Healthcare represents one of the largest segments of our economy, yet in many ways it still operates as a cottage industry of individual actors.
Atul Gawande, MD, addressed this phenomenon during this year's commencement address at Harvard Medical School. He explained that medicine was developed in an era when "doctors could hold all the information patients needed in their heads. And they could manage everything themselves." But today, "medicine's complexity has exceeded our individual capabilities."
What's true for doctors is also true of our healthcare supply chain. Once, it was acceptable for materials managers to toil away in isolation, focused exclusively on contract compliance and getting the best price for everything needed in the acute care setting. Each supply chain actor, including the manufacturers designing products, the materials mangers making the purchases and doctors using the products in the course of care, operated alone in isolated silos.
It's no longer acceptable, but it's still happening. It's a myopic process compared to what can and should be happening in healthcare. It is this fragmentation, both within an individual facility and across the healthcare industry overall, that keeps us from realizing greater system-wide advancements in care delivery.
Instead, we should be learning from and implementing best practices that have been realized in other industries to drive supply chain improvements that can provide the best patient outcomes at the best cost.
Wal-Mart provides a good example of how to transform this cottage approach to supply chain.
In the early 1990s, manufacturers supplying deodorant to Wal-Mart sold their products in a paper box. Then Wal-Mart asked a simple question: Why do we need the box? The box cost money, made the shipments heavier and destroyed millions of trees. And it didn't make customers smell better. So Wal-Mart told suppliers to lose the box. And they did, not just for Wal-Mart, but for almost all their customers.
But these types of innovations can only come with scale. Wal-Mart makes up a significant portion of most consumer products manufacturers' business, and when they request that a standard or a process change be implemented, it happens. But there is no Wal-Mart in healthcare. This has to change.
We need to unite individual providers around common, shared goals, such as the consistent need for better, more clinically effective products. And we need to use our scale to get those products at the best price using the most effective sourcing strategies.
One way to achieve this is through "sourcing to specification." Essentially, this program flips the purchasing dynamic so providers aren't just buying what's available. Instead, we are working to engage physicians and other clinical experts to develop the necessary, evidence-based specifications for new product design based on the ability to improve outcomes. Through this program, providers are sharing their collective expertise and the clinical evidence with manufacturers so that the end result is a product that is better, more effective and optimized to produce the best outcome for their patient mix.
Consider an example from Cincinnati Children's Hospital.
Statistics show that up to 65% percent of premature infants develop an infection during their hospitalization because their skin and membranes are underdeveloped. Typically, that information would be collected by and remain with clinical teams in a hospital. It may be used to design new infection treatment protocols or process interventions, for instance.
But Cincinnati Children's did something more. It worked with a manufacturer to design a new positioner for their preemie population -- one that would prevent the skin breakdowns that lead to infections from occurring in the first place, by using new materials that were gentler on the baby's skin. By bringing together clinicians and manufacturers to collaborate on product design, a new type of positioner was created that reduced instances of skin breakdown by 68%. And this new, better positioner is 33% less expensive than the old model.
This is the healthcare industry's deodorant box moment. But we can't afford to stop with a preemie positioner. We need to engage more physicians in this process and spread this innovation so that many more products designed and produced in this new, collaborative manner, using clinical evidence to create products that deliver better outcomes.
Some may say this puts a damper on the manufacturers' ability to innovate, but nothing could be further from the truth. In marrying clinical information that once was walled off in the hospital with best-in-class manufacturing techniques, it's possible to create more innovative products that are meeting real demands.
This is the future for our supply chain. It is not based on protecting each individual actor's piece of the pie or on building walls to keep us separate, but on breaking down those walls and sharing to achieve mutually beneficial success. Like Cincinnati Children's, we have to move farther up our supply chain, find the best ideas, learn how to make them reality and then scale them to reach providers across the nation.
These ideas aren't revolutionary. In fact, they're incredibly simple. But what they achieve is revolutionary.
Mike Alkire is the Chief Operating Officer of the Premier Healthcare Alliance. He may be reached at Mike_Alkire@PremierInc.com