Evolution of the Hospital Supply Chain - Part 2


Tue Mar 29 13:00:00 CDT 2016
Eugene Schneller
Director of Health Sector Supply Chain Research Consortium, CAPS Research (HSRC-ASU)

Despite remarkable advancements in technology, there is still a great deal of human interaction in the success of the supply chain. Our research at Arizona State University has centered on two key initiatives in this realm: Project Trust and Project UDI (unique device identification).


Project Trust speaks directly to the trust that the best device manufacturers and suppliers have brought to the table for many years. We are doing an in-depth, study of what matters most to manufacturers and hospital supply chains in maintaining good relationships and increased performance. These areas include:


  • Dedicated resources
  • Commitment
  • Trust
  • Contracts
  • Information sharing
  • Collaboration


We also seek to understand the barriers that exist in building good relationships.


For example, trust is earned through relationships with manufacturers’ representatives. Product reps know their devices inside and out, and are often present in the operating room, providing education and advice to surgeons during procedures. This can cut both ways, seen as either upselling in the surgery suite or something that only a trained human being can provide.


It’s an interesting relationship: When surveyed, suppliers frequently said that their most trusted customers — aside from exceptional provider organizations — were the larger group purchasing organizations (GPOs).


Yet hospitals, when asked the same question, said that their most trusted partners — aside from specific suppliers — were distributors. This was an important testimonial to the ways that both GPOs and distributors have listened to the marketplace to provide added value to their customers.


Project UDI initially sought to assess the FDA’s unique device identification (UDI) mandate to promote standardization and inventory management. It also sought to clarify how UDI would help develop registries and other mechanisms to improve patient safety and care.


Today, at ASU and CAPS Research, we’re reaching out to suppliers to truly understand how information from a UDI system helps, and what barriers they encounter to putting such data to good use. By gaining value from the UDI mandate, suppliers have the potential for significant ROI.


With this new focus on capturing important information on devices in both their clinical use, and in directing information back to the entities that made the device's component part, new opportunities are realized. Device manufacturers can measure effectiveness and efficacy of their component of the device when information about the use in the patient is shared. That way, it's not merely educated guesses about a syringe or a port, or any other component—we get to know how they function in the real world, in concert with other parts that make the device whole.


Key to uniting all these efforts is big data. And its value can go both ways: Buyers can alert device manufacturers how products perform, both economically and clinically.


For healthcare organizations looking to manage population health and succeed in a bundled payment environment, big data can be critical. It provides the aggregated information needed to assess discrepancies in how products are used, as well as both economic and clinical outcomes.


Make no mistake: A great deal of fragmentation still needs to be wrung out of the system. The continuum of care is under study for efficiencies — from the ambulance through the hospital to the home or post-acute care. There is still unnecessary waste and repetition. As other industries have learned, progress comes from visibility into the “end-to-end” chain of value.


In the future, there will be an even more global approach to the supply chain ecosystem through the lens of patient care and the Triple Aim, which embraces population health. When big data can uncover specific outcomes, that information can help successfully manage both the value and supply chains of the future.



Eugene Schneller is the director of Health Sector Supply Chain Research Consortium at CAPS Research (HSRC-ASU) and professor of Supply Chain Management at the W.P. Carey School of Business at Arizona State University. He is passionate about the ways the health sector can learn from other industries that have embraced the value of big data and trusted buyer-seller relationships.