What Hospital Boards Need to Consider Now
It has now been more than a year since the novel coronavirus hit the U.S., and during that time, healthcare systems the world over have been tested to their limits. As a result, the healthcare supply chain has been thrust into the limelight. COVID-19 presented challenges that we have never had to face before, certainly not on a scale this large — from the danger of using unauthorized gray market suppliers to the need for real-time tracking of personal protective equipment (PPE) deliveries and other vitally needed items. Just as past disasters such as Hurricane Sandy gave hospital supply chain leaders a frame of reference, COVID-19 will serve as a reference point for pandemics, which scientists predict are likely to recur.
So, how do we re-set our strategic plans? Even with a new administration in Washington that’s committed to strengthening the healthcare supply chain, we have learned a crucial lesson: relying on the Strategic National Stockpile in times of national (let alone global) emergency is not enough. What we can do is modernize the healthcare supply chain. In order to succeed, however, hospital boards must recognize that the supply chain should be elevated from the basement to the boardroom. They have earned a seat at the table. In fact, we desperately need them there.
Here are the key questions that hospital and health-system boards of directors should be asking now as they evaluate the role of the supply chain as an integral part of their strategic plans.
How does supply chain impact our organization’s mission?
The mission of most hospitals focuses on delivering quality, cost-effective care to improve the health of the communities they serve. Supplies are at the heart of that mission; patients cannot be treated without the provisions needed both to deliver care and to ensure the safety of the hospital staff. The supply chain is involved in nearly every step of patient care. Yet in most organizations — at least from the board perspective — supply chain still isn’t considered a strategic component of hospital operations and not yet seen as critical to achieving quality outcomes.
Boards have a responsibility to ensure that the healthcare systems they serve are well-positioned to deliver on their mission and to ensure the financial health of the organization. In many hospitals, the potential for supply chain to enhance this effort remains untapped. From PPE and ventilator shortages to vaccine delivery, COVID-19 has spotlighted the importance of a strategic, resilient supply chain and its impact on the delivery of quality patient care. This is especially vital in underserved communities, which are frequently hardest hit by emergencies and natural disasters.
What impact does the supply chain have on the financial health of our institution?
The impact that a strategic supply chain department has on the quality of care and the financial health of hospitals and healthcare systems should not be underestimated. According to Healthcare Finance News, one of the surprising outcomes of COVID-19 has been that it has helped accelerate the pace at which healthcare delivery organizations have embraced value-based care, driven by the lack of fee-for-service payments during the pandemic. Under President Biden, support for the Affordable Care Act is expected to grow, along with the number of mandatory bundled payments and pay-for-performance models.
In a value-based payment environment, a proven framework for evaluating the clinical effectiveness of a product or technology by examining the outcomes of the procedures for which it is used is essential to the success of a hospital or health system. This evaluation may result in the decision to purchase a costlier device because it is more clinically effective, which — under value-based models — can result in a greater financial return for the institution.
This is but one illustration of the impact that the supply chain can have on the delivery of quality patient care and, therefore, the growing need for more strategic and empowered supply chain leaders who understand the advanced analytics and processes necessary to make these decisions.
Are we incorporating supply chain in strategic planning?
When it comes to strategic planning, it is typical to look many years ahead in order to anticipate the changes that will be necessary in the short term. COVID-19 has likely altered or hastened organizational plans to keep pace with growing trends, such as the use of telehealth and the shift to outpatient care. Regardless, hospital leaders and board members must now consider what the hospital of the future will look like in a post-COVID-19 world.
When considering how our hospitals must innovate, we should not forget the lessons learned as a result of the pandemic. Innovations in supply chain management become an essential component of future strategic plans. Modernizing (and protecting) the supply chain can be effected in numerous ways, whether through technology and automation, improving workflow and operations, increasing transparency, forging partnerships for emergency preparedness response, and — perhaps most importantly — establishing a Chief Supply Chain Officer role to ensure the achievement of these initiatives at a leadership level.
Building a more resilient system
It is critical to recognize that investing in the healthcare supply chain is a fundamental investment in a more reliable and resilient healthcare system. While COVID-19 has owned the headlines over the past year, we must remember that it joins a list of other coronaviruses — in particular SARS and MERS — which, according to experts, still pose the risk of future outbreaks. Preparedness is essential to strengthening the trust that our patients and our staffs have in the healthcare system.
While we may not be able to control external events, we can control how we anticipate and ultimately respond to them. What are our restart and recovery plans? And how, starting right now, can we make sure that the moments in history where we could have performed better are not repeated? The speed, creativity, and agility with which a hospital can respond to evolving conditions takes board involvement.
In light of all that we have been through this year, ensuring that vital supplies are in the right hands when and where they are needed most should remain a top priority. As we recover from our COVID-19 hangover and consider how our hospitals must prepare for the future, boards must realize the importance of investing in the healthcare supply chain to ensure the health of their hospitals.
Christopher J. O’Connor is an experienced CEO and nationally recognized healthcare entrepreneur, innovator, and thought leader with more than three decades of global experience advising growth-oriented hospitals and health systems in strategic supply chain management.
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