In pursuit of the clinically integrated supply chain


December 13, 2023

Part 2 of a 2-part series on the healthcare supply chain

It’s a lot easier to talk about a clinically integrated supply chain than it is to achieve one. It’s no coincidence that there are seven stages of grief and eight stages to a clinically integrated supply chain. It’s that challenging.
That said, it’s not impossible to build a clinically integrated supply chain just like it’s not impossible to successfully cope with grief. Both take time, effort and commitment.  

Defining the clinically integrated supply chain

Let’s look at some of the barriers to building a clinically integrated supply chain, some of the solutions to overcoming those barriers and how close hospitals, health systems and medical practices are to achieving healthcare supply chain nirvana. 
What is a clinically integrated supply chain? the definition is simple and straightforward. It’s a supply chain operation in which clinical outcomes drive both price and reimbursement. It’s starts with the optimum clinical results for patients. Those, in turn, drive price. A provider pays for devices, supplies and equipment that give it the most desirable outcomes. That could be more than the provider historically paid; that could be less than the provider historically paid.

Outcomes also drive reimbursement. Reimbursement isn’t based on the cost of the device, supply or equipment a provider used plus a markup. Reimbursement is based on the outcome the provider achieved for its patient irrespective of its cost to produce that outcome. If it costs the provider less to produce that outcome, the provider’s profit is higher. If it costs the provider more, profit is lower. 

Of those, the least of a provider’s problems is people. Everyone from the clinical, financial and operational sides of the house can agree that a clinically integrated supply chain is the right strategy moving forward. The problem right now is the pandemic-induced shortage of supply chain staff. A recent survey by MHI, a supply-chain industry trade association, reports that recruiting and keeping qualified workers is the leading challenge for supply chain executives in 2023.  

The pandemic ignited the “great resignation,” and that phenomenon has temporarily left providers shorthanded as they try to execute their strategy. Assuming the great resignation ebbs, people will become less of a problem in building a clinically integrated supply chain.
Another hopefully temporary problem is processes. As mentioned in Part 1 of this series, hospitals, health systems and medical practices are still working their way out of the disruptions caused by the pandemic. Right now, it’s all hands on deck as providers deal with supply and equipment shortages, inventory management struggles and storage and warehousing issues. Like the people problem, the processes problem should wane in time.

Disconnected tech and data woes

That leaves technology, and it’s the biggest problem. It’s the biggest problem because providers’ disparate health IT systems aren’t connected. Those systems produce all kinds of clinical, financial and operational data. But providers have no way to pipe that data into a single, integrated platform that can merge the data, synthesize the data, and generate the right information and insights in real time to make the best purchasing decisions. There is no way for them to enable outcomes to drive prices and reimbursement. As a result, price and reimbursement usually sit in the front seat with clinical outcomes sitting in the back seat looking out the window, hoping for the best. 

The solution is interoperability. It’s building or installing a single platform that can make those disparate systems talk to one another and agree on supply chain truth.

Interestingly, HIMSS has a lie detector for supply chain truth, or more accurately, a way to measure how close a provider is to achieving a clinically integrated supply chain. It’s called the Clinically Integrated Supply Outcomes Model, or CISOM. CISOM has seven stages (actually eight as it starts with Stage 0) with Stage 7 being the highest state of clinical integration. 

Organizations that reach Stage 7 have the following capabilities:

  • “Point of care capture of product data proactively cues clinician teams to the risk of adverse events using predictive analytics tools to enable preventive actions to strengthen quality and safety.”
  • “Patient outcomes are linked to care processes, product use and clinician teams at the point of care to identify the best outcomes for population segments and conditions under which the best outcomes are achieved.”
  • “Patients access their personal health data with analytics tools to build health literacy and inform decisions to support self-management.”
  • “Leadership strategy is informed by the flow of clinically integrated data in real time, which creates evidence informing all strategic leadership decisions to personalize care delivery 
  • to population segments to achieve best outcomes.”

As you can see, in Stage 7, a clinically integrated supply chain is all about clinical outcomes. When that happens,  good business, i.e., prices and reimbursement, follows. 

Will we get there this yearin 2024? It’s possible. But the first step must be integrating clinical, financial and operational data on a single, interoperable platform. Without that step, it may be back to square one (or Stage 0).



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