Healthcare Digitization: Saving lives one data point at a time at BJC HealthCare

Healthcare has seen significant transformation in the United States over the last decade.  As Accountable Care Organizations (ACOs) become more prevalent, health systems will be paid not for the quantity of services provided, but for the quality of care patients receive.  This fee-for-performance model fits neatly with the HITECH Act of 2009, which spurred a movement to transition our healthcare system to electronic medical records.  This push towards digitization has had a profound impact on the recording of patient information and flow, medical supplies, and the interactions between health institutions.

As healthcare moves towards a digital age in which costs are closely tracked, hospitals are actively searching for areas where technology can be leveraged to decrease expenditures.  Supply chain currently accounts for nearly one third of hospital expenses and is estimated to surpass labor costs by 2020.1  According to a study by Navigant, US hospitals can reduce costs by $23 billion by optimizing supply chain operations, product utilization, and process flows.1  This would result in a 17.8% reduction in supply chain costs, which amounts to $9.9 million per year per hospital.  These savings can be used to pay for 4,000 cardiac defibrillators or 150 nurses.1  According to Navigant, the top 24% of hospitals in the US, with regard to supply chain optimization, spent $23 billion less per year than the other 76%.1  As mentioned in the report, one key change that can bring all hospitals to the same level of cost efficiency is through the digitization of purchase orders, requisitions, invoices, and all other supply chain documentation.1

The need to cut costs through the digitization of healthcare information has been particularly relevant to BJC HealthCare, a health system delivering care to St. Louis, southern Illinois, and mid-Missouri.  BJC has applied several digitization practices across its twelve hospitals and has seen tremendous optimization of its supply chain.  Essential to building a digital supply chain is data standardization.  Standardization enables the streamlining of all information regarding transactions, trading partners, locations, and products.  To accomplish this, the health system has adopted the GS1 global data standards.  This includes two forms of data standardization: Global Location Numbers (GLNs) to identify locations and organizations and Global Trade Item Numbers (GTINs) to identify products in transactions with partners and suppliers.2  RFID tags have been adopted to mark all hospital supplies such that GLNs and GTINs are leveraged to understand up-to-date inventory needs.  As all data regarding supply chain transactions are quantified and recorded using these universal languages, real-time tracking becomes a very powerful tool.  To leverage the large amounts of data being produced, BJC has developed several real-time dashboards using Tableau.3,4  These real-time dashboards allowed BJC to bring supply chain data to the rest of the hospital system and increase the transparency of this information to all key stakeholers.

The enhanced supply chain knowledge transfer enabled through the implementation of these programs has produced several prominent results for BJC.  The system has seen a seventeen percent SKU reduction and expects to save a total of $68 million over the next decade.5  Additionally, improvements to patient safety have been noticeable as BJC is able to prevent supply stock-outs, reduce emergency orders and overnight shipping costs, and conduct more efficient distaster planning.5 Looking forward over the next several years, BJC is seeking additional suppliers and partner organizations that adhere to the same data standardization methods, thereby increasing the volume and accuracy of their supply chain models.

While digitizing the supply chain and developing real-time dashboards is the first step in systems optimization, it is integral to further increase the transparency of and access to this information among all stakeholders.  This will require integration of Tableau dashboards into the electronic medical record such that providers will be able to easily obtain real-time supply chain information without having to open a new application or disrupt their clinical workflow.  Additionally, the RFID tagging system currently being adopted needs to be applied to patients.  This will enable real-time tracking of patient flow through the hospital system.  A deeper understanding of exact patient movement can be used to better understand true bottlenecks, transportation logistics, and ultimately create optimized and adaptable process flows.  As patient information is encoded in these RFID codes, providers can leverage RFID readers, potentially in the form of Google Glass, to allow point-of-care information delivery, ultimately increasing the speed of knowledge transfer and treatment.

Reflecting on the digitization of healthcare, an area of active debate is the question of who owns all the data that is being generated through novel tracking methods?  As patients become more empowered, should they be able to transport their health information across systems?  What is the mechanism to do this? (775 words)


  1.  Henderson, James. 2017. “Supply Chain Improvements Could Save US Hospitals $9.9Mn, Says New Study | SCM | Supply Chain Digital”. Supplychaindigital.Com.
  2. “BJC GS1 Standards Implementation Case Study”. 2017. 1.
  3. “BJC Reduces Supply Chain Expenses With Tableau”. 2017. Tableau. 1.
  4. “Integrating Advanced Analytics Into The BJC Healthcare Supply Chain”. 2017. Tableau. 1.
  5. “BJC Healthcare Recognized For Innovation In Supply Chain Management”. 2017. BJC Healthcare.


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Student comments on Healthcare Digitization: Saving lives one data point at a time at BJC HealthCare

  1. The complexities of the healthcare service model and supply chains certainly make this industry ripe for harvesting the benefits of digitization. I am impressed by BJC’s ability to decrease supply chain costs, reduce SKUs, and improve patient safety. One interesting supply chain dynamic that is unique to healthcare is the prevalence of physician preference items (PPIs). These items are often medical devices (like cardiac stints or artificial knees) over which the physician controls the purchasing decision. Different physicians may have different preferences and cost may not always factor into consideration. A paper by Kathleen Montgomery and Eugene Schneller that was published in The Milbank Quarterly proposes imposing a price ceiling on physicians for certain categories of PPI’s. This “payment cap” system is a top-down mechanism to control medical device costs, especially when physicians may not have the incentive to shop on price. However, this could result in sacrificing quality for cost. The real value will come when patient outcome data can demonstrate which medical devices are worth a premium price.

  2. Healthcare is one of the trickiest of topics because it is the intersection of very significant number resources and decisions. Reflecting on digitization of the healthcare space, what’s interesting to note is that a significant amount of healthcare costs are the result of specific patient behaviors. Heart disease and Type II Diabetes in particular are often caused by specific lifestyle choices that individuals make. Digitization efforts that can motivate people to do what most doctors recommend (nutrition, exercise, limit alcohol intake, etc.) are probably the biggest leverage points for the system. Could wearable technology provide patients, providers, and insurers better feedback mechanisms to improve the population’s health? It would be interesting to see how health insurance pricing could be linked to motivating healthy behaviors.

  3. Thank you for this interesting article, it’s great to see large integrated healthcare organizations like BJC using their market position to leverage these kinds of needed changes in the healthcare supply chain. You correctly point out that healthcare organizations are under ever-increasing pressure to rein in healthcare costs without sacrificing quality; the industry’s notoriously inefficient and expensive supply chains are a prime area in which to seek these kinds of savings. You began to touch on this supply chain digitization as a “first step” of sorts towards a more globally digitized healthcare ecosystem. Many in healthcare refer to this as the “clinically integrated supply chain”, and it is in many ways the holy grail in this industry;the notion that we can automatically incorporate real-time clinical data from the EHR to track patient flows, make efficient scheduling decisions, track resources, and place orders for replacements, from one central information hub. There remain some critical hurdles to this integration, however – patient privacy laws like HIPAA place strong restrictions on use of patient data, for example, while the EHR landscape remains highly fragmented. Further, any fully integrated system, or any system capable of exchanging patient information across providers as you mention in your final paragraph, will require cross-talk between different electronic platforms which doesn’t currently exist. An interesting legal/regulatory approach which has been raised is whether such platforms should be regulated in a manner similar to telecoms; in other words, sprint phones are required to be able to talk to verizon phones. Should a similar regulatory approach be pursued to coerce Epic EHRs to interface with Meditech ones? Is this anti-competative?

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