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)
- Henderson, James. 2017. “Supply Chain Improvements Could Save US Hospitals $9.9Mn, Says New Study | SCM | Supply Chain Digital”. Supplychaindigital.Com. http://www.supplychaindigital.com/scm/supply-chain-improvements-could-save-us-hospitals-99mn-says-new-study.
- “BJC GS1 Standards Implementation Case Study”. 2017. 1. https://www.gs1us.org/DesktopModules/Bring2mind/DMX/Download.aspx?Command=Core_Download&EntryId=600.
- “BJC Reduces Supply Chain Expenses With Tableau”. 2017. Tableau. 1. https://www.tableau.com/solutions/customer/bjc-reducing-supply-chain-expenses-tableau.
- “Integrating Advanced Analytics Into The BJC Healthcare Supply Chain”. 2017. Tableau. 1. https://www.tableau.com/learn/webinars/integrating-advanced-analytics-bjc-healthcare-supply-chain.
- “BJC Healthcare Recognized For Innovation In Supply Chain Management”. 2017. BJC Healthcare. https://www.bjc.org/About-Us/Newsroom/BJC-News/ArtMID/897/ArticleID/144/BJC-HealthCare-Recognized-for-Innovation-in-Supply-Chain-Management.