Under the healthcare industry reforms of the 21st century-to date (the Bush Administration’s electronic health record policy and the Obama Administration’s access and insurance coverage policy), healthcare organizations have been collecting a lot of one thing that connects both policies to the Clinton Administration’s reform aims before them: Data.
Yet the lingering question that continues to loom large is what to do with all of this data, whether it’s the “right” data or the “wrong” data. After all, the idea of “Big Data” is a lot like a newly mined, rough, uncut and unpolished diamond, essentially a worthless chunk of highly compressed carbon that requires a great deal of effort to unlock its inherent value.
Still, whenever Supply Chain executives, leaders and professionals want to build relationships with doctors and influence their preferences and product choices, they know — because they’ve been told frequently in conferences, trade shows and media outlets — that they have to show physicians the data. Those data elements encompass product consumption and usage patterns, product costs and pricing, and more importantly, clinically relevant patient outcomes linked directly to the products being evaluated.
Notice that Supply Chain should not be collecting, analyzing and wielding this data for “gotcha!” moments to expose and rope outliers into line with organizational directives — even if some maintain that attitude.
But what kind of “meaningful” data should Supply Chain be collecting, analyzing and using to make inferences and recommendations to influence behaviors and impact practice patterns that benefit the patient, the clinician and the facility? And how can Supply Chain contribute to and participate in clinical data analytics initiatives, specifically as they relate to products, services and patient outcomes?
Cementing ties that bind
Perhaps the prerequisite question could be: Should they even be doing this? Most indications seem to point to yes.
“Supply Chain needs to collaborate with clinicians who are motivated to provide input to the sourcing process,” insisted Stacy Brethauer, MD, Associate Professor of Surgery. Cleveland Clinic Lerner College of Medicine and Medical Director, Supply Chain Management, Cleveland Clinic, and Medical Director, Excelerate. “Physician engagement, evidence-based data and shared values assist to create a culture of quality, trust and putting the patient first. Many surgeons are not aware of the costs of the devices and supplies they are using. By informing the physicians about costs and variability within their service line, Supply Chain has an opportunity to partner with clinicians to streamline care, reduce costs, and decrease variability.”
Of course, the discussion can — and should — go both ways to work effectively, according to Brethauer.
“Incorporating subject matter expertise of the procedural and surgical point of care workflows allows Supply Chain to connect directly with the demand signals generated from the patient event,” he said. “Designing and implementing supply chain solutions that align with physician and nurse workflows delivers downstream effects in predictive analytics. The enterprise associate chief nursing officer (ACNO) becoming a co-owner of this transformation is a key success factor as nurse behaviors, and changes to roles and responsibilities, is integral to transformation.”
But Supply Chain shouldn’t limit discussions to arms-length relationships in board and conference rooms, Brethauer indicated.
“Actionable data and business intelligence at the ‘point of use’ creates a more predictive and prescriptive sourcing model,” he said. ”Understanding the patterns inherent in patient care events will transform the way health systems deliver support. Utilizing core competencies of the health system and vendor distribution models, the evolution of supply chain is in a centralized organization able to respond to demand signals, changes in case mix and service line volumes.”
Until now, Supply Chain traditionally worked with physicians through value analysis committees and on some large contracting initiatives, according to Carola Endicott, Vice President, Services and Operations for Cardinal Health Inventory Management Solutions, Cardinal Health, Dublin, OH. But that’s changing.
“Physicians are a major driver of supply expense and engaging them in the process is starting to yield large benefits and greater partnership,” Endicott noted.
As such, clinical data analytics represent the fuel to forge ahead, she said. “Physicians are data-driven, curious and competitive,” she noted. “With the right level of data, Supply Chain can provide their physician partners with data about their own supply choices, cost implications and how they compare to others with similar cases and outcomes. Partnership begins with transparency, and Supply Chain is in a position to kick-start this effort with the goal of improving cost effectiveness while ensuring clinical quality is maintained.”
Sack the silos
David Levine, MD, FACEP, Senior Vice President, Advanced Analytics & Informatics/ Medical Director, Center for Advanced Analytics & Informatics, Vizient Inc., emphasized that a siloed approach focusing only on quality or only on supplies won’t drive value in today’s healthcare market.
“Hospitals must clinically integrate their supply chains to be able to effectively improve clinical quality while reducing costs,” Levine said. To drive value, Supply Chain leaders and clinicians must work together. Every clinician’s top priority is quality outcomes for patients. However, most are not routinely exposed to supply cost. On the other side, Supply Chain leaders do not always know how the products they make available relate to quality outcomes. For supply chain professionals to successfully engage clinicians in the process of decreasing costly, expensive variation the key is to lead with data showing the same high-quality outcomes will result using less-expensive supplies. Supply Chain must use data to create an overall picture of clinical, operations and supply.” Levine cited an example of a certain implant that consistently leads to a patient spending a longer time a patient in the operating room. Alternatively, a certain device may be linked with an increased risk of complications or readmissions. The lowest price might not be the least expensive or best quality for the patient, he added.
Siloes really don’t work, concurred David Hargraves, Group Vice President, Strategic Sourcing, Premier Inc., Pittsburgh, PA, in today’s era of value-based care where the onus is on healthcare providers to deliver optimal care at a lower cost.
“Institutions need a holistic view when reviewing how their supply chain purchases impact performance across the board in terms of patient outcomes, usage patterns and financial implications to achieve the dual goal of implementing cost-effective practices on purchasing without compromising quality care,” Hargraves noted. “With access to data on quality, safety, operational and other insights on 40 percent of U.S. health system discharges and our work with thousands of hospitals on collaborative, aggregated solutions, we test, measure, develop and scale evidence-based standards in healthcare to reduce clinical and supply chain costs through resource utilization and comparative effectiveness analyses. Bringing together the right team across an organization, including frontline clinicians, financial advisers and supply chain leaders, health systems are shining a new light on how smart purchasing decisions that encourage the use of cost-effective products and supplies can ultimately break bad habits and support optimal clinical outcomes.”
Optimizing the purchase price of goods and managing the logistics of getting supplies into the hands of the clinicians that needed them simply won’t work as Supply Chain’s sole aim any longer, insisted Tim Lantz, Senior Vice President, Analytics and DataNext, Sentry Data Systems, Deerfield Beach, FL.
“As provider revenues continue to face increasing pressure and the entire industry forges slowly ahead toward the pursuit of value-based care, managing price and logistics is simply no longer enough,” Lantz said. “Healthcare supply chains must choose to take on the challenge of becoming an integral component of the value equation. If we define ‘value’ in healthcare as outcomes divided by cost, then it becomes clear how data analytics can and must play a major role in this transformation.”
Sentry views outcomes as a triangular combination of clinical (as in quality), operational (for throughput) and financial (margin) measures, while cost also represents a multifaceted definition of being the product of total cost of ownership of the supplies themselves and the level of utilization, including waste, according to Lantz.
“Traditional healthcare analytics have always been — and in most cases continue to be — very siloed based on hospital department,” he continued. “Quality departments look at clinical data, finance departments look at revenue data, and supply chain departments look at purchasing data. For supply chains to impact results in pursuit of value, clinical data analytics are essential in order to understand the relationship of products and services that are deployed during the provision of care to the ultimate results of that care. However, clinical data analytics are not enough. Supply chains must drive collaboration across the entire business in order to gather and integrate purchasing, utilization, throughput, clinical, and revenue cycle data.”
Consequently, Sentry traces the “greatest hidden opportunities” to the intersection points between the data and the departments involved, Lantz noted. Until now, no one has been looking there, he added.
Lantz points to Supply Chain and Pharmacy as two intersected areas to “leverage consolidated, cross-functional data analytics to help drive increased operational efficiency, quality, and financial performance with their organizations.”
Planning work, working plan
Beth Meyers, RN, PhD candidate, CPHIMS, Chief Nurse Executive, Analytics Strategy Director, Infor Healthcare, fused physician performance and operational results to expert decision making.
“To influence clinicians and operational leaders, Supply Chain must first recognize that analytics are useless until they are incorporated into a decision-making process,” Meyers said. “And when it comes to experts, for instance, an orthopedic surgeon or the laboratory director, decisions are routinely made based on experience, not by using a formal decision algorithm. Supply Chain leaders need to be savvy and think first about how to leverage clinical data to influence decisions made by busy experts. The strategy provides a scope for analytics projects, driving the type of analysis required and defining the necessary data elements.”
Meyers cited three examples of decisions where Supply Chain can influence decisions by adding a clinical data analytics step to existing processes.
New product entry. “Most supply chains have a process for adding new items to the item master, but not all include a review of clinically relevant data,” she said. “More frequently than not, supplies are still introduced by a clinician, who has seen the new item at a conference or was shown it by a vendor, and wants to try it out … just one time. This is one of the most crucial decision points where supply chain processes can intervene. Once a product has been used, it’s much harder to extricate at a later date. Clinical data analytics allow Supply Chain leaders to promote a less biased introduction process, which includes a review of clinical effectiveness and safety for all new products. It’s the ideal time to leverage clinical, financial and operational outcomes in a formal economic cost-effectiveness study.”
Value analysis. “Value Analysis projects provide ongoing opportunities to introduce clinical data analytics into decision processes,” Meyers continued. “In fact, there are so many factors to consider that teams can get stuck in ‘analysis paralysis’ if they are not careful. The best way to bring clinical data analytics to play in these projects is to correctly prioritize the projects before the teams take them on. Prioritization helps teams focus on projects with the most impact and avoid falling back into unstructured gut-instinct decision making. To make this work, teams need tools to help them organize clinical outcomes, safety, and financial information in a way that surfaces only the information pertinent to the decision at hand, preventing them from being overwhelmed by massive amounts of irrelevant data.”
Capital purchases. “Few supply chains take an active role in the analysis for capital purchases,” she observed. “Generally, new equipment, software and construction are selected in committees in which finance or operations takes the lead role. Supply Chain is at the table to oversee contracting and maybe help negotiate pricing, not for analysis of purchase impact. These large purchases present an opportunity for Supply Chain to collaborate with finance decision support teams and clinical leaders. Supply chains can blend best practices for cost, quality and outcomes analysis with finance’s traditional cost accounting methods to provide a robust picture of the true impact these decisions have on clinical as well as financial operations. This helps both teams earn credibility needed to thrive in the new world of value-based reimbursement.”
Exploring variation
Supply Chain simply must strive to reduce variation in practice across providers treating the same disease states, according to John Cunningham, DSc, MBA, Chief Solutions Officer, Procured Health, Chicago.
To achieve that Supply Chain must engage physicians by presenting data that always leads with clinical implications versus cost, he argued.
“While supply chain operations are focused primarily on the variation in the use of supplies and devices, in terms of type and quantity, the clinical data will also provide insight into the variation across providers in the use of tests, ancillary services and drugs,” he said. “When collaborating with physicians in the application of the data, it is important that Supply Chain engage colleagues from these other areas to provide the physicians with the full view of the episode of care to balance the costs of variation with the impact to outcomes and operations. The combination of clinical and spend data provides not only visibility into the variation but also the cost and/or benefit of that variation. For example, if a costlier device reduces a patient’s length of stay or shortens the time to return to full functional status, the higher cost may be justifiable.”
Cunningham further noted that practice variation generates costs beyond price. It also includes inventory carrying cost, which represents the financial side, productivity effects from managing more stock-keeping units, which represents the operational side, and the education and competency of clinical staff required for the use of multiple devices that are therapeutically equivalent, which represent the clinical side.
“These are not completely soft costs,” he asserted.
Another key factor involves the categorization of new technology.
“When presenting the data, it is equally important that the data explicitly demonstrate the cost of new technology and whether that technology is revolutionary or evolutionary,” he said. “Physicians can be significant partners in addressing the premium pricing associated with evolutionary technology that should not demand a premium price. As organizations define their ‘value’ focus from the perspective of the patient versus value to the organization, the business case for eliminating variation is more relevant and top of mind for service line executives.”
Supply Chain must gain a better understanding of its value and impact on reimbursement if it hopes to drive improved clinical, financial and operational results, observed Kathy Schwartz, Solutions Owner and Associate Vice President, Strategic Messaging, Craneware.
“Cost improvements and physician preference consolidation are key parts of the equation, but these efforts will be lost if charges are not captured, manual markups and HCPCS coding for consignment implants are misaligned or pricing on the chargemaster is not regularly audited for price defensibility,” Schwartz said. “Disparate data clogs the path for corporate governance to maintain and sustain the Triple Aim and CQO initiatives.”
Schwartz called for the necessary links between item masters and chargemasters but beyond just being considered billing system databases. “This data supports activities for financial clearance through financial settlement,” she said. “Hospitals need to proactively align their Supply Chain data and chargemaster with the aim of creating a transparent pricing model or more flexible model for healthcare value-based reimbursement strategies utilizing a standardized methodology and approach. This data is accurate and complete at the claim level so that clinical efficacies can be analyzed and monitored to improve healthcare delivery.”
Perhaps Michael DeLuca, Executive Vice President, Technology and Client Services, Prodigo Solutions, Cranberry Township, PA, summed it up most appropriately. “To bring greater appreciation and visualization to the supply chain, Supply Chain leaders must integrate physicians into the conversation,” he said. “Don’t produce an analytic in a vacuum. Don’t assume you have an analytic that will resonate. Sit down with physicians and talk about what metrics are important to them. Then, assess the data available to support physician interests and use technology to produce metrics that provide answers to their questions. By reverse-engineering the process, you will improve clinical, financial and operational results.”
Sidebar: Analysis vs. analytics: A defining moment?
People and Opinions:
Motivating Supply Chain to embrace data science for clinical decision support
Rick Dana Barlow | Senior Editor
Rick Dana Barlow is Senior Editor for Healthcare Purchasing News, an Endeavor Business Media publication. He can be reached at [email protected].
