Care-based contracting should define Supply Chain activities

As organizations migrate towards value-based care models we are finding a primary focus based upon reducing clinical variation. Success in this emerging model requires an interdisciplinary governance and partnership between clinicians and Supply Chain to balance the trade-offs between quality and costs.

The role of Supply Chain is to enable clinicians to make optimal supply-related decisions. To meet the emerging cost vs. quality equation we need to be better equipped to provide information. Normalized data sets, credible evidence, comparative benchmarks, shared and leading best practice are the basis upon which organizations should be making care based contracting decisions.

An interdisciplinary team can take a more collective approach. First, define care. Whether we start with an episode of care, a specific DRG or simply a single initiative, the hardest thing is to just start. The heavy lifting is around standardizing care, and obviously Supply Chain would say “that is up to the clinicians.” That is a true statement, but Supply Chain can help by providing distilled evidence and information into actionable support for the clinical decisions. Supply Chain should access full-text journals, identify conflicts of interest and garner the quality of the evidence. Peer network reviews are a valuable source of shared process and procedure best leading practice.

Based on evidence, Supply Chain can help to define the quality, but at what cost question? Credible evidence, peer studies, outcomes and costs represent the base upon which clinicians can make a much more objective decision vs, those of subjective participants, such as, “this is what I like and my outcomes are okay.” By going one step further interdisciplinary teams then need to review their own comparative benchmarks and shared best practice to that available in the industry. Once all of this information is thoroughly discussed creating practice guidelines can be accomplished.

Leading the way

This is when Supply Chain takes the lead in optimizing contract value. Supply Chain can accomplish this by managing utilization and working with suppliers on how to award value based on volume and commitment and also by eliminating waste through reduced variation in care to include outcomes and cost-per-case or initiative. All of these negotiation points tie back to the practice guidelines that clinicians have created and an interdisciplinary team can approach together. The equation involves contract value maximization, standardization and commitment all based on utilization management, which then loops us back to the practice guides. The care protocols and pathways reduce unnecessary variation in both practice and products. This interdisciplinary approach incorporates an evidenced-based clinical perspective into contracting endeavors. Contracting based on the clinically proven best products in the market.

To summarize, here are Supply Chain’s five steps to success:

1. Define care
2. Select optimal supplies
3. Implement contracts
4. Educate and convert
5. Monitor and report

Many organizations get bogged down on where or how to even think about starting a care-based contracting model. Most organizations have multiple committees all trying to achieve better outcomes. Rather than forming new committees, organizations should consider having Supply Chain join existing care committees. Those committees in which Supply Chain already participates must begin to infuse a standardized approach and information. To reduce clinical variation is to reduce cost and ultimately achieve what we are all hoping for — improved outcomes both for our patients and our organizations.