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May 6 2011   10:44AM GMT

The integration of supply chain management into healthcare IT strategy



Posted by: Jenny Laurello
AHRMM, supply chain IT, Supply chain management

Guest post by: William Stitt, CHL CRCST CMRP FAHRMM, Vice President, Materials Management, Robert Wood Johnson University Hospital; President, Association for Healthcare Resource and Materials Management (AHRMM) 

The focus on strategic planning and implementation for healthcare information technology projects continues to be at the forefront of most, if not all, healthcare organizations today. The advent of meaningful use, the desire to integrate complex clinical systems to drive efficiency and the desire to partner with physicians through virtual means are all key success factors.  In many cases these are focused primarily on the clinical aspect of such systems, when in reality there is a significant opportunity for operational and financial improvement in a variety of areas, especially the healthcare supply chain.

Although the advent of automation has been growing within the healthcare supply chain environment, with a focus on controlling costs and enhancing the use of resources, a great deal of these supply chain specific  IT initiatives are done in a silo, assuming that the procurement and logistics aspects of the operation stand alone and, as a result, are not viewed as an essential part of the IT strategy map or as a key component of an integrated plan.

While the actual selection of such systems is based on the functional use qualities, occasionally two factors are overlooked:

1) Scalability of those systems to grow from a technology perspective.
2) The need and ability for the integration of supply chain information systems into the clinical arena.

A reasonable argument could be that such systems are viewed solely as transactional, meaning that they serve a function to acquire products and manage inventory and therefore are limited in the overall impact in relation to other IT systems and projects.  When you look at the organizational responsibility of the healthcare supply chain, it is about cost reduction, increasing efficiency, eliminating waste and finding ways to do more with less. As supply chains mature in their ability to affect service delivery, they often look to technology solutions to meet the stated objectives, only to encounter roadblocks because insufficient funds for upgrades or other system enhancements, or the existing IT infrastructure (networking, wireless, etc) will not support the addition of new modules or devices.

This is especially true in areas such as RFID (equipment and product tracking) as well as point of use systems.  Perhaps the reason that such issues are prevalent is because the supply chain itself does not have an IT strategic plan that is shared at the CIO or other senior IT levels in the organization.  Sharing the vision for supply chain management technology should be a key component of IT planning, and should contain the requisite return on investment or operational justification for strategic plan consideration. While the supply chain executive should take responsibility for creating a plan and getting it in front of the right people, IT executives should also be open to hearing the value proposition, and providing the appropriate technical support and information to incorporate the supply chain into the organization’s information technology highway.

The other area that should be considered is if there is a requirement for supply chain systems to integrate into clinical systems within, for example, the OR, Radiology and the Cath Lab. The challenge here is that many of the existing clinical systems have some type of inventory management programs inherent within them, which gives the impression that such systems can stand alone from and do not require integration.  With the adoption of healthcare supply chain standards on the horizon, and data and pricing integrity at the forefront, the integration of these systems will be essential. When you look at the benefits of being able to populate product data to the clinical side, it brings about the ability for accurate procedural costing, increased charge capture and the opportunity to create an automated supply chain, with less manual intervention. Those benefits should not be overlooked.

This is not to say that some organizations have not been successful in integrating the supply chain into their IT strategic plan — but there continues to be more opportunity.  The IT executive and the supply chain executive need to form a collaborative relationship and wherever possible supply chain should have a seat at the table during information technology planning — your organization will thank you for it.

Please see here for more information on Bill and AHRMM.

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KarenConway  |   Jun 16, 2011  8:27 AM (GMT)

I applaud Mr. Stitt for raising the oft-ignored issue that hospitals and healthcare systems need to more fully consider the supply chain when developing their overall IT strategic plan, and I would take his argument even further. In his post, Mr. Stitt references the “possibility” of a requirement for supply chain systems to integrate into clinical systems. With the pending FDA rule requiring manufacturers to assign unique device identifiers (UDIs) to their products, I see this as more a question of “when,” not “if.” I fully expect providers to eventually be required to include the UDI in electronic health records (EHRs);l in fact the FDA and the Office of the National Coordinator for Health IT are already working on such an initiative. At the annual HIMSS conference in February, hospital CIOs were intensely focused on how their institutions were going to meet the requirements of Phase 1 of meaningful use, which includes incorporating data on medications into EHRs. One reason is for the limited focus on pharmaceuticals is that they already have a standard identifier in place, the NDC. The lack of a comparable standard on the medical device side is one reason why Congress passed legislation requiring a UDI in 2007. Therefore, once we have the UDI, the next step will be for the government to look at how they want it used, from tracking product usage and outcomes to including it on claims for reimbursement. My concern is that CIOs, as they design their IT architectures to meet the requirements of healthcare reform, may not be taking into consideration how they are going to capture data on the supplies used in patient care, especially implants. And if that’s the case, they may find themselves, down the road, scrambling to find ways to integrate supply chain and clinical systems, not only to meet regulatory requirements, but also to better understand the role of supplies in delivering quality care at the most affordable price. When you consider that in orthopedics the cost of the supply, the implant, can contribute as much as 80 percent to the total cost of the procedure, you cannot ignore the price component. And with a growing focus on comparative effectiveness and product registries, the need for data on product usage and efficacy will only increase. These kinds of integrations take time. The time to prepare is now.


 

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