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Data Transparency: The Key to Building More Resilient Health Care Supply Chains

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Read more about author Kirtan Patel.

Today, approximately 30% of the world’s data volume is generated by the health care industry. And as staggering as this sounds, it’s estimated that the annual growth rate for health care data will reach 36% by 2025, outpacing the manufacturing, financial services, and media and entertainment industries. The challenge in front of health care executives and administrators is how to use this data and practice data transparency to improve the operational and financial performance of the industry, while maintaining the highest level of care for the populations it serves.

Data Transparency to Facilitate Operational Improvements

The past several years have been financially challenging for health care. There is a silver lining, however. In response to these challenges, the industry has accelerated its timeline to become more data-driven. Health care is not simply generating massive volumes of data – it’s putting that data to use for the benefit of all.  

One of the areas where data is having a significant impact is identifying costly and unwarranted physician-level device variation. In 2019, spending on medical devices neared $200 billion, representing 6% of all health care spending. Further, it’s estimated that 40-60% of a hospital’s total supply spend comes from physician preference items (PPI). Physicians often favor certain products used in the delivery of care such as a specific implant. But this variation in preference is not always rooted in data and clinical evidence and can drive up supply chain costs and even have an unintentionally negative impact on the quality of care.  

Reducing variation begins by identifying how much a hospital is spending on PPI by category, service line and physician. Fortunately, the massive amount of data generated from electronic health records, the supply chain, and financial systems enables hospitals to understand not only the cost, but also the efficacy of PPI compared to alternative products in the market. Then, clinical evidence can be used to determine if it’s the best option from a financial and clinical outcomes perspective.

When this data and evidence is shared with physicians, it helps build coalition and support for conversations about managing product selection and utilization patterns. Involving physicians in cost-savings initiatives is imperative to improving operational performance and margins without sacrificing the quality of care delivered to patients. 

Data Transparency to Bridge Cross-Functional Partnerships 

We’ve established that the foundation of inter-departmental partnerships is the exchange of clean, accurate data that identifies the factors affecting cost, quality, and patient outcomes. In the case of PPI, value analysis teams use item utilization and cost data to paint a picture for physicians, helping them understand their utilization rates and the financial impact to the service line and the hospital down the case level. That data can then be combined with clinical evidence to determine how device use affects clinical outcomes. During these clinical supply chain optimization discussions, physicians can share their expertise, explaining why they use specific items, how frequently they use them, as well as the impact to the patient. These discussions empower supply chain and clinical stakeholders to break out of their silos and collaborate on standardizing to products that benefit both the patient and the hospital’s bottom line.   

What’s exciting is that the data allows for greater segment analysis by facilities, procedure, vendor, and device. The insight gleaned can help value analysis teams and clinicians pinpoint opportunities to standardize on supply items within and across service lines. We can evaluate differences in physicians’ outcomes and device cost per case for a given procedure, and then explore functionally similar products, with the intent of supporting cost-savings initiatives without sacrificing the quality of care.  

For example, a cardiovascular service line within a hospital or health system can use physician level analytics to help address the variation in dual-chamber pacemaker implants for cardiac rhythm management. During these procedures, mesh envelopes, a premium product, are used to reduce surgical site infections. Using clinical evidence and data, supply chain and clinical teams can better compare the increased cost of this premium product with the outcomes that were achieved. By reviewing utilization data and understanding the rate of infection for procedures utilizing a particular mesh product or not, stakeholders can then better decide whether current utilization practices should be modified or whether the system will standardize on a product that is clinically equivalent but less costly.

Conclusion

Despite the hardships of the past several years, the health care industry stands on the precipice of an exciting future, one where data truly becomes the foundation to support and transform the business of health care. Data, along with clinical evidence, will help facilitate the right conversations between supply chain and clinical teams, supporting critical cost-savings goals without sacrificing the quality of care. In short, data can help foster a common vision and strategy for advancing quality across the heath system through a more clinically integrated supply chain.

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