15 percent to 19 percent overall, more in some cases.
Supply Chain Strategies & Solutions | MAy/june 2015
ebate continues around where we are now with
regards to healthcare reform and supply chain for
good reason. Our healthcare industry is addressing
radically changing strategies with ever-increasing
regulations, rapidly declining reimbursement and
new payment methodologies with evolving cultures demanding
healthcare cost be reduced.
As we turn the page, we ask how we determine our next steps.
Frist we move forward with wisdom and vision. We can paint the
picture of the future while recognizing that it takes tremendous
energy and resources to sustain momentum and that it can be as
complicated as being on a trapeze while making omelets. As the
CQO Movement continues to move from awareness to adoption,
supply chain has to be a pillar to healthcare. Although supply
chain does not own all of the cost and we do not influence all
of the quality, consider for a moment how much value would it
bring to your organization for the supply chain to become the
"teacher" the "facilitator" and the "subject matter expert" on total
cost of ownership, which is the foundation of CQO. To become
that pillar, supply chain must continue to think differently. To
think differently, we must also think broadly-as broad as our
membership and as board as our industry while leading wisely.
Our executive leadership teams recognize that the fundamental
architect of cost containment, quality improvement measures,
and financial outcomes must continue to change moving forward
with the only way to connect this three being the management of
the intersection of Cost, Quality, and Outcomes (CQO). The CQO
Movement was launched in 2013 by AHRMM as the premier new
method to approach supply chain management. AHRMM has
successfully transferred CQO from a conception to a movement
through awareness and adoption. By sharing best practices,
continuing education, and providing tools, AHRMM has laid
the ground work for our industry to embrace this message.
As our member hospitals began to think differently, creative
collaborations began to emerge and engage an often unclear
healthcare environment. Supply chain leaders are responding
with heavy pursuit of alignments that include opportunities
beyond historical paths such as the migration of care outside the
traditional "four walls" of an acute care environment.
There is no doubt we still have a monumental challenge lying
ahead, but how are we to succeed?
To start we must take a step back and be sure we are on solid
ground. We can't afford to slip or take a breather resulting in a
While embracing the principles at the industry level around the
adoption of CQO, we must continue to broaden our collaboration
and engage further with our key industry stakeholders such as our
supplier partners, manufactures, distributors, group purchasing
organizations, universities, health insurance companies, and
solution providers. We have to recognize that the evolving
healthcare landscape continues to create the potential for
these innovative partnerships. Growing and cultivating these
relationships and being the pillar our industry needs will allow
our methodology and passion to be hardwired into all we do. With
that our industry would conclude that supply chain has the keys
to the strategic plan, and it is where we should be.
Brent Petty, CMRP, is a National Healthcare
Accounts Manager at Lexmark International, Inc.,
in Bristol, Virginia, and is also the 2015 chair of the
AHRMM Board of Directors.
Table of Contents for the Digital Edition of Supply Chain - May/June 2015
Cover Story - Where Are We Now?
Four Things Supply Chain Must Do to Meet the Demands of Healthcare Reform
A Letter to the CEO
CQO Movement Case Study Providence Health & Services
Supply Chain - May/June 2015