Clinical integration hinges on authentic partnerships with mutual respect and understanding
By R. Dana Barlow
September 2024 – The Journal of Healthcare Contracting
Editor’s note: The following is part one of a two-part series. Look for the follow-up story in the November digital issue of The Journal of Healthcare Contracting.
Physicians, surgeons and supply chain executives represent a different kind of circular economy that reinforces business, clinical and economic sustainability.
The round-robin process works something like this: Physicians and surgeons bring revenue into a healthcare organization – largely from payer reimbursement for procedures – but consume a tremendous number of resources in terms of costly devices, equipment and products. Supply chain executives, on the other hand, can rein in those costs through strategic sourcing, effective contracting, value analysis and facilitation and management consulting, but must equip and fortify physicians and surgeons to carry out their missions.
Without the proper, respectful and responsible balance between the two groups, everyone loses – particularly the patients.
If physicians and surgeons obtain everything they ever want, regardless of cost, quality or procedural outcomes, then the facility in which they practice will slide deeply into the red unless those clinicians overcompensate with additional – and substantial revenue.
If supply chain executives succeed in denying any or all physician and surgeon requests to keep costs in check then the facility in which they work will slide deeply into the red unless it can attract more clinicians to practice that promise to toe the budgetary line.
The equation remains simple enough: Give physicians and surgeons absolutely everything they want, and you run out of money quickly; crack down on or deny physicians and surgeons absolutely everything they want, and you drive away the clinicians who bring in the patients that generate the revenue from procedural reimbursement from payers.
Since the enactment of managed care and the passage of diagnosis-related groups for payer reimbursement in the early 1980s, healthcare organizations have bobbed and weaved in their struggles to balance budgets and economics with clinical service and patient care. Since the turn of the century and millennium, however, a small but growing number of healthcare organizations have embraced a new strategy to bridge the perceived gap between clinicians and administrators that doesn’t involve money or technology for incentives – but the human touch.
They’re called “medical directors of supply chain,” and they encompass doctors and surgeons – actively practicing medicine or not with master’s degrees in healthcare administration and business or not – who liaise with either group because they speak the language of either group and understand the aims and goals of either group.
The Journal of Healthcare Contracting reached out to three examples of these relatively new healthcare executives so they could shed some light on what they do and why they matter as well as share how their roles can be applied anywhere. They are:
Anand Joshi, M.D., MBA, senior vice president, Procurement and Strategic Sourcing, New York-Presbyterian Hospital
Stacy Brethauer, M.D., MBA, Professor of Surgery, vice chair of Quality and Patient Safety, Department of Surgery, and medical director, Supply Chain Management, The Ohio State University Wexner Medical Center
Jimmy Chung, M.D., MBA, FACS, FABQAURP, CMRP, Chief Medical Officer, Advantus Health Partners and Bon Secours Mercy Health
All three expressed optimism that more clinicians like them are emerging within forward-thinking hospitals and healthcare systems around the country, striving to achieve balance between physician influence and preference.
JHC: Let’s talk about expectation myths vs. reality of someone with your title who straddles two realms. What should supply chain know about and expect from a medical director of supply chain?
BRETHAUER: The role of medical director of supply chain provides the supply chain and value analysis teams with a direct point of contact to help manage new product requests and sourcing projects with the faculty. Involvement of a physician leader ensures that clinical care and quality are prioritized while making evidence-based decisions to drive value for the health system. The supply chain team and leadership should expect the medical director to engage in all decisions with a major financial impact and to act as a liaison between the clinical teams and the supply chain team and lead any change management efforts required after decisions are made by the clinical stakeholders.
CHUNG: Physician leaders of supply chain (e.g., medical director of supply chain) are not just physicians who happen to spend some time collaborating with supply chain or participate in committees. They are supply chain executives who happen to have an MD and experience with patient care. This means they have the following skillsets that are important for supply chain management: 1) Ability to validate clinical efficacy of a product and lead Value Analysis programs, 2) Ability to craft the language necessary to gather and communicate to physician groups 3) translate the value of supply chain initiatives to real world outcomes that affect patients and communities, 4) propose supply chain initiatives based on clinical needs and align with clinical metrics, and 5) align clinical improvement programs with goals of supply chain to reduce waste and unnecessary variations.
JOSHI: Let me set a little bit of context. Although I do have an M.D. behind my name, I never actually practiced medicine. I finished medical school but never did residency or a fellowship. In many ways, while there are more and more systems hiring what I would describe as full-fledged medical directors of supply chain – physicians who are practicing medicine and supporting supply chain in different efforts – I’m much more just a supply chain leader who happens to have a clinical background. Twenty-plus years ago I was in medical school; my management experience comes from the supply chain side. If I have to give advice on what you want a medical director of supply chain to know, it’s that the range of technologies and supplies that physicians are using across any organization is enormously wide. And technology is changing really quickly.
I’ve often viewed it as a real challenge to think that a single medical director can cover and represent the entire breadth of a clinical portfolio of supplies that are purchased – not that it can’t be done. I’ve seen two pitfalls. The first risk depends on the subspecialty of the medical director that you hired. If they’re a general surgeon they’re going to feel most at ease talking about general surgery-type technologies, whether it’s staplers, suture, mesh or other classic technologies used in the OR. The risk there is that your sourcing organization may artificially limit themselves to focusing on those categories the medical director is comfortable with. Obviously, there’s an enormous range of expense categories that’s outside of a certain surgeon’s or certain physician’s comfort zone. I think that’s one risk.
The second risk is, again similarly, any physician you bring into this role is going to be specialized or subspecialized in some way. If they actually feel like they can be the experts in areas even outside of their own area of practice, that also has the potential to not go over so well with different specialists in the organization. For example, if the general surgeon is trying to be the expert in electrophysiology implants, it’s going to be a bit of a leap potentially because the technology in any one of those spaces is so technical and advancing so quickly. Just because you have an M.D. doesn’t necessarily make you an expert in every single technology used by every single subspecialty.
The most successful medical directors will be those who recognize their limitations in terms of technical knowledge and expertise but are still able to bring the type of influencing skills and persuasive abilities to other physicians in other subspecialties even if they’re not as familiar with the technologies that they use. It’s more about the soft skills that the medical director brings that in my mind are more important than their exact technical knowledge about the different technologies that are being utilized.
My team, none of whom are clinicians themselves, are the ones doing the work of engaging physicians and surgeons. I think it is critical that the engagement of physicians and surgeons cannot only be handled by a select few in a sourcing organization because that would limit the scale and scope of the impact you’re able to produce. It’s possible that one individual or five individuals would quickly become the bottleneck to getting a lot of work done.
With the right mindset and perspectives, even if you’re not a physician or clinician, you can still engage physicians and surgeons and create value out of those interactions. It’s all about coming in with the right mindset. Something I noticed when I first arrived at the hospital and within the industry, was that there was a lot of demonization of physicians and vice versa. The model that we’ve employed at New York-Presbyterian involves building strong trust-based longitudinal relationships with key physicians in all of the key service lines and building new relationships whenever there’s a new technology or opportunity. That has really served us well in the long run. We get the right physician and surgeon input on a particular category and have it a trusted partner. Ironically, we don’t necessarily employ any of those physicians with official supply chain medical director titles. We just use them as key stakeholders with whom we are engaging. That’s been the model that has worked in our environment, but it may not work in others.
JHC: Allow me to ask somewhat bluntly, how do you or someone in your position with your expertise respond to those who see you as a good luck charm who will solve all of supply chain’s inherent problems in dealing with physicians?
CHUNG: My best policy is transparency and humility. You have to admit what you don’t know and be willing to learn from everyone. You have to be humble yourself to be a part of the team and get your hands dirty to show that you’re willing to truly understand the details of the issues. Then you can acknowledge the difficulty and complexity of the problem and validate the hard work everyone else has done so far. If you wave your M.D. flag and ride in to “save the day,” you will not only quickly lose your credibility, you’ll also alienate everyone else, many who are admittedly smarter than you. I recall many years ago, AHRMM invited a surgeon to the annual conference to present how “easy” it was to standardize surgical instruments. He had this “what’s the big deal” attitude, which I think was very condescending.
JOSHI: [Laughter.] It won’t be so easy as that for the number of reasons we’ve already talked about. I think that having realistic expectations is critical. It’s unbelievably important to have the right personality and mindset in that role because it is all about bringing people together. It’s about bringing suppliers, the hospital administration and the physician body together around a contract and an agreement that everyone has bought into and understands is the right one for all three stakeholders. That takes some amount of skill to bring those parties together. Otherwise, and quite naturally, they would view themselves as adversarial in the dynamic that they’re set up in.
BRETHAUER: I think hospital and clinical leadership understands that these conversations are always negotiations and involve compromise. I haven’t encountered the perception that I can fix everything but have convinced people that we can prioritize projects and interventions to get the best value for the system. A lot of the job is setting expectation with leadership about what we can accomplish in a given year and explaining why certain things aren’t feasible at the moment.
JHC: What should physicians and surgeons – including nurses and related clinicians – know about and expect from a medical director of supply chain?
BRETHAUER: Physicians and nurses should know that the medical director is there to help facilitate their requests and to engage in the clinical discussions regarding new products or contracts. Having a medical director who actively participates in these discussions can de-escalate the tension that can sometimes exist between supply chain and the faculty when change is needed. It is important for the faculty and nurses to know that the medical director’s responsibility is to help the organization make decisions that drive value based on the best available evidence and that every request can’t be granted. The medical director can provide data to the clinicians about where there is unnecessary variation or preference and why certain decisions don’t make sense for the organization based on the value analysis process.
CHUNG: Clinicians should be educated about the need for physician leaders of supply chain. While they may be seen as physician colleagues who are positioned to champion (or temper) their desire for new product requests, they are also there to resolve some of the biggest issues that stem from decades of unchecked tolerance of unnecessary variations in care delivery. These include patient safety and waste, both which have been shown to be unacceptably high, lead to health inequity, cause health care unaffordability in the U.S., and challenges global environmental sustainability. Physician leaders of supply chain should leverage their position to educate clinicians about the importance of reducing variability, adopting principles of High Reliability, and making health care affordable and sustainable, while representing clinical positions to the operational leaders of health systems to ensure they are focused ultimately on the patient experience and health of communities.
JOSHI: They should expect some level of technical and clinical humility about areas of medicine or surgery that aren’t necessarily their area of expertise. That would be a good expectation to have, and you need to have the right medical director to fulfill that expectation. The flip side is that the medical director will have been, roughly speaking, in the shoes of the clinicians – nurses, physicians and surgeons – that the supply chain team is working with. Having someone who truly has been in their shoes and deals with the realities of requesting new technologies and recognizing the pros and cons of getting new technology, that experience is meaningful, so ideally, you’d find that in a medical director or executive of supply chain. That’s one of the reasons that my medical background, while very helpful in understanding how physicians think about things, doesn’t really serve much of a purpose with respect to saying that I’ve actually been in their shoes because I haven’t. I’ve been a medical student and rounded with physicians, but I’ve never been a surgeon looking to get his or her cases scheduled in and out of the OR quickly. That takes experience that I haven’t had, but a medical director of supply chain ideally would.
For true medical directors or executives of supply chain, I think more than anything else it’s understanding how physicians think about things, which I have absorbed over the years from medical school to working with clinicians. I think that training ultimately does help.
JHC: In your current role, what do you see as working well vs. what’s not working well and why? How might you address, if not solve, what’s not working well?
BRETHAUER: At The Ohio State Wexner Medical Center, we have had many successes in our sourcing projects to drive value with a variety of service lines including total joints, spine, cardiology, bariatric surgery, and vascular surgery. These sourcing projects have succeeded because we have been able to get the clinicians to come to the table, review the data and options and make reasonable decisions that meet their clinical needs and still drive value. Many times, we have asked our clinical stakeholders to engage in negotiations with our vendors to reach specific price points or contracts. Without a medical director leading these efforts, it would be much more difficult to get the clinicians involved and to have these sometimes-difficult discussions with our vendors.
We have come a long way over the last five years in building a clinically integrated supply chain in which clinicians are active participants in these decisions. There are still some groups, though, that resist these efforts and want to continue with their culture of physician preference, which is often pursued under the guise of innovation, research or training needs. It’s important for the medical director to educate the clinicians that saving money on the big contracts and eliminating unnecessary variation actually provides more money to pursue those other interests, and they are not mutually exclusive. In the areas that still resist these efforts, we have engaged our senior leadership (CMO, CQO, COO) to help explain the “why” and manage the change that is needed.
CHUNG: Supply chain’s adoption of physician leadership is gaining traction rapidly, especially after lessons learned during the Covid pandemic. Supply chain leaders and industry partners are catching on quickly that clinical integration of supply chain is critical to everyone’s success. What isn’t working so well is lack of commitment on the health system’s side to support a centralized model to reduce variability. When the payment model is still based on volume and acuity with hospitals barely surviving on near-zero margins, there is no room for any risk of losing surgical cases. While the fear of losing surgeons to a competing hospital is largely based on myth, it is still a threat that surgeons leverage to hold their control at hospitals. However, the actual challenge is convincing hospital leadership to take that risk because 1) there is added value to standardizing that isn’t immediately apparent and 2) most surgeons do not actually leave because of lack of product choice. Having a robust data platform that shows the value [that] opportunities can empower leaders to have these difficult conversations.
JOSHI: What’s working well is the breadth of physicians that we’re able to form relationships with. It’s pretty significant. We are a 10-hospital system with two academic medical schools and lots of world-renowned, cutting-edge physicians and surgeons across those entities. We have the breadth of talent at the front-line levels so that our financial and sourcing analysts here are regularly in touch with cardiac surgeons, interventional cardiologists, electrophysiologists and working through the details of what a bid is going to look like and what the new products are and what they should be priced at. I think what’s working well is that breadth of coverage we are able to have in that model.
I think what’s not working well is finding exactly the right balance. There are certainly some number of those interactions where having a stronger clinical presence or background could help drive and push the envelope in terms of what we’re able to achieve or trying to achieve in a particular category with particular sets of physicians. I think that some of my more seasoned sourcing team members get there over time, but it’s definitely harder if you’re a sourcing analyst straight out of either a graduate school program or out of an undergraduate program. Because they are early in their career it’s going to be hard for them to push the envelope with the cardiac surgeons in terms of what they’re utilizing. There’s a middle ground that we miss a little bit, but part of it is just staffing realities and resource availability in some instances.