Healthcare

COVID-19 is Forcing Medical Supply Chains to Change… And that’s a Good Thing: Part III

By Connor Smith

Hello everybody! Welcome to the conclusion of my series on how COVID-19 is changing medical supply chains. In Parts I & II I talked about how the pandemic is forcing U.S medical supply chains of the future to embrace digitization and automation, rep-less sales models for high cost implantable medical devices, and the influence that domestic manufacturing and value-based healthcare are having on their evolution. Before I conclude this series, I’ll add the caveat that medical supply chains will evolve in a myriad of ways far beyond just the six I addressed. These are simply what I believe are the most profound changes on the horizon for these complex systems. Now, let me dive into the two final transformative forces that will reshape U.S medical supply chains in the post-pandemic era.

5. Sophisticated Risk Analysis & Disaster Planning Software

COVID-19 is far from the first environmental disruption global supply chains have faced in recent times. There was the SARS outbreak in 2003, the Ebola virus in 2014, and natural disasters like earthquakes and hurricanes that occur frequently and can have devastating economic impacts. In fact, as many as 85% of supply chains experience at least one major disruption per year. The reality of the modern era is that globalized supply chain networks allow us to consume goods and services at incredibly low  prices, but they are also riddled with ‘achilles heels’ that can shake global economies if perturbed.

As I mentioned in Part II, one way U.S based providers and manufacturers will look to mitigate such interruptions in the future is by ensuring geographic redundancies throughout supplier networks and logistics partners and leveraging domestic manufacturing. While this approach will be one core component of U.S medical supply chain architecture in the future, an overall proactive, strategic approach to supply chain design will be paramount. Hence, medical supply chains of the future will be designed using sophisticated risk analysis software that leverages predictive analytics and advanced simulations to model for possible disruptions like pandemics and natural disasters before committing to suppliers and plan accordingly.

Academics have been developing operational supply chain risk analysis models that leverage AI and advanced computational methods for well over a decade, and supply chain experts across all industries have known the benefits of proactive supply chain risk mitigation for some time. A 2017 study conducted by Deloitte found that taking a proactive approach to supply chain risk management can save firms up to 50% when managing major disruptions. As medical supply chains become increasingly transparent and digitized, investments into proactive risk assessment technologies will be one of the best ROI that medical supply chain management teams can make. Using tools like predictive analytics, supply chain management teams will be able to quantify the risk of using a particular supplier by modeling scenarios like the spread of a virus to a particular region, losing a key manufacturing plant to a natural disaster, and more. Some researchers have already started developing simulation based analyses for global supply chain disruptions resulting from the spread of COVID-19, and it is reasonable to expect that using such models for supply chain planning in the future will become the norm. 

6. Integrating Population Health Analytics 

Originally posited by David Kindig and Greg Stoddart as “the health outcome of a group of individuals, including the distribution of such outcomes within the group”, population health has become a fairly nebulous term used to describe the overall health of patient populations. ‘Pop health’ research encompasses everything from studying how socioeconomic factors like income levels, race, or education level influence the prevalence of certain conditions to the prevalence of various genes in communities and how that affects disease spread and more. Depending on who you talk to, they likely have a different view as to what population health is and the responsibility that providers and manufacturers have in improving outcomes.

Regardless of your thoughts around what population health ecompases, as healthcare continues to evolve towards a value-based model it is inevitable that population health will play an increasingly vital role in how providers deliver care. Value-based incentive structures are designed to drive healthcare towards what the Institute of Healthcare Improvement refers to as the ‘Triple Aim’: improving the patient care experience, improving the health of populations, and reducing the per capita cost of healthcare. An overview of the triple aim is pictured below.

Image Adapted from Health Catalyst

Prior to the pandemic, providers were starting to integrate population health initiatives with supply chain management to combat the increasing strain they felt from over half of the U.S adult population having at least one or more chronic diseases. For example, Indiana-based Eskenazi Health extended its partnership with Meals on Wheels in 2017 to deliver healthy meals to patients discharged from the hospital at their home in an effort to reduce readmission rates. A recent analysis published by Providence Health System found that COVID-19 is accelerating this transition to a distributed care model in which patients receive personalized care from their homes or local clinics instead of at a Health System. They found that the use of virtual care technologies coupled with the desire to reduce unnecessary visits because of the pandemic is forcing medical supply chains to become more personalized. 

It is reasonable to suspect that the medical supply chains of the future will become increasingly patient-centric and account for the socioeconomic, genetic, and other key factors that influence a patient population’s well-being. The Internet of Medical Things market is growing at over 20% year over year and technologies and will likely increase due to the rapid adoption of telehealth & remote patient monitoring technologies because of the pandemic. These platforms will enable providers to gather more information about their patient population than ever before and construct truly personalized care plans. Medical supply chain teams of the future will integrate this information with predictive analytics models to not only ensure that patients receive the best possible care, when and where they need it, and at the lowest cost, but also make cost effective population-level interventions that improve overall societal health levels. 

In Conclusion
I hope you enjoyed the final installment of my series on the future of U.S medical supply chains! Interested in learning more or ways your medical supply chain could be improved? Feel free to contact us at Consensus Networks, where our HealthNet technology is being used to reinvent medical supply chains for the post-pandemic era.

Press Release

Consensus Networks Joins MATTER

South Bend, IN Sep. 22, 2020 — Consensus Networks announces its admission into MATTER, a leading healthtech incubator based in Chicago, IL, to accelerate the commercialization of its HealthNet technology and reinvent medical supply chains for the post-covid era. 

“Being accepted into MATTER has been a complete game changer in our journey bringing HealthNet to market.” Said Consensus Networks’ COO, Connor Smith. “Their team and network of healthcare experts and mentors have helped us tremendously. They understand the nuances and intricacies of the Health IT landscape and have really helped us fine tune our value proposition, messaging, and offering to all of the different stakeholders. MATTER has gone above and beyond to connect us with the potential end users, advisors, and partners we need to successfully commercialize HealthNet and we are excited to be a part of this vibrant community of healthtech innovators.”

MATTER, the premier healthcare incubator and innovation hub, includes hundreds of cutting-edge startups from around the world, working together with dozens of hospitals and health systems, universities and industry-leading companies to build the future of healthcare. Together, the MATTER community is accelerating innovation, advancing care and improving lives. For more information, visit matter.health and follow @MATTERhealth.

About Consensus Networks.

Consensus Networks is an Indiana based LLC that is reinventing medical supply chains for the post-covid era. Founded in 2016 with the goal of creating trusted data environments to derive novel insights, Consensus enables clients to integrate clinical and supply chain data to optimize inventory management and improve patient outcomes. Consensus Networks uses serverless application architecture, blockchain technology, and predictive analytics to ensure the best materials are used to treat patients at the lowest cost.

Healthcare

COVID-19 is Forcing Medical Supply Chains to Change… And that’s a Good Thing: Part II

By Connor Smith

Hello everybody! Welcome back to my series on how COVID-19 is forcing medical supply chains to change. In Part I I talked about how the pandemic is forcing the medical supply chains of the future to embrace digitization and automation and rep-less sales models for high cost implantable medical devices. If you have not checked out the first part of this series, you may do so here. Without further delay, let’s dive into two other ways medical supply chains will evolve.

3. Building Resilience through On-Shoring Production

It’s no secret that China is the world’s largest producer and distributor of medical supplies. Prior to the pandemic, China manufactured 48% of the United States’ personal protective equipment (PPE) and over 90% of certain active pharmaceutical ingredients (APIs). When factoring in other foreign suppliers, the U.S imports nearly $30 Billion worth of medical supplies every year, or roughly 30% of all its medical equipment. While this may seem like a fairly trivial portion of U.S total medical supplies, the pandemic has illustrated the profoundly negative consequences of relying entirely on foreign sources for particular items. There are over 25 drug shortages related to COVID-19 (17 of which are from increased demand) and critical shortages of PPE over six months into the pandemic.

Aside from the public health consequences posed by such disruptions, failure to make domestic supply chains more resilient pose a national security threat. Accordingly, shoring up medical supply chains is a priority for both presidential candidates for the upcoming election. President Trump recently announced an executive order aimed at increasing U.S domestic manufacturing and onshoring supply chains for pharmaceutical and medical supplies to protect against potential shortages. Similarly, Democratic Presidential Nominee Joe Biden put forth a 5 page plan articulating actions he will take, if elected, to rebuild domestic manufacturing capacity and ensure U.S medical supply chains remain resilient and geographically redundant in the future.  

Likewise, the commercial sector has expressed similar sentiments. A recent study conducted by McKinsey & Company found that 93% of surveyed supply chain experts listed increasing resiliency across the chain as a top priority with an emphasis on supplier redundancy and near-shoring production. The U.S medical supply chains of the future will emphasize  localization to mitigate as many disruptions as possible. Such regionalization will also make it easier to shorten the distance between suppliers and customers. As pointed out by Brad Payne of PCI Pharma Services, “Shortening the distance in the supply chain expedites deliveries and lessens room for complicating factors, like customs clearance”. 

Forward looking supply chain leadership on both the provider and vendor sides will be investigating ways to leverage these new logistics and distribution paradigms to reduce their bottom line and improve the quality of their services. For example, technologies like Predictive Analytics can be used to improve last mile delivery for medical supplies manufacturers. Other industries have leveraged logistical data analytics in this manner to reduce fuel costs and improve the quality and performance of their deliveries. Healthcare supply chains of the future will leverage these technologies and other tools like RFID to provide more efficient deliveries and optimize procurement strategies.

4. Use Value-Based Procurement Strategies

Historically, providers received payment through a fee-for-service model in which they are reimbursed based on the number of services they render or procedures they order. This strategy made sense when it was instituted as the reimbursement mechanism for Medicare & Medicaid in 1965, but it has perversely affected the way healthcare is paid for today. Physicians are incentivized to provide as many billable services as possible and take a ‘defensive’ approach to healthcare, ordering procedures and tests just to be safe. Consequently, they may order unnecessary tests and procedures without hesitation, as neither they nor the patient are financially responsible, increasing the cost of care. Over the past decade, insurers have started implementing ‘value-based’ payment models that link reimbursement to patient outcomes in an effort to reduce the overall cost of care and improve patient outcomes. Early results suggest that value-based reimbursement can reduce the cost of claims by nearly 12% and improve chronic disease management. The benefits of value-based models by stakeholder may be seen below.

Image adapted from NEJM Catalyst

Prior to the pandemic, pure fee-for-service was expected to account for less than 26% of all reimbursements in the U.S by 2021. Given the immense financial impact of the virus, the impetus to reduce costs by transitioning to value based care has never been greater. Hence, value based procurement, or ensuring that the right product is delivered to the right patient at the right time and at the lowest cost, will be the norm of medical supply chains of the future. As members of HIMSS have pointed out, the future of the healthcare supply chain will emphasize connecting cost, quality, and outcomes to help realize the Triple Aim and optimize provider  performance.  

Similar to the adoption of rep-less sales models I described in Part I, the foundational technology underlying value-based procurement will be clinical supply chain integration. Connecting supply chain and clinical data sources enables providers to redefine how they administer care. Once integrated, predictive analytics can be used to guide procurement decisions based on the cost of the material and its outcome for the patient. Some hospitals have already saved over $15 Million from clinical supply chain integration. Additionally, EHR integration with supply chain data allows providers to assess clinical variance in treatment with granular detail. Such functionality will be critical as providers look to minimize the impact felt by the pandemic, and continue playing a key role in how they operate into the future.

In Conclusion

I hope you enjoyed the second installment of my series on the future of U.S medical supply chains! I will be back next week with my final two insights as to what the future of these systems will look like. Interested in learning more or ways your medical supply chain could be improved? Feel free to contact us at Consensus Networks, where our HealthNet technology is being used to reinvent medical supply chains for the post-pandemic era. Until next week!

Uncategorized

COVID-19 is Forcing Medical Supply Chains to Change… And that’s a Good Thing: Part I

By Connor Smith

Without question, the dedication and tireless work ethic exhibited by medical first responders has been nothing short of heroic throughout these trying times. Unfortunately, despite (and partially due to) the valiant efforts on the ground, the healthcare sector is one of the most negatively financially impacted industries by the pandemic. A recent report by the American Hospital Association estimates the total financial impact of COVID-19 on the U.S healthcare system from March 2020-June 2020 to be $202.6 Billion. While a significant amount of this financial strain stems from treating patients infected with the virus and forgone revenue from elective procedures, many problems brought on by the virus could have been mitigated with more efficient and resilient U.S medical supply chains.

While the magnitude of a global pandemic is something few could have properly anticipated, COVID-19 introduced few truly new problems for U.S medical supply chains. Instead, it exacerbated problems and inefficiencies that have plagued the industry for years which have never been properly addressed. Yes, over 70% of active pharmaceutical ingredients that supply the U.S healthcare market are imported and constrained as a result of the pandemic and unprecedented global surges in demand for PPE created massive shortages in basic medical equipment for U.S frontline responders. However, siloed data, lack of automation & interoperability, and a reactionary approach to purchasing contributed to upwards of $25 Billion in wasted supply chain spending each year long before the pandemic. In fact, analysts project that 2020 will be the first year in which supply chain costs surpass those of labor as the largest cost component of delivering medical care by providers.

Some are optimistic that a COVID-19 vaccine will be ready by the end of 2020, but this is far from guaranteed and it could be a year or more before one becomes readily available. Consequently, the U.S healthcare system must face a stark reality that it may continue to lose upwards of $20 Billion per month for the foreseeable future. Major operational improvements must be made to its supply chains in order to help offset these costs.

The status quo for medical supply chain management is no longer tolerable and inefficiencies that were previously ignored must be corrected. Medical supply chains need to be reinvented over the coming months if the U.S healthcare system is to survive the pandemic and thrive into the future. This is the first of a three part series in which I will explore 6 different ways that U.S medical supply chains will look in the post-pandemic era and the technologies and external forces that will enable them. So without further ado, let’s dive into the future of U.S medical supply chain management!

1. Automation & Digitization

While this may sound obvious, over 80% of clinicians and hospital leaders still rely on manual processes for managing inventory. Consequently, health systems struggle to know what supplies they currently own, where they are located, if they have expired, and a myriad of other problems. Unfortunately, patients pay the largest price for these manual, inefficient systems. One survey found that 40% of clinicians postponed a patient’s treatment and 23% know of adverse events occurring to patients because of inadequate inventory. Considering that some industries are well into the ‘Supply Chain 4.0’ era, the first seismic shift for medical supply chain & inventory management will be to go entirely digital and implement technologies already used in more mature supply chains like retail.

Regulatory pressures from the FDA’s medical device unique device identifier (UDI) requirements and the Drug Supply Chain Security Act have already begun forcing some of this change and major compliance requirements are going into effect over the coming months. Digitizing medical supply chains will not only significantly reduce errors and inefficiencies arising from human error and manual entry, but also enable the use of technologies like AI and blockchain that can elicit even greater cost savings. For example, firms in other industries have seen cost savings of 32% across an entire operation by implementing AI based inventory management systems. Such implementations can be used to improve inventory management by enabling features like predictive forecasting and optimizing surplus inventory levels that should be maintained at all times. Other heavily regulated industries, like food, are experimenting with blockchain for product traceability applications in supply chains and estimate they can reduce costs of compliance by 30% within a few years. 

Certainly, there is much foundational work that must be done before medical supply chains can integrate these more advanced solutions. Implementing RFID chips to enable real-time asset tracking, achieving basic systems interoperability through data standardization, and switching to cloud-based healthcare inventory management software are among the baby steps that must first be taken. However, given the lack of digital infrastructure currently in place in many medical supply chains, there is an opportunity to ‘leapfrog’ legacy supply chain technology and implement cutting edge solutions to realize even greater cost savings immediately. Forward looking medical supply chain management teams will be looking to implement such solutions to ensure their supply chains remain resilient and future proof to future disruptions or pandemics.

2. Rep-less Medical Device Sales Models

Manufacturers of implantable medical devices have traditionally used an in-person sales model for distribution. These sales reps form close relationships with clinicians and are oftentimes even present in the OR during the surgery. While this model has been the standard practice for decades, it also increases the cost of delivering care tremendously. For example, in orthopedics, it’s estimated that the sales process for implantable devices accounts for 35-50% of the cost of sales. Moreover, this sales process makes it nearly impossible for device manufacturers to track their field inventory and providers to manage their consignment inventory, resulting in further cost increases of up to 25%.

The pandemic has not only made these inefficiencies no longer bearable for providers, but it has hindered the ability of manufacturers to even sell their products. Whether through self-selected or provider mandated deferral, there have been 50% fewer patients receiving care compared to normal, and elective surgeries for implantable devices like knee replacements have dropped by 99%. Moreover, nearly 50% of orthopedic sales reps have been forced to use exclusively digital means to support physicians or have been unable to provide support at all. 

It is reasonable to suspect that providers will continue to limit who is allowed into a hospital at least until a vaccine is readily available, if not longer, and patients can only forgo necessary care for so long. Hence, providers and manufacturers alike will be required to implement technologies that make rep-less sales models attainable. One key technological enabler of this transition will be integrated data environments of supply chain, medical IoT, and EHR data. Integrating supply chain data with EHR data had already been a top priority for many providers entering 2020. Such environments will serve as the cornerstone for other tools like video conferencing software and payment processing tools that can enable a rep-less sales model and save providers  millions of dollars per year

In Conclusion
I hope you enjoyed the first part of my series on the future of U.S medical supply chains! I will be back next week with two more insights regarding what the future of these complex systems will look like. If you are interested in learning more or ways your medical supply chain could be improved, feel free to contact us at Consensus Networks, where our HealthNet technology is being used to reinvent medical supply chains for the post-pandemic era. Until next week!