The move to a healthcare system that rewards the value delivered to patients vs. the volume of services performed is no easy task. Healthcare providers, including hospitals and physicians, face decreasing reimbursements as both commercial and government payors implement new payment models designed to more closely align the activities of various organizations and practitioners involved in patient care. Better coordination has been found to both improve the quality and lower the cost of care, which is a benefit for patients as well as the organizations responsible for delivering that care.
Physicians, who are integral to creating a more value-based system, are expressing more interest in data that they believe can improve both the quality and cost of care. Historically, physicians have preferred autonomy in the selection of products used in patient care, basing most of those decisions on what they believe works best and on products with which they have the most experience. However, two recent studies12, —by Lumere and Deloitte— found that a significant percentage (70-90%) of physicians believe data on the cost of products would also be valuable in their decision-making process. Unfortunately, only 30% to 40% of those same physicians say they have access to that data or that their organizations were working to provide it.
A similar situation exists around data on variation in clinical practice. The Lumere study found that 86% of physicians believe that data on clinical variation would drive changes in practice and improve outcomes, but far fewer (57%) reported that their organizations were developing programs to reduce unnecessary variation in practice. Even fewer were working to reduce variation in the pharmaceuticals (53%) and the medical devices (52%) selected for use in specific patient populations.
One of the challenges to accessing this kind of data is that healthcare technology has historically been developed to support functional silos. Clinical systems focused on quality, finance systems focused on charge capture and revenue realization, and supply chain systems focused on procuring products and managing inventory. While that worked fine in a fee-for-service world, it is hopelessly inadequate in a value-based healthcare model where the relationship between cost and quality is paramount. Even electronic health records (EHRs), which have been touted as instrumental on the road to value, were primarily designed to automate billing and coding.
This has led to considerable frustration among physicians who spend more time on documentation requirements. It has also made it challenging to accurately capture comprehensive data on products used in patient care. Such data is key to measuring value, which requires knowing the total cost of care delivery along with understanding the role products play in delivering better outcomes. These factors matter to a wide range of stakeholders, from patients and physicians, to supply chain and finance. Access to such data can create new opportunities for collaborative decision-making based on each stakeholder’s area of expertise and better insights into performance at the individual patient, physician and hospital level.
The other challenge is a historic lack of investment in the supply chain3, due in part to an under-appreciation of the role supply chain can play as an integrator of data from various sources because it is the one function that works across the clinical, financial and operational aspects of care delivery. Nearly half of hospital executives recently surveyed said they still use manual processes and spreadsheets to manage the supply chain; without automated processes that support a digital record of what was used in a case, it is extremely difficult to assess information on both the cost and quality of care, let alone the relationship between cost and quality. On the other hand, hospitals that have invested in supply chain automation improved data capture and management, and the integration between key supply chain, clinical and financial systems, is driving visibility to data that physicians increasingly need4.
Clinical, supply chain and finance leaders must have line-of-sight to each other’s data and perspectives if they are to optimize value. This necessitates an investment in technology to harness data and collaborative leaders who can derive insights from the data. When organizations understand the link between supplies and clinical and financial outcomes, they are better able to engage physicians in their value journey. Physicians are hankering for data that they can use to redesign care to deliver the most value to their patients. Supply chain leaders are best positioned to help provide that data and are extremely valuable in the critical conversations that align the clinical, financial and operational aspects of care delivery.
About Dr. Chen and Karen Conway
Dr. Chen is viewed as an industry leader in regard to balancing the cost-quality equation. She is incredibly engaging on this topic and speaks eloquently of the challenges. More than that, she gives practical advice regarding the ways in which various stakeholders can come together around all of the data, including examples of what this looks like in the hospital setting.
Karen Conway is the vice president of industry relations for GHX, where she works with standards bodies, government agencies, academic researchers, trade associations, hospitals, and suppliers to optimize clinical and business performance through supply chain excellence. Most recently she served as chair for AHRMM.
 Falk S, Cherf J, Schulz J, Huo A. Cost and Outcomes in Value-based Care. Physician Leadership Journal Website. https://www.physicianleaders.org/news/research-costs-outcomes-value-based-care. Published January 23, 2019. Accessed June 7, 2019.
 2018 Deloitte Insights Study: Volume to Value based care: Physicians willing to manage cost but lack data and tools. https://www2.deloitte.com/insights/us/en/industry/health-care/volume-to-value-based-care.html. Published October 11, 2018. Accessed July 5, 2019.
 Optimizing Supply Chain Management: The largely untapped value opportunity. Sage Growth Partners website. http://www.syftco.com/report/optimizing-supply-chain.html. Published March 2019. Accessed August 10, 2019.
 The 2018 AHRMM Cost, Quality, Outcomes Report on the Clinically Integrated Supply Chain. AHRMM Website. http://www.ahrmm.org/knowledge-center/resources/report-study/2018-ahrmm-cost-quality-and-outcomes-cqo-report-on-the-clinically-integrated-supply-chain. Published July 2018. Accessed August 2019.