by Deb Reber
Consulting Director, Vizient
In addition to internal and external workforce shortages, healthcare supply chain leaders face complex demands that require identifying and synchronizing data from many different sources. As such, many organizations are seeking innovative ways to simplify and automate processes — allowing teams to shift time and energy away from replicable tasks to support broader organizational performance improvement initiatives.
The volume of competing suppliers and the rate of surgical innovations in musculoskeletal (MSK) care require diligent monitoring and management. Spine care, a subset of MSK, is particularly expensive and complex, and unjustified variation increases the difficulty of implant and instrument contracting, inventory and clinical management in the operating room, and sterile processing. Managing supply variation in spine warrants increased attention, as spinal procedures are expected to see accelerated growth
over the next decade, according to the Impact of Change® 2022 forecast from Sg2®, a Vizient company that focuses on market and industry intelligence.
Because an effectively managed spine program can help achieve sustainable value while improving outcomes, taking a more holistic and proactive category management approach is essential to manage supply spending while improving operational and clinical outcomes through reduced variation and deeper partnerships.
Tenets of a successful category management strategy
Category management is a strategic approach that identifies and aggregates similar products or services and develops a comprehensive strategy to holistically support the business — resulting in more sustainable, analytics-informed and evidence-driven cost reduction initiatives. For example, working
alongside our members and suppliers, Vizient subject matter experts apply three key components to enable a successful category management approach.First, cross-functional teams inside and outside of the organization — including supply chain, clinicians and suppliers — work together to achieve shared goals. Then these teams perform their due diligence around decision-making factors such as benchmarking, clinical acceptance and overall financial impact. Finally, they ensure a focus on variation reduction over cost implications by leveraging data-driven insights and peer-to-peer discussions to help ensure both short- and long-term acceptance and success.
For instance, Vizient worked with one health system in the Midwest to leverage data, technology and automation in a spine and orthobiologics category management initiative that delivered previously undiscovered value for both the hospital and supplier. It was a prime example of how a category management approach can streamline processes, shorten cycle times and do much of the heavy lifting.
Putting growth opportunities into play
As contracting processes continue to evolve over time, it is important to provide flexible strategies that benefit both providers and suppliers. When the health system reached out to aptitude — a Vizient technology platform that helps automate and accelerate category management efforts — for support, it was immediately noticeable that there was an organic synergy in spine and orthobiologics. Also, it was clear that the health system had not historically included volume commitments in their supplier agreements. Both served as foundational principles to begin building a customized approach for this initiative.
Based on existing relationships and previous initiatives with other providers, aptitude knew that a leading neurosciences supplier wanted to both secure and grow its existing business while broadening relationships to additional categories within its portfolio. However, the provider wasn't 100% comfortable if the supplier offer didn't include access to comprehensive insights to fuel informed, confident decision-making. Both parties wanted to work together but needed a boost to advance the partnership.
Ultimately, the supplier and provider discussed the value that a deeper relationship could bring. Initial discussions and a detailed spend review revealed that nearly 70% of the provider's spine and orthobiologics spend was already with this strategic supplier. However, by working more closely, each party found additional, incremental value with minimal product changes.
Analytics reveal a new pathway to savings
Providers can identify new opportunities by digging into their purchase history analytics in a new way. For example, in the case of the health system referenced above, they initially wanted to separate spine and biologics spend because they thought it would be easier to manage the portfolios separately. After some discussion, the suppliers thought it would be beneficial to combine the contracts. What the provider originally thought would be easier — separating the two categories — instead led to customization based on supplier input and creativity. This allowed for greater savings, more spend to count on and greater value for all.
Technology ensures compliance
Documenting the current practice pattern and executing an official contract through digital platforms can help ensure compliance through best-in-class pricing (benefiting the provider) and available spend measurement metrics (benefiting the supplier). Reviewing scenarios based on increased or decreased market share enables realistic budgeting expectations to meet and exceed fiscal goals.
Lessons learned
There are numerous takeaways from implementing a category management approach to spine care. For providers looking to adopt such an approach, it's important to consider the following:
- Take time to integrate technology into your processes.
- Consider testing new processes with a smaller initiative.
- Avoid setting overly aggressive deadlines that could create a higher potential for failure.
- Ensure clinical decision-making committees are in place, if not already, enabling a means to bring together stakeholders for consensus.
- Conduct weekly calls — communication is key and especially important during a request for proposal.
It's vitally important for cross-functional teams inside and outside of the organization — including supply chain, clinicians and suppliers — to work together to achieve shared goals. Ultimately, you must always be open to new pathways toward your intended goal, particularly when backed by data and trusted experts.
Learn more about aptitude.
About the author:
As a technology consultant, Deb Reber provides support to aptitude providers. She assists with pipeline development, RFP submissions and proposal reviews to help drive savings, reduce clinical variability and maintain clinical quality. Reber has been with Vizient for more than 14 years and has expertise with supply chain sourcing, clinical quality value analysis and as a consulting director for aptitude. She has more than 40 years of experience as a registered nurse working in acute care, occupational health and supplier clinical educator roles.