Healthcare supply chain apps: Turning financial risks into rewards

Several new trends around improving healthcare quality, including value-based care and population health management, have made addressing supply chains in the industry an imperative. The rise of prevention efforts resulted from the industry's shift in focus to keeping patients healthy by addressing health disparities in entire communities and tying physician payments to the quality of the services they provide. A high performing supply chain lets providers keep track of preventative healthcare technologies, such as screening technologies, while reducing costs on preventative care.

Further, the spike in drug prices have been impeding hospitals' ability to manage their budgets in recent years.

Many healthcare executives would argue there is a need for more supply chain investment. More than half (67%) of the 52 C-suite executives across the U.S. who participated in a recent survey conducted by Premier reported their annual investment in supply chain will increase over the next three years. Adopting the right supply chain app to analyze cost data and develop cost-lowering strategies can help soften the ongoing fiscal battle.

Why supply chain apps are gaining a foothold in healthcare

There are two main reasons why healthcare facilities would evaluate how they are managing their supply chain: Cost and quality. By taking steps to address inefficiencies in supply chains via single-source purchasing information and streamlining orders, costs could be substantially reduced. In 2013, McKinsey & Company estimated the healthcare industry could save as much as $130 billion by simplifying the supply chain. "Even minor efficiency gains could free up billions of dollars for investments elsewhere," the business management consulting firm stated. At the time of publication, McKinsey stated supply chains make up 40% of medical device costs ($122 billion) and 25% of pharmaceutical costs ($230 billion).

In addition, efficient supply chains free up time for providers to focus on delivering quality patient care. By automating manual processes, there would be less time spent on administrative tasks, which were cited as the top contributor of physician burnout in a Medscape survey earlier this year. Doctors are spending around two hours on EHR and administrative tasks for every hour they spend with patients, a September study published in Annals of Internal Medicine found.

A lay of the supply chain app land

There are at least a dozen different supply chain apps that can be used in the healthcare industry, including Prodigo Mobile and The Supply Chain Operations Reference, Becker's Hospital Review reported. These types of apps are used for a variety of purposes, such as accessing real-time pricing data, receiving alerts about supplies, tracking exchanges with vendors. In addition, saving plans can be created and customized.

In the healthcare supply chain, traceability matters, especially when dealing with recalled medical devices that could put patients lives in jeopardy. Unique device identifiers (UDI) on medical devices can allow for any mistakes to be traced back to originating moment to reduce the impact of a recall.

Supply chain apps, such as Curvo and Premier's PremierConnect, have helped hospitals strategically address cost and quality. Connecting with logistics providers allows healthcare supply chain executives make informed decisions about preferred products within a smaller time frame. For example, some of PremierConnect's functionalities include real-time promotions, pharmacy programs and product sourcing.

How two hospitals are putting these apps to practice

“We are a strategic source," Curvo co-founder Andy Perry tells Healthcare Dive. The software – used by at least 53 different hospitals – helps healthcare supply chain executives' work for contracting projects, Perry says.

Debbie Schmidt, a long-time Curvo client, has been the director of supply chain services at Carle Foundation Hospital for almost 23 years. Schmidt was pleasantly surprised with how responsive Curvo was in comparison to using a group purchasing organization (GPO) and a benchmarking tool.

“We could send them data and within two weeks they have everything categorized and put into product categories,” Schmidt says. Curvo can also manage pricing negotiations with vendors online. This was particularly appealing to Schmidt because her team would sometimes have difficulty keeping track with vendors when using different approaches.

“The use of UDI is critically important to us, as well as being able to email requisitions directly from the application, which we do quite a bit of.”

Anthony Hinds

Senior Director of Supply Chain Management, El Centro Regional Medical Center

Anthony Hinds, senior director of supply chain management at El Centro Regional Medical Center, has been using PremierConnect for about seven years to better manage finances. App users can access information about the vendors they are using and the different price levels among vendors and products. Users can then negotiate pricing by offering complete commitment to a product in exchange for lower prices.

"Sometimes it’s just a natural change and we’ve got to accept the price increase," Schmidt says. "But not always." Carle Foundation Hospital has reduced spending on arthroscopy instruments, vein harvest products, vascular closure, and endometrial ablation with Curvo. "We are up to $165,000 in annualized savings with the four categories we’ve tackled so far," Schmidt says.

“We are very progressive and proactive in trying to find savings and getting as much information as we can to negotiate better prices.”

Debbie Schmidt

Director of Supply Chain Services, Carle Foundation Hospital

What to consider

Before an organization decides which supply chain app is the best fit for them, consider the following:

Installment - One of PremierConnect main selling points was that installment didn’t require any in-house or IT resources, according to Hinds. Within eight weeks, the app was installed and ready to be used from any location, Hinds says.
Usability - It may take some time to learn Curvo's ins and outs. "There were actually a few pathways that you had to learn," Bob Slesinski, value analysis coordinator at Carle Hospital, tells Healthcare Dive, adding once "you figure those out, it’s really right in front of you."
Security - There are security implications involved with implementing any IT tool. In a recent Red Hat survey, 98% of the participating 200 IT decision makers from healthcare organizations across the U.S. cited security as the most dominant business concern with implementing a mobile solution. Safeguards must help prevent unauthorized access and maintain the security of the data within the app.