When Changes in Consumption Patterns Cause Monumental Shifts in the Healthcare Supply Chain

Over on Healthcare Matters, Tom Finn has been busy penning a number of somewhat incendiary posts, undoubtedly causing industry insiders to put on the flack jacket. But one recent post from Tom with more universal insights into how to adapt supply chains and procurement strategies to changing business models is not so much controversial as it is observant. In examining the shift to home-based healthcare delivery vs. acute care services in traditional facilities, Tom observes that "as the healthcare economy swings over to satisfy demand for home-based solutions (for chronic disease management), opportunities for home licensed practical nurses, health aides; personal care aides; nursing aides, orderlies, and attendants will explode."

Moreover, "The number of home health care jobs will jump by 872,000, or 81 percent. The total number of jobs related to ambulatory care will grow by 2.7 million between 2010 and 2020, or 44 percent." But it's not just the human capital and services side of the healthcare delivery equation that will be stretched.

In Tom's words, "this demand shift will change the game for many SCM professionals who have spent their careers optimizing supply systems in support of event-driven, acute care for designated facilities." Specifically, the 'center of gravity' for supplies is shifting away from single node acute care facilities to 'n' node care networks where the demand for supplies, in terms of delivery/destination options, are far greater and will often include the patient's home." Tom also points out that it's "not just medical homes (Patient Centric Medical Homes), but private residences" where care will be delivered and supplies will need to go.

Such a shift in how goods and services are delivered and must come together could potentially cause openings in new models of distribution. For example, an Amazon-like provider could swoop and displace traditional hub-based distribution models within an integrated delivery network (IDN). For observers of the industry, by way of comparison one could look at the evolution of the electronics space and how Best Buy appears to be on its last legs just as Amazon and others are increasingly gathering sales and distribution steam. But the first question on order as this shift occurs in healthcare is whether suppliers and supply chains will be able to keep up with basic order fulfillment at the point of care delivery in the home. UPS or new 3PL services, anyone?

- Jason Busch

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