Yes, healthcare, supply chain can generate income and revenue.
By R. Dana Barlow
December 2024 – The Journal of Healthcare Contracting
Outside of the healthcare provider organization market segment, companies generally regard the supply chain with a modicum of respect for managing assets used in the manufacture and sale of products. This links the supply chain in most other market segments directly to the top-line revenue stream as well as to the bottom-line expense stream.
Supply chain within the healthcare provider organization market segment, however, typically fails to experience similar benefits and rapport.
Supply chain as a department and function may serve as specialists in strategic sourcing, product and service evaluation, contracting, purchasing, logistics, distribution and process facilitation – all of which typically fall on the expenditure side of the budget. But a growing number of entrepreneurial supply chain teams also are creating, developing, launching and sharing revenue-generating processes and products to promote and reinforce additional value to their provider organization and to others. These teams not only work to control costs but also to generate income.
Some of these entrepreneurial provider-based supply chain teams have launched a bevy of revenue-generating enterprises to help their own operations and processes as well as those of affiliated facilities and provider customers. The menu can include running consolidated/shared service centers where they sell supply chain services such as contracting, distribution, inventory management, laundry and sterile processing to affiliate facilities; group purchasing services for bulk and cooperative buying; software-based products that facilitate ordering, tracking and tracing, management consulting and process facilitation; mechanical products for materials handling and stocking; or even investing in domestic manufacturing ventures for backorder- and stockout-susceptible personal protective equipment (PPE), intravenous fluids and other relevant products.
Among this burgeoning group of supply chain-emerging income incubators, five shared their experiences with the Journal of Healthcare Contracting, not only highlighting what they did and why, but also explaining what motivated them to do it, the entrepreneurial spirit necessary and how to sell supply chain-generated income ventures to a C-suite that may expect them to stay in their original lane to control costs.
MultiCare Health
The Tacoma, Washington-based integrated delivery network (IDN) foresees tremendous growth and opportunity in harnessing business intelligence and digital expansion, according to Jason Moulding, Chief Supply Chain Officer (CSCO).
“Our Supply Chain division has been heavily investing in business intelligence and insights for the past several years,” Moulding told JHC. “We embarked on our digital transformation journey back in late 2019 just before COVID-19 which was very fortunate, as we had a foundation to quickly build dashboards for inventory management when days on hand became an important ratio. Now our Supply Chain Resource Analytics team has grown significantly and the amount of disparate data that we can collect and ‘paint a picture’ with has improved financial, clinical and operational efficiencies. This is an area of our supply chain that we’re going to continually invest in as I believe it’s our competitive advantage and value that we bring to our organization and our customers.”
WHAT THEY DID: An internal supply chain team created a suite of software products to help clinicians and administrators more effectively and efficiently manage operations.
“One of the major functions within MultiCare’s Supply Chain Management is our Innovation and Application Development team,” said Matthew Palcich, system director, Resource Analytics. “Over the last couple of years, we have partnered internally with stakeholders and subject matter experts to develop multiple offerings leveraging a combination of reporting expertise and low-code application development.” Palcich listed some of the key areas of development as in:
- Procedural Analytics Intelligence – a dynamic and flexible data eco system leveraged to compare physician cost per case, reimbursement and quality metrics to drive improvement across the full spectrum of procedural areas.
- Substitute Item Database – integrated workflow, approval and data capture of substitute activity leveraged to enable speed to execution and data enrichment for operational teams.
- Savings /Initiative Tracker – Single source of truth for all savings initiatives and results that is linked to data sources, intuitive user experience for data entry, and transparent results for value-based reporting to senior leadership.
- Demand Planning Suite – a highly integrated application focused on identifying lead time variation, demand signals and inventory availability that is quick to stand up targeted initiative-based reporting for supply shortages and visibility to run daily operations and senior leadership.
Because these products were developed internally by a dedicated team rather than relying on third-party vendors, MultiCare Health enjoyed a number of benefits through their methodology, according to Naresh Thapa, assistant vice president, Supply Chain Strategy & Integration.