April 30, 2008
Welcome to HFMA Wants You to Know, where you will find business solutions for caring organizations.
Gaining physician buy-in represents the greatest opportunity for supply chain improvement, according to HFMA’s 2008 Supply Chain Survey reported in Opportunities for Supply Chain Improvement. The survey and report are sponsored by Amerinet. Seventy-two percent of the 225 survey respondents indicated physician buy-in was a “high” or “tremendous” opportunity area, up from 65 percent who felt similarly in 2005.
The survey respondents also indicated the most promising strategies for achieving clinician-hospital collaboration on supply chain issues. The top three strategies ranked as “high” or “tremendous” opportunities were:
- Engaging the executive team in developing a supply chain strategic plan with clear goals and accountabilities (51 percent)
- Sharing data with physicians to increase their awareness (50 percent)
- Conducting value analysis (49 percent)
However, findings showed that implementing such strategies and achieving desired expense reductions generally are two separate matters. Unlike other cost-containment programs, prospects for gaining physician buy-in typically are less clear. There is no definitive software, metric, or formula that will translate into physician buy-in. “A lot of organizations continue to struggle with how to meaningfully and successfully engage clinicians in discussions around procurement matters,” notes Anand Joshi, MD, director of clinical procurement, New York-Presbyterian Hospital.
To better inform physicians on preference item costs, supply and materials managers are recognizing the importance of being inclusive with physicians on decision-making activities in these areas. New York-Presbyterian made great strides by developing its Clinical Resource Initiative, a committee-based effort to get physicians more involved in the procurement process and, in particular, sourcing high-quality products at the best price. “This physician-led initiative then evolved into a hospitalwide approach to strategic sourcing based on close collaboration between administration and clinicians,” Joshi says. The result was a $25 million dollar reduction in operating expenses between 2005 and 2007.
At University of Kentucky Healthcare, one approach to cost containment is to determine how each new product will affect the bottom line and share this information with physicians. In addition, the organization has developed a physician-led value analysis committee that considers several metrics when parlaying data into significant cost savings: whether the item has been approved by the FDA to be used as intended, what the item costs, how much of the item will be needed for use on a monthly or annual basis, what reimbursement will be for the item, and the difference in cost between the item and one that it replaces.
Eugene S. Schneller, Ph.D., and his colleagues at Arizona State University have collected best practices in physician engagement related to supplies from HCA, New York-Presbyterian, Nebraska Orthopedic, and others. Dr. Schneller will present these practices during “Key Supply Chain Initiatives and Physician-Hospital Relations,” an HFMA audio webcast on May 15. Also included will be a case study by Thomas Nance, Director of Purchasing at Virginia Mason Medical Center, and a review of HFMA’s recent research findings.
Hospital CFOs recently shared strategies for physician engagement at a roundtable discussion of HFMA’s CFO Forum, including techniques for effective communication. Interest in the topic has been so strong that HFMA is launching a new Physician Alignment Forum, which will provide monthly tools for developing and executing a physician engagement strategy. You can sign up here.
Another key to supply chain improvement is broad change management. The Nebraska Medical Center, with the Massachusetts Institute of Technology, present a case study of such change at this year’s ANI: The Healthcare Finance Conference in Las Vegas. The session, held Tuesday, June 24, is titled “Achieving World Class Supply Chain Effectiveness: MIT Research and the Nebraska Medical Center Case Study.”
Experts at Denver Health stress putting supply chain improvement within the context of a broader strategy for managing resource utilization. Denver Health, a safety net hospital, achieved $11 million in savings over three years using "Lean manufacturing" principles. This case example, and other practical cost-containment strategies, will be featured in HFMA’s new Healthcare Cost Containment publication, coming in June.
If you have questions or comments about HFMA Wants You to Know, contact editor Robert Fromberg at rfromberg@hfma.org.
"HFMA Wants You to Know" ISSN: 1540-0697. Volume VII, Issue 9. Copyright 2008, Healthcare Financial Management Association. All rights reserved. April 30, 2008.