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KSR Publishing, Inc.
Copyright © 2016

         Clinical intelligence for supply chain leadership



June 2015

Products & Services

New Technology

Start-up offers low-cost breast cancer genetic screening test

A Silicon Valley-based start-up called Color Genomics is offering an at-home DNA saliva test to detect gene mutations linked to breast and ovarian cancer. Priced at just $249, the home test will offer a much cheaper alternative to genetic testing at a doctor's office, which can cost as much as $4,000.

The company hopes it will increase access to genetic testing for mutations in BRCA1 and BRCA2 genes, which are tied to an increased risk of breast and ovarian cancer, as well as 17 other genes that may play a role in cancer development.

A woman with the BRCA1 mutation has up to a 65 percent chance of developing breast cancer by the age of 70, reports CBS News chief medical correspondent Dr. Jon LaPook. About 3 percent of breast cancer cases per year, amounting to about 6,000 women, and 10 percent of ovarian cancers, affecting 2,000 women, result from inherited mutations in the BRCA1 and BRCA2 genes.

If a woman tests positive for the BRCA1 or BRCA2 mutations, she may choose to undergo a preventive mastectomy and oophorectomy, or removal of the breasts and ovaries, to reduce her risk of developing these cancers. Other less drastic options include more frequent screening, taking prescription medications like tamoxifen to lower cancer risk, and lifestyle modifications such as diet and exercise. However, testing positive for one of the mutations does not mean that a woman will definitely develop cancer, which makes decisions regarding preventive measures difficult to make.

Until now, genetic testing for BRCA1 and BRCA2 has mostly been limited to women who already have cancer or those with a family history of the disease. The tests can range from $1,500 to $4,000, making it difficult for the uninsured to be tested.

Quest Diagnostics Inc. and Myriad Genetics Inc. are two of the major distributors of these tests. In 2013, Myriad Genetics lost a Supreme Court case related to its patents on the genes, opening up competition for other companies to offer the same kind of testing at a reduced cost.

To use Color Genomics, a woman can order the testing kit through the company's website and receive it at home. After taking a saliva swab, she sends it back to the company for analysis. After results are reviewed by a physician, an email is sent informing the patient of the results. The company offers genetic counseling at no extra cost. The test is not covered by health insurance.

Unlike the genetic testing company, 23andMe, Color Genomics has a doctor involved in every order, either the woman's physician or a physician provided by the company. Experts anticipate that the new, low-cost testing option will result in both more women getting tested who need it and otherwise couldn't have afforded it, as well as more women getting tested who may not need it.



Inside the box thinking

What can healthcare learn from manufacturing industry inventory practices?

by Rick Dana Barlow

Outside of healthcare in the manufacturing industry, one small company crowed that it was managing more than 10,000 stock-keeping units (SKUs) confined within a footprint just inside of 1,500 square feet.

Sure, that deft inventory management operation includes some perks perhaps unreachable by hospital storerooms, such as horizontal carrousels, robotic extractors to move products, a 32-foot ceiling to contain it all and an integrated order-picking and warehouse management system that easily handles 1,000 orders per 8-hour shift.

Nice tech and work if you can get it.

Too often healthcare supply chain executives, leaders, managers and workers salivate over the good fortunes enjoyed by their counterparts in other industries, while enduring background snipes from non-healthcare industry types about how far behind healthcare lags. They harrumph at healthcare’s talk about performance improvement as deep down healthcare professionals lament, "If only…"

Even as a small but growing number of prominent supply chain experts trickle into healthcare from other industries, theoretically fusing their industry thinking with the subtle and not-so-subtle intricacies of healthcare operations, questions remain about realistic applicability.

Can - or should - healthcare adapt and adopt inventory and logistics practices from other industries? Is it valuable or viable enough to shake off the stigma of "logistics is logistics, but healthcare is healthcare?"

Peering over at non-healthcare industries for tips and tricks about realistically improving inventory management practices in hospital warehouses and storerooms glean mixed reactions, depending on whether you work at a healthcare provider organization or a healthcare supplier.

Pointing fingers

While some argue that logistics is logistics, regardless of industry, hospital warehouses and storerooms should be distinguishable from their manufacturing and retail counterparts — even if the use of the term counterparts remains dubious.

Tina Harding

The argument certainly irks Tina Harding, Director, Materials Management, North Texas Medical Center, Gainesville, TX, who has revamped her facility’s inventory management locations.

"I have heard the same argument over my 20-plus years in healthcare materials management and do not agree with it," she said. "If a manufacturer or retailer does not get in a product when it is needed, no one will die from not having it. It may slow down their workflow, but there is no harm done to the people involved. You cannot say the same thing about healthcare. If you are missing something and need it, you could have a patient die from not having the product. That is why so many hospitals will keep an item in their storeroom ‘just in case.’ The idea though is not to stock the item at a high level — just what you may need if the item is requested — one to two each."

Dudley Sisak, Vice President and General Manager, Claflin Co., Warwick, RI, attributed this perspective to a financial viewpoint.

"I think the non-profit status of hospitals dictated the mindset, wherein manufacturing/retail always addressed profits, in performance appraisals and profit sharing," Sisak noted. "Also, managing the asset in manufacturing is key to success. Many storerooms are not financially driven by the asset. Other departments with direct manufacturers’ inventory have much larger financial commitments to inventory, such as the cath lab and/or surgical services. Many times departmental [general ledgers] do not consider specialty SKUs as assets."

Paperwork and procedural variation may motivate the distinctions, according to Steve Thompson, Vice President, Supply Chain Innovation, Cardinal Health Inc., Dublin, OH.

"While every industry experiences some type of demand variability, healthcare sees larger swings due to changes in census, demographics, clinical practice and seasonality," Thompson said. "The other reason is because manufacturing uses a bill of materials. Healthcare does not have a consistent procedural bill of materials — beyond expensive/sensitive implantables. This results in lack of visibility."

Dave Salus, Healthcare Market Manager, InterMetro Industries Corp., Wilkes-Barre, PA, acknowledged that "in certain instances" logistics functionally transcends industry differences — but not entirely.

"Manufacturing and retail can control their needs and supply chain requirements to a degree," Salus said. "Forecasting is a bit more repetitive or predictive. For hospitals, they may have a run on supplies at any given moment. If this run is not expected, it means that supplies are not available for life-caring needs. These supplies, and/or the time spent looking for them, may be a factor in the outcome of a patient. The supply chain needs to be responsive to sudden changes in demand.

"Unlike other industries, hospitals cannot shut down a production line or offer other brands of the same product," Salus continued. "Patients need to be cared for as the need dictates, when the need dictates. There is no room for extended stock-outs, at least not without affecting patient care."

Sibling rivalry?

John Reichert

Whatever side you take on the argument hinges on which part of the supply chain you’re addressing as healthcare can spot some commonalities and learn some lessons from different industries, observed John Reichert, Director of Warehouse Management Systems Solutions, TECSYS Inc., New York.

For example, a hospital system with a shared services network that uses a consolidated distribution or service center should be able to recognize a "high degree of commonalities between industries from an operational perspective," he noted.

"Efficient buying practices can lead to lower acquisition costs both in terms of product pricing, carrier and shipping cost, even though suppliers claim that freight is included," Reichert said. "Understanding consumption variations between facilities can lead to recommendations by a standardization committee [that] could streamline supply sources, increase the likelihood of on-contract purchasing and diminish the variance in protocol relative to the delivery of care for similar and identical procedures."

Inside the hospital may represent a different story, Reichert noted.

"If the focus is on the supply chain within the hospital, then there are unique processes and variations on requirements found in other industries, but still many of the same challenges," he continued. "Oftentimes, clinicians need assistance from the supply chain organization to ensure that products are tracked and properly rotated to avoid risk and costly waste due to expiry. While the focus on urgency of care often takes away the focus from good stock rotation practices, a clinician will acknowledge that they are always concerned with minimizing risk for patient safety — part of which the administration of expired goods is a concern, so there is common ground between the two environments."

Recalls represent another hurdle, Reichert insisted.

"Reduction of risk and liability related to improper response to manufacturer’s recalls, while of concern in other industries, have heightened significance in healthcare," he said. "As an example, recalling a baby car seat, while important, has significantly less impact on the consumer as to a recall on a hip liner or pacemaker. The supply chain in the hospital setting must work collaboratively with clinical staff and systems to ensure that the data is available to support these critical processes."

John Freund

Hospital supply chains, by and large, are simpler than those in retail or manufacturing, emphasized John Freund, CEO, Jump Technologies Inc., Eagan, MN.

"In each of those, supply chain planning, forecasting and decision-making gets more complex," Freund observed. "Issues including demand planning on a global level, long-term forecasting models and planning for potential disasters and disruptions create high degrees of complexity. These supply chain leaders are dealing with trends and potential events in their businesses that are months, even years in the future. They deal with long lead times on many products they order, which makes forecasting challenging.

"In hospitals, most of the supplies needed can be received within a 24-hour period," Freund continued. "Hospitals have outsourced a lot of their supply chain planning and warehousing to their distributors so they don’t need to keep as much inventory on-hand. Hospitals can afford to dedicate less square footage to storerooms and warehouse areas. They need a good view of their highest velocity supplies to ensure they can avoid stock-outs and keep the lowest possible on-hand inventory, especially for low-velocity items. It’s generally their inventory management problems they need to focus on."

Another difference involves the final destination for supplies, according to Freund. "Because healthcare organizations aren’t yet all using tracking for locations, packages often arrive on the dock at a hospital without a final destination on the shipment label," he noted. "Once inside the hospital, incoming inventory is highly distributed, as items are moved to inventory closets and even carts around the hospital. A unique challenge for hospitals is matching incoming shipments to orders and then final destinations, and with inconsistent tracking numbers or systems, this step can be extremely difficult."

Glenn Spriggs

Glenn Spriggs, Healthcare Product Manager, TECSYS Inc., concurred.

"The unfortunate reality is that healthcare continues to play catch-up to other industries," Spriggs observed. "For example, the retail industry has long been leveraging the benefits of unit-specific product bar-code labeling, such as GS1 GTIN and SSCC, while the healthcare industry still battles with having manufacturers’ uniquely identify products down to the unit-of-use on a patient. There is no reason why the two industries should differ."

Could the differences somehow be rooted in the foundation of hospitals? Robb Swann, Vice President, Sales & Marketing, BlueBin, Seattle, thinks so.

"The difference lies in the fact that hospitals and healthcare facilities were often built in the past without some of the supply needs that are around today," Swann said. "There is also a contrast in healthcare [with] traditional materials-management systems that require a large central warehouse, a bevy of supply chain staff and expensive technology. But they often result in an unreliable supply replenishment process that frustrates clinicians and wastes money, time and space."

Layout may be another concern, according to Peter Saviola, Vice President, Operations, Corporate Sales, Medline Industries Inc., Mundelein, IL.

"Hospital storerooms need to be accessed by people other than the materials management team," Saviola said. "So a layout and storage methodology that are easy to figure out and almost self-explanatory are important. In addition, hospital storeroom items may need to be accessed in a STAT or emergency situation, so a product flow and access that allows products to be located and retrieved quickly is critical."

Donna Van Vlerah

Donna Van Vlerah, Vice President, Supply Chain Operational Resources, eNovation — SCORe, Parkview Health, Fort Wayne, IN, points to leadership as the real solution.

"As someone who has supported government and commercial models, I would have to agree that logistics is logistics," she said. "The fundamental principles transgress all industries. Each industry has nuisances that require subject matter expertise, but solid leaders can find this expertise within their organization. Placement of a leader that understands logistics is pivotal and more important than understanding the medical product line. These gaps will rapidly close and before long the outsider becomes an insider."

Inventory management dos

Inventory management don’ts