Outcomes matter to hospital supply chain

With healthcare reform a top priority for most organizations, the cost, quality and outcomes (CQO) movement is garnering some popularity among supply chain leaders at hospitals.

The aim of the CQO movement is to provide first-class quality of care, continuity of care and lower readmissions while reducing costs to an organization, supply chain experts say. It is an approach that requires organizations to examine the intersection of all the factors that touch the supply chain.

In order to implement the CQO approach, there are five areas an organization should focus on, according to John Willi, senior director of supply chain management at Dana-Farber Cancer Institute in Boston and board member for the Association for Healthcare Resource & Materials Management (AHRMM) of the American Hospital Association.

The first key factor is the supply chain professional, Willi said. These people should be seeking and finding spend data, analyzing it, benchmarking, using predictive analytics, making sure supplies are sufficient for patient flow, and determining that the healthcare environment is sterile.

[See also: Suppy chain savings.]

A second area of focus is engagement with your suppliers. Organizations could adopt a touch-less procurement process or touch-less buys to improve their costs.

According to Brent Johnson, vice president of supply chain & support services at Intermountain Healthcare in Midvale, Utah, and an AHRMM board member, the number one key to success for a supply chain manager is talent, but strategy comes second. “You need to strategically manage suppliers – some of them are still just trying to make money,” he said.

The third CQO factor is creating and building consensus to motivate change.

“Hospitals have got to start engaging the right executives and physicians and share data with them,” Willi said. “They’re scientists by nature. You’ve got to give doctors input on what is being used.”

“Cost, quality and outcomes is nothing but a total cost of ownership of our buying strategies,” Johnson added.

The fourth critical area to focus on is how the healthcare supply chain can mitigate risk.

“We want to make sure that our supply chain is not disrupted,” Willi said. “Our role in procurement is to really understand the pipeline of medications, capital items, whatever it is, to meet demand. No other department is responsible for the flow of supply chain.”

Finally, providers must understand the impact of the items they wish to procure, such as devices and pharmaceuticals, on patient outcomes. Physicians and nurses need to become revenue enhancers, Willi said. This means that everything from physicians’ rounds to nursing huddles must be part of an integrated approach to supply – because it impacts cost, quality and outcomes.

“Hospitals need to be integrating all five points to really be ready for the continuing impact of healthcare reform,” said Willi. “Facilities are not surviving financially because they do not understand the cost, quality and outcomes in healthcare.”

Johnson agrees. “We have to invest more into supply chain management to get ready for healthcare reform. A supply chain organization in a fee-for-service model is a thing of the past.”