Introduction: The national context
The cost of healthcare supplies can account for 50 percent or more of the total costs for high-volume procedures in orthopedics and cardiology. Future delivery mechanisms, including value-based purchasing, bundled payments, and comparative effectiveness research, will be difficult to handle until hospitals and physicians find ways to collaborate.
Physicians focus extensively on clinical medicine during their training, while product cost, reimbursement, hospital cost-containment efforts, potential conflicts of interest, and collaboration receive much less (if any) attention.
People trained in supply chain, health management, business, or finance who may become professionals in supply chain management often do not learn physician priorities, physician language, or relationship management and communication skills.
When these two groups meet in the hospital, they invoke a perfect storm. In many hospitals, physicians view administrators as “suits” or “bean counters” who approach them only when they want something. They perceive that hospital margins and finances aren’t transparent enough and have often not seen a benefit for themselves from hospital cost containment initiatives in terms of improved patient outcomes or greater clinical efficiency. Physicians also feel in many cases that their voice and clinical concerns are not heard. The consequence is a lack of trust in which physicians may not feel that the organizations where they work act in their or their patients’ best interests.
Likewise, physicians are a source of frustration for many supply chain managers. They perceive them as disengaged, unwilling to change behaviors, and indifferent to cost-containment efforts. In many cases, these supply chain leaders do not have:
- a clear understanding of why the physician is reluctant to engage or change
- the tools they need to engage physicians
- the credibility and authority they need to engage physicians.
In this chapter of Getting It Done, the authors describe hospitals that have bridged the gap and successfully engaged physicians in their supply cost management efforts to overcome some of the challenges described above.
Case Study: Collaborating to Get It Done
At NewYork-Presbyterian Hospital (NYP), where Dr. Joshi, one of the chapter authors, works, clinical supply spending exceeds $500 million annually.
Clinical sourcing activities at NYP have been led by a physician executive with MD/MBA degrees since 2004. The executive’s full-time job is to manage a team of specialists who focus on reducing costs across the spectrum of clinical expense categories.
Over the past seven years, the team has developed strong working relationships with physicians. On any given day, the sourcing specialists may exchange dozens of e-mail communications with their end users, from interventional cardiologists to orthopedic surgeons to ICU medical directors. In addition to engaging physicians through traditional means—face-to-face meetings and teleconferences, for example—the sourcing specialists aim to create a seamless interface between the team and the clinical decision makers through their communication.
Since implementing this approach in 2004, the NYP clinical sourcing team has saved between $10 million to $13 million dollars annually. As a percentage of net patient revenue, the hospital’s spending on supplies and other expenses has declined from 37.0 percent in 2004 to 32.5 percent in 2009.
This chapter is a great example of the power of physician-hospital collaboration to decrease supply chain expenses while maintaining or improving clinical outcomes. As always, I welcome your input to improve healthcare collaboration where you work.
Kenneth H. Cohn
© 2011, all rights reserved
I have not received any compensation for writing this content. I have no material connection to the brands, topics and/or products that are mentioned herein.