Fast Forward
You knew this day
was coming…

by Rick Dana Barlow

QUICKEN LITTLE. CMS proposed to change its reimbursement system for inpatient care, basing the diagnosis-related group (DRG) calculations on costs and no longer charges as early as fiscal 2008. The decision is designed to level the playing field between ambulatory surgery centers and specialty surgical hospitals (accused by the American Hospital Association of attracting all the "profitable" patients) in one corner with acute care hospitals in the other, as well as metropolitan versus rural hospitals. But once the smoke clears, don’t be surprised if you hear the hue and cry emanating from the very organizations it’s supposed to help: Hospitals. Why? If this decision becomes legitimate policy it will pull the curtain back on one of the most poorly guarded industry secrets for years. Most hospitals don’t know what their true costs are. Those manufacturers trying to keep their vaunted pricing secret won’t help the process either. The bottom line is that this move effectively will separate the wheat from the chaff in the healthcare supply chain management profession. This also will open the door for managed care organizations and private payers to start ratcheting down reimbursement to those few facilities that have a handle on their costs, effectively penalizing them for process efficiency, and sending the rest of them kicking and screaming up the fiscal river.

HIGH NOON. ECRI filed suit at press time against Guidant Corp., alleging that the manufacturer’s new policy on strict pricing confidentiality violates "First Amendment rights to publish comparisons of prices paid by hospitals for medical devices." Bravo for ECRI. Now where are the American Hospital Association, Healthcare Financial Management Association and Health Industry Group Purchasing Organization as co-plaintiffs? Better yet, where are the leading insurance companies? Nothing like Big Payer Inc. to send the right message to those manufacturers harboring such anticompetitive and frivolous notions: Back down. Now.

DUE NORTH. Expect beleaguered HealthSouth Corp. to turn the page on a peccadillo-stained past, peppered by creative accounting. Long the laughing stock and whipping boy of the healthcare industry and Wall Street, courtesy of a number of disgraced, arrogant and (thankfully) now former executives (including the founder), HealthSouth recruited a top-notch executive to oversee its supply chain activities. Unfortunately, the company’s first choice of a well-respected industry thought leader nobly had to remove his name from consideration for family reasons. Although this nameless executive would have given HealthSouth a much-needed credibility and image boost, he struggled with the decision to help turn the company’s fortunes around (and he would have succeeded) or remain where he was needed more. Family mattered. And he made the wise choice. Meanwhile, HealthSouth’s final choice, another younger nameless executive who once served as a protégé of the first choice, should be able to carry the torch and deliver the goods, too. If he stays for the long haul, don’t be surprised to watch HealthSouth emerge as a formidable supply chain authority and see this executive define his career.

THAT’S IT? David Brailer, who led the Bush Administration’s healthcare information technology initiative during the past two years as HHS’ Office of the National Coordinator for Health Information Technology, resigned his post. As an homage to his now former boss landing a fighter jet on an aircraft carrier with a "Mission Accomplished" sign on deck as a backdrop, fake rumor has it that he was going to send a mass "Mission [On The Way To Being] Accomplished" e-mail to all of those hospitals interconnected on the national electronic health record project. Then he received word that it wouldn’t be prudent. Apparently, those hospital executives would have to navigate Google to find the message.

SAY WHAT? During his opening keynote at the AHRMM Supply Chain Technology Conference & Exhibition, Dell Inc. Supply Chain Evangelist Mike Gray, C.P.M., CIRM, asked the several hundred materials management professionals in the audience whether they served as their facility’s supply chain executives. Silence (save for some low-decibel murmuring). In fact, no one raised their hands, even though the bulk of them subsequently admitted to having at least 15 years of industry experience. "You gotta get excited about the supply chain," Gray said. "Nobody knows what you do." ‘Nuff said.

Quality matters, readers.

April 2006