It’s a critical time for healthcare leaders as they face new challenges from the COVID-19 pandemic and continued declining reimbursements. In a recent Modern Healthcare article, ECRI’s Executive VP and COO, Tony Montagnolo, was featured alongside other industry leaders on the topic of COVID-19 and the market pressures thought to be reshaping procurement. Here’s what he shared with Modern Healthcare on his vision and strategies for reaching value-based care goals and wisely preparing your health care system for the future.
How has the practice of supply chain management changed in the last decade?
A: Healthcare executives now uniformly understand that a highly efficient and productive supply chain is key to running a successful provider organization. The C-suite now focuses attention on supply chain issues to a much greater extent compared to 10 years ago. The COVID-19 PPE and ventilator supply scares have further highlighted the need to focus on supply chain as, quite literally, healthcare workers and patient lives hang in the balance.
Why should supply chain be a C-suite priority?
A: Simply put, healthcare product and technology costs represent a huge budgetary expense, yet without high quality products and supplies, it is impossible to deliver high quality care. So, every organization must grapple with supply costs and supply quality and then successfully wrestle with all the trade-offs inherent in providing care in the 21st century.
How can health system leaders best align clinician decision-makers with their supply chain strategy? How should leaders build cost-effectiveness into their culture?
A: Clinicians should always be part of the value analysis process with a common goal of acquiring the safest, most effective technologies, at the right price. Transparency about supply usage and costs while using reliable clinical evidence establishes trust in the decision-making process. Decisions become less about personal preference and more about evidence and data. Clinicians will not engage if discussions start with, or are too focused on, cost.
The COVID-19 pandemic led to a massive stockpiling of PPE and other items. How should health systems move forward in a way that ensures they are prepared for a crisis?
A: Supply chains must focus not just on pure efficiency but also on robustness. The pandemic has illustrated that super-efficiency may limit adaptability. Some duplication may be needed in the long run. Providers should reassess their relationships with GPOs, distributors and manufacturers based on the support or lack thereof during the pandemic. They should also reassess current contracting models, particularly those that are sole source.
COVID-19’s impact has varied from region to region. What best practices can you share for health system leaders managing a supply chain in a broad geographic area?
A: Regional providers, typically competing with each other, forged alliances with each other to share supplies. In regions not heavily impacted, those providers donated excess inventory to states with greater need. Associations and private organizations established marketplaces to exchange and donate supplies. There are also sites accepting private donations to fund the manufacture of supplies for areas in need.
How are AI and predictive analytics changing how health systems procure materials and maintain supply?
A: AI and predictive analytics will help better match supply and demand across the supply chain. The pandemic has shown we could certainly use better tools. While we still have quite a distance to go, those organizations that adopt better predictive modeling should gain efficiency and improve outcomes.
While historically focused on price and volume, leaders with a value-based mindset are now making procurement decisions based on quality and effectiveness as well. How should leaders balance these levers?
A: Often, even today, it is the other way around and price is still the focus. Yet, no one sets out to buy the cheapest car or computer as their goal because we understand that less expensive may yield poor reliability and a bad long-term decision. We must relentlessly focus on true value and define value with real evidence. Cost is an input, not an outcome.