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18 6 ways health systems can drive revenue and reduce costs through strong supplier partnerships By Brooke Murphy S tandalone hospitals are increasingly rare in today's healthcare land- scape. Health systems are managing a broader portfolio of non-acute sites than ever before, with care settings ranging from physician offices and ambulatory service centers to urgent and long-term care. As vertical consolidation among health systems ramps up, acute and non-acute healthcare facilities face significant pressure to improve patient outcomes and reduce costs. is article examines opportunities for providers to leverage part- nerships with acute and non-acute suppliers and use supply chain and data analytics to identify cost savings opportunities, capitalize on new channels of revenue generation and improve patient care. Overcoming data silos in acute care settings Acute care facilities' greatest challenge with analytics programs is combining and aggregating data across disparate information systems to give physician and administrative decision-makers a holistic view of patient care. "As the big continue to get bigger, it's become challenging for hospitals to pull analytics together to be able to make great decisions," says Mark Eastham, se- nior vice president and general manager of McKesson RxOTM. "It's no secret hospitals have tremendous amounts of data, but they're struggling at times to pull data together from different systems to make quality decisions from a fi- nancial and a patient outcome perspective." Mr. Eastham recalls speaking with the director of pharmacy services at a sin- gle hospital system who expressed frustration in having to toggle between 16 disparate internal information systems to gather the data needed to inform pharma-related business decisions. Furthermore, acute care leaders and clinicians lack the necessary time, resourc- es and expertise to accomplish data-wrangling tasks, such as scrubbing and validating data, before they can begin using data to drive decision making. "Physicians and health care decision makers don't have a lot of time," Mr. Eastham says. "ey need succinct data, like an executive summary that pops up on their hand-held device. In addition to pulling the data together, they need it analyzed in a way they can readily use to make the appropriate calls and possible changes to current treatment." Here, Mr. Eastham discusses three benefits hospitals gain by partnering with their acute care suppliers to help bridge data silos between supply chain, clinical and pharmacy systems and deliver actionable information to acute care leaders. 1. Integrate purchasing and clinical data for operational cost savings. "Few hospitals have the expertise and or time to analyze their supply chain and clinical data and fully understand what their cost drivers are," Mr. Eastham says. "We've seen more people seeking outside consultants to analyze their data and come up with solutions that help them look at data and provide the right analytics on the purchasing side." Technology platforms that integrate supply chain and pharmaceutical spend with utilization data and clinical outcomes exemplify the new collaborative re- lationship providers and suppliers share to drive evidence-based care delivery. "Now, we're working to combine utilization data, purchasing data and out- comes data so supply chain and clinical leaders can have greater visibility into cost savings opportunities," Mr. Eastham says. "We're also factoring in the reimbursement side and pulling this info together for hospitals in a way that is fairly easy to understand and that they can then use to make the right decisions for the patient." 2. Prepare for regulatory complexity. Healthcare is one of our most highly reg- ulated industries. Health systems must deliver medical products and services to patients in a complex environment driven by mounting regulatory scruti- ny, fluid alliances and partnerships, active mergers and acquisitions, privacy rules and cybersecurity risks, escalating pricing pressures and eroding profit margins. To address these challenges and remain prepared, health systems are looking to their suppliers and medical product manufacturers for expertise and guidance on regulatory changes coming down the pike, Mr. Eastham says. "Health system administrators are looking for help to understand what could be the potential impact [of regulatory changes] on their business," Mr. Eastham says. "Systems are coming to organizations like ours that are experts in supply chain to help them understand an increasingly complex regulatory environ- ment, so then they can make decisions and try to get ahead, because that makes a huge difference in the profitability of the health system." 3. Capitalize on new pharmaceutical channels for revenue generation. Unlike five years ago, hospital CFOs today see pharmacies as opportunities to drive revenue by capitalizing on new distribution channels, such as specialty phar- maceuticals and infusion clinics. In fact, a moderately sized health system with $2 billion to $3 billion in annual revenue stands to gain $20 million to $30 million annually by operating its own specialty pharmacy, according to the Na- tional Association of Specialty Pharmacy. "We've seen an explosion in the health system side of pharmacy being looked at as a revenue generator," Mr. Eastham says. "CFOs would typically look at pharmacy as a line item on the budget, but not anymore. Now it's a tremendous revenue driver that can also help them drive and improve patient care." Many health systems see value in consulting their pharmaceutical suppliers for assistance in establishing new product distribution channels to best posi- tion themselves for financial success. Part II: Opportunities for supply chain analytics in non-acute settings Health systems nationwide are ramping up non-acute acquisitions and ex- panding their continuum of care for value-based medicine. Stakeholders ex- pect vertical consolidation to increase as health systems diversify by integrat- ing physician groups, urgent care centers, home health services, rehabilitation centers and other non-acute or post-acute settings. Hospitals' acquisitions of non-acute providers are expected to account for 84 percent of total provider acquisition volume in 2018, according to Accenture. For many health systems, expanding non-acute networks across larger geo- graphic footprints creates a decidedly more complicated supply chain. Dis- parate clinical and inventory management systems, geographic distance and varying clinical specialties can obscure purchasing trends and utilization habits and create process inefficiencies. Providers face challenges specific to managing and standardizing non-acute clinical spend. In short: e non- acute environment does not look like the acute-care world in which most supply chain executives have built their careers. "Dissimilar outpatient settings aren't operating on the same care management platform or using procurement systems or platforms and for good reason," says Jacob Hookom, vice president, customer technology, information technology at McKesson. "A home care clinician isn't going to use the same procurement process as an outpatient surgery center." Some health systems have attempted to gain visibility in to and gain control over the non-acute supply chain by implementing centralized practices and SPONSORED CONTENT Sponsored by: