Determining ways to strengthen the supply chain’s efficiency, value and impact on care and the environment.
June 2024 – The Journal of Healthcare Contracting
From his vantage point as president of Advantus Health Partners and Chief Supply Chain Officer of Bon Secours Mercy Health, Dan Hurry believes the financial squeeze that U.S. healthcare providers have experienced over the last few years is unsustainable. New advances in technology are being introduced to the market – robotics, novel drugs, surgical tools and procedures – but the way providers get reimbursed remains the same.
“When you squeeze or remove margin, it naturally creates a pinch on what we do in supply chain,” Hurry said. “How do we manage that? How do we get around it?”
Today’s leaders need to be more thoughtful and comprehensive of how they view the supply chain’s impact on the continuum of care. It will take a shift in thinking from contract management to true supply chain management.
How do we get there? Hurry provides a few ideas in a recent discussion with The Journal of Healthcare Contracting.
Data transformation
There are more and more great insights coming through technological advances, but the U.S. healthcare supply chain still has one great weakness – an absence of a uniform language. There is no common UPC or UDI to standardize data and create absolute visibility into the supply chain. The industry has been too slow to adopt.
That lack of uniformity has been a source of frustration and bewilderment for Hurry, who came from the retail world where every item could be tracked through a standardized process.
“It’s not a matter of the ability to do this,” said Hurry. “I think you’ve got market forces that don’t want continuity of the insights into pricing where platforms can tell you Widget A costs a certain amount in Houston but costs a different amount in Boston and Chicago. Right now, that doesn’t exist.”
“Capability is not the issue. It’s the desire and impetus because what comes after common language is common insights. Once those walls get broken, the technical side will move quickly,” he said.
Today, though, not even 50% of the products in most hospital and health system item masters have something resembling a UDI that the IDN can use for a universal language. “When we think about the digital side of what we do, if you don’t have that common language, it’s hard to make sense of the data and the insights,” said Hurry. “Even insights from AI are built off common language. So, how do we build the infrastructure?”
Over the last few years, Advantus has partnered with SupplyCopia to develop a platform that will glean insights from several million lines of data.
“We have this rich information from our data lake that can tell us where we use things, how we use things, and who we use them for,” Hurry said.
Through the platform, anybody on the supply chain team can now ask a question and get near instantaneous visibility into a product category. For instance, someone can get the answers to how many total joints were done during a certain time period, how many of those were done with one specific supplier, and what the readmission rate was.
“We’ve never had this kind of speed to an answer,” Hurry said. “The only challenge with it is that it works well in our data lake, but doesn’t necessarily transform where anybody else can plug into it, because it’s subject to the data that’s built into the infrastructure. We are a large sample size, so we get good insights, but hopefully the next evolution will be a common language as an industry.”
Sustainability
Sustainability should not be a do-it-yourself project for today’s IDNs. Bon Secours Mercy Health uses a mix of industry partnerships and internal reviews to enhance its sustainability efforts.
For example, one industry partner, the Healthcare Anchor Network (HAN) catalyzes health systems to leverage their hiring, purchasing, investing, and other key assets to build inclusive local economies to address economic and racial inequities in community conditions that impact poor health. Another industry partner, Practice Greenhealth, is a leading sustainable health care organization, delivering environmental solutions to more than 1,400 hospitals and health systems in the U.S. and Canada.
In 2021, Bon Secours Mercy Health was one of 12 health systems that signed the Impact Purchasing Commitment (IPC) to build healthy, equitable, and climate-resilient local economies through how they spend their dollars. The commitment directs health care purchasing toward industries that decrease their carbon footprint, produce safer products and services, and grow economic opportunities for people of color- and women-owned businesses by at least $1 billion over five years. Health system signatories committed to adopting sustainable procurement goals, which help build additional momentum garnered by hospitals in the Practice Greenhealth network to purchase goods and services that minimize damage to community health and the environment. The commitment was designed by the Healthcare Anchor Network in partnership with Health Care Without Harm and Practice Greenhealth.
Internally, Advantus, as the supply chain team for Bon Secours Mercy Health, looks at their environmental impact in some simple – but effective – ways. “For instance, the more we can get into consolidated distribution (i.e. everything going on fewer trucks thus fewer vehicles on the road), the better off we are with the environment because your current footprint completely changes in the energy or consumption that takes place,” said Hurry. “To move those things the final mile like we do is certainly reduced in that effort. We’re constantly looking at simplified logic to make an impact. Measuring it is yet another challenge on having to get true throughput on whatever carbon emissions or water intake might be. This process involves continuous learning.”
Resiliency
The debate over onshore manufacturing versus overseas manufacturing has gone back and forth over the last few years due to economic factors. Bon Secours Mercy Health has a new partnership with a company that’s about to open a large manufacturing center in Ohio for domestic production of PPE products, and Advantus will be the first health care client for the new company. “We’ll continue to grow and support that while balancing it with the global equation,” said Hurry.
During the pandemic, shortages of PPE and assorted med/surg supplies garnered most of the headlines. But the reality is, pharmaceuticals have been going through the same issues long before the pandemic hit and still do today. “Probably on average, we manage about 70 pharmaceutical shortages every single day,” said Hurry. “Whether the shortage is about to come, it’s here, or we just came on the other side of it, on a day-in-day-out basis, there are a lot of drugs that we look at with a very fine-tooth comb.”
Fortunately, because of Advantus’s inventory strategy, the hospitals and health systems that they work with have not experienced a drug shortage. “We’re getting ahead of it and not being as reactive to what happens,” Hurry said. “Craig Wright and the pharmacy team overall do a tremendous job staying ahead of that.” This July, Advantus will open a distribution center exclusively for pharmaceutical products they believe are distressed or a challenge to augment their efforts operationally.
Advantus approaches its supply chain resiliency in several well-defined stages. The closer the product gets to the point of use, (bedside, OR, cath lab, etc.), the shorter the days on hand. In those settings, a health system might stock a week’s worth of supply. However, the supply is built with redundancy, because upstream, depending on the criticality of items, there may be another 30 days’ worth within the basement of every site.
Further upstream with distribution partners, there may be upwards of six months of supply because of an IDN’s strategic relationship with them. So, if there is a shortage or disruption, it rarely impacts the provider at the point of care.
“If there is a shortage, we’re looking at it upstream and asking when it would impact us and would it impact us at all,” said Hurry. “If this is a three-month issue or a concern with a particular product mix, and it happens to be on our list of where we’re carrying six months, technically it’s not a problem for us. We’re aware of it, we’re going to stay ahead of it, we’re going to keep an eye on it, we’re going to manage it accordingly, but it never becomes a problem for us. That’s what we differentiate. We relate that it’s a problem and we identify that problem. It only becomes a problem if we don’t have it when somebody needs to use it.”
All those incremental steps are managed. “I wish more people did something like that in the industry, because their distributors will be good partners in supporting those efforts,” concluded Hurry.