Impact of Digitalization
The healthcare supply chain is a complex system that requires buy in from manufacturers, distributors, providers, payers (government and insurance companies), regulators, and patients. Providers, such as hospitals and healthcare clinics, are at the center of this supply chain – they purchase goods from manufacturers or distributors and use them to deliver services to their patients, while also ensuring they will receive appropriate approval from payers and meet the quality standards of regulators. To have an efficient healthcare supply chain, providers much manage the goals of each of these stakeholders to deliver optimal customer value at minimum costs .
Digitalization has made an isolated impact on each stage of this supply chain; however, the most profound impact has come in the form of increased ability to communicate transparent, real time data between each stage and stakeholder. This is particularly powerful in the healthcare industry because it allows for ongoing monitoring and reporting of patient centric data that enables providers to identify and respond to patients’ needs more quickly. This data also helps providers effectively communicate with suppliers and payers to ensure they have a low cost but efficient inventory and drive preventative care as well as quality patient outcomes . Providers across the United Sates belief that digitalization can help improve the healthcare supply chain and in turn lower costs, increase revenue, and improve quality of care . One provider, Kaiser Permanente, has noticed this potential impact and is striving to implement sophisticated data sharing systems to ensure data is optimized at every step in their supply chain.
Acting on Digitalization
To address the implications of digitalization in the Healthcare sector, Kaiser Permanente was one of the first health care providers to adopt an electronic medical records system that would enable the organization to drive transparency and communication across their healthcare delivery model . In the short term, Kaiser’s integrated healthcare data model is being used to improve inventory management, demand forecasting, care coordination, reduce medical errors, patient satisfaction, and overall patient-provider communication . In the next two years, Kaiser will be able to reduce their inventory variability and drive supply chain efficiencies to help decrease the cost of care, which directly flows to their patients .
In the medium and long term, Kaiser plans to optimize its electronic medical records to disrupt the way the American health care system monitors costs and provides services. Historically, the healthcare sector has focused on a fee-for-service model, where providers are paid based on quantity of care provided rather than quality. For example, a patient can visit a clinic or hospital for treatment for symptoms related to the common cold. However, the medication prescribed is ineffective and the patient returns to the clinic a week later looking for another remedy. In this system, the provider is reimbursed for the two visits – despite the poor patient outcome. If the hospital were able to track the actual outcome, it could incentivize the particular provider to spend more time with the patient and identify the true cause of the cold. In many cases, the patient may have a more complex illness, but because of the poor communication, is consistently given cold remedies. In fully integrating patient electronic records, Kaiser can better track patient outcomes at their clinics and drive a fee-for-value model that rewards providers for quality of care provided .
Could Kaiser do more?
Up to this point in time, Kaiser has been on the leading edge of recognizing and responding to digitalization in the healthcare industry. However, there is still more the organization can do to fully take advantage of digitalization and drive change in each part of their supply chain. While Kaiser has effectively improved both the downstream and upstream management when dealing with their suppliers and delivering patient care, there is room for further improvements on the payer side. Kaiser should use digitalization as an opportunity to better translate patient data to payers so they can understand the true cost of care per region and adjust insurance rates and reimbursements accordingly. Also, by sharing more accurate provider data, health insurance companies and government regulators would have a better understanding of patient needs, related illnesses, best practices in short and long term medical practices, and effective policies to drive care prevention and holistic treatments.
Additionally, Kaiser can more aggressively manage unwarranted variation in how individual physicians and care centers treat common problems. This will further drive efficiencies as well as standardization in their healthcare delivery .
Despite the positive impact of data digitalization in the healthcare supply chain, there is still a concern regarding subjectivity of the data. Are there actions Kaiser and other providers can take to decrease this subjectivity? Or is subjectivity a necessity in healthcare that should not be diminished? (792 words)
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