Supply chains in healthcare are now starting to feel the full impact of the paradigm shift between fee-for-service/product and value-based payments. On the whole, the healthcare industry is seeing a seismic shakeup in the way goods and services are provided. Now, the value-based model, already popular among doctors and patients, is making its impact felt on suppliers as well. As a result, healthcare reform is speeding ahead with supply chain management taking center stage.
In the past, fee-for-service was generally the most common model. Patients would be provided with a service, such as a checkup, and then either they or their insurance would pay the doctor for the service. Now, many healthcare providers and patients are shifting to a value-based reimbursement system. Under this system, payments are more closely tied to the actual outcomes of care provided.
For patients, value-based payments help ensure better outcomes which promotes better health. Now, value-based models are being used to organize entire healthcare value chains. In turn, this may allow for a more efficient and effective healthcare supply chain that will deliver goods and services at a low cost without sacrificing quality. If anything, outcome-based models tend to increase the final quality of the products produced.
1. Defining the Healthcare Supply Chain
So what is healthcare supply chain management anyway? The healthcare supply chain refers to the entire delivery model for healthcare, from suppliers, to healthcare providers, and to patients themselves. Management refers to the oversight of these systems and the flow of goods and services through the system.
Think of a pair of hypo-allergic latex gloves. Before the doctor or nurse even puts them on, the gloves have to be delivered to the hospital. Before that, a supplier is likely purchasing them from a factory, or else shipping them from their own factory to a warehouse. The factory, of course, needs to get materials to make gloves. Once the gloves are used, they come into contact with the patient.
So the healthcare supply chain can be thought of as the flow of base materials to and from the factory, the healthcare provider, and finally towards use on a patient. In the past, healthcare supply chains were guided by simple fee-for-product/service model. Now, value-based reimbursement models are being implemented.
2. Fee-for-Outcome is Forcing Healthcare Providers To Change Things Up
By tying fees to outcomes, patients can rest assured that they will receive as high of quality of care as possible. After all, payments are based on outcomes. This means hospitals have every incentive to maximize outcomes from the services they provide.
In order to ensure maximal outcomes, hospitals are becoming more transparent and open about the services they are offering. They are also gathering more actionable data and are making revenues accountable to outcomes. As a result, the whole supply chain is becoming both more efficient and effective at delivering high-quality care.
3. Automation Into Supply Chain Management
Automation is one way to deliver better outcomes throughout the entire healthcare supply chain. Of course, not everything can or should be automated. However, by using automation in key areas, it is possible to improve the whole healthcare supply chain. Automation can increase speed and reduce the risk of human error. This makes healthcare supply chain management much more manageable.
Automation also allows humans, including doctors and other healthcare providers, to focus on high value-added areas, such as medical treatment. Automation can take care of the messy and tedious areas of supply chain management, allowing people to focus their energies where they can make the most difference.
4. Integrate and Empower With Big Data
Big data is more than a buzzword. Big data is revolutionizing healthcare supply chain management. With more data, decision-makers can make better decisions. Pharmaceutical companies, for example, can cut costs by reducing waste and discovering better opportunities. Health care practitioners and researchers, meanwhile, can use big data to identify unseen correlations. Insurance companies can increase tracking and make the whole healthcare reimbursement process easier.
As healthcare shifts to outcome-based models, big data will become all the more important for both tracking and implementation. Big data will improve the entire healthcare supply chain and treatment in general.
5. Use the Supply Chain to Empower
In the past, supply chain management was often thought of as nuisance management. Supply chains were pressing challenges for companies to overcome. With the rise of new technology and big data, however, the supply chain is becoming a tool for empowerment. Merged with outcome-based payment models, healthcare supply chain management can be utilized to deliver more effective treatment at lower costs. This empowers everyone, including suppliers, practitioners, and patients.
The Future of Supply Chain Management in Healthcare Is Bright Indeed
What does the future hold? A well-managed healthcare management system will provide across the board improvements for healthcare provision. For value-based healthcare delivery, a well-managed healthcare supply chain will reduce costs all while increasing outcomes.