Healthcare Supply Chain Connections: Value-Based Purchasing and Point of Service Compliance

As complex operating structures, healthcare providers have long tended to segregate operations, thinking that by addressing them as disparate tasks they’ll be better able to manage them. One effect, unfortunately, is how this approach often confounds attempts at eliminating variance, regardless of type. To compound the matter, such divisions filter down, even into otherwise functionally integrated operating environments.

Procurement and supply chain, despite their convergence, are not exempt.

The concepts of value-based purchasing (VBP) references a broad set of performance-based payment strategies that link financial reimbursement incentives to a healthcare providers’ performance. Despite how difficult it is to equitably apply, especially given population health differences, the directive is simple.

Value-based purchasing and bundled Medicare payments are intended to accelerate the integration of care delivery. The design says that if patient outcomes essentially determine reimbursement, or if providers are forced to assume greater financial risk, their behavior will be more accountable. On the near horizon are, therefore, increasingly variable, bundled payment arrangements will score entire episodes of care and compensate accordingly.

Segregated views must combine to provide a higher-resolution picture of performance. They can’t obfuscate this.

Linking payment to performance requires healthcare systems to connect dots and establish a broader operating context, one that can ultimately be seen as defining of the health system’s brand. So that brand, obviously, must be synchronized with the latest value-based, increasingly bundled payment models.

While none of this is easy, there are steps that can be taken — proven strategies that have worked across industry — that are plainly available. Whether the care network sees itself as a pursuer of tighter, more integrated care delivery, or a care delivery network in pursuit of tighter standards, or both, making point of service compliance a foundational tenet is an absolute no-brainer requirement.

For acute care providers, controlling the point of service means more than providing a convenient shopping interface. Healthcare supply chain mananagement leaders need to deepen their analysis of the latest internal marketplace solutions and gain a fuller appreciation for what a default state of compliance actually means and accomplishes.

Connecting the dots between the behavior of thousands of requisitioners to the items and services presented to them, to the governing supply contracts (i.e. discounts, rebates and performance requirements), to ongoing internal value analysis initiatives, including product phase outs and introductions, to on-time recall management, to ordering patterns and inventory controls — even links to patient medical records — should all be on the table. The point is, at the scale these systems operate, if the POS data flows are logically integrated to such systems, community behavior is not only revealed but administrators finally have a tool they can use to shape it.

Software usability is among the most powerful of levers. As users require little to no training to use these systems, the adoption rate is almost instantaneous — a hugely overlooked benefit. The scale and speed of effective user adoption is inseparable from the other opportunities here. An internal marketplace effectively organizes and engages what may well be the largest cross section of users in a health system. Furthermore, it does so on a steady-state basis, becoming part of their routine workflows. For strategically minded procurement and financial professionals, there’s all kinds of creative planning and execution leverage here.

Shopping interfaces have been commoditized — they’re not the point anymore. The advice here is to evaluate systems from vendors who talk less about a “shopping experience” and more about the value of controlling the POS and using the information to enhance the relevance and performance of other logically integrated, complementary systems.

Health systems that delay in updating their point of service methodologies will fall behind. System evaluators must look past the opportunity to streamline “customer transactions” and understand the myriad supply chain management paths that will benefit.

The ability to shape the behavior of a massive cross section of users needs to be top of mind. Supply chain managers who view these systems as an effective communication platform are not only on the right track but also on the cusp of realizing opportunities to accelerate the integration of value-based purchasing and care delivery.