How digital transformation is reshaping the healthcare supply chain | Steve Jackson

Organizations that have embraced digital transformation through the cloud, automation, and AI will see additional performance and cost efficiencies.

It’s no secret that healthcare organizations are under immense pressure as operating margins decline, budgets shrink and staff struggle with fatigue and burnout.

To help address these challenges, many are taking a closer look at where and how they can reduce costs and minimize the impact of employee vacancies while delivering better patient outcomes. One viable path forward is through the digital transformation of the healthcare supply chain.

COVID-19 showed many healthcare organizations just how limiting their legacy IT systems are. These systems cannot support the need for accurate and real-time forecasting nor management and re-allocation of supplies across their organization.

Business decision makers at healthcare organizations also learned their legacy systems were keeping important data trapped in silos, resulting in a number of discrepancies.

This is challenging, at best, when item data is not easily accessible throughout the organization. Adding to this, item data that’s trapped in silos may not synchronize with the latest contract, causing discrepancies and incorrectly priced orders between the hospital and its suppliers. This results in more administrative work, leading to delays and potential impacts to patient experience and care.

In a digital-first future, health systems should be able to dynamically identify where inventory exists and reallocate it to the areas with the highest demand. When information remains in individual systems, or is not easily available to decision makers, it holds back the entire industry.

Embracing a Digital-First Approach

What’s clear is that COVID-19 has separated forward-looking organizations from those that are struggling. Healthcare organizations that embraced a digital-first approach have withstood the impact of COVID-19.

That’s not to say significant technological advances in healthcare organizations haven’t been underway for years. There are countless tools and platforms currently available for healthcare providers to harvest incremental gains through digitization.

A simple and familiar example is the rise in telehealth. Today, it’s a lot easier and more efficient for a patient and medical professional to have a virtual appointment versus getting in a car and driving to an office.

Yet from a back-office perspective, digital transformation in the healthcare supply chain is still nascent. It requires healthcare organizations to move away from legacy systems and relinquish outdated and time-consuming business practices.

Digitizing the back-office is in many ways easier than trying to digitize customer-facing processes, which is why healthcare executives should turn to digitization of the supply chain.

Driving digital transformation

There are three technologies that will help healthcare executives harness the power of digitization and modernize the supply chain: cloud computing, automation and artificial intelligence (AI). Let’s take a closer look at how each is driving digital transformation.

Cloud Computing

Healthcare’s adoption of cloud technology has been slow compared to other industries. This is largely due to aging infrastructures and sensitive data flowing through a healthcare organization’s systems.

As that data continues to grow at unprecedented levels, during an age of great digital transformation, it’s driving healthcare to quicken its pace in moving to the cloud. And in making that transition, healthcare providers are discovering cost efficiencies without compromising sensitive data.

As hospitals turn to digital transformation for more resilient supply chains, migrating ERP systems to the cloud is one area that’s delivering tremendous benefits. Cost savings are gained by eliminating multiple or redundant systems and having a single or fewer enterprise partners.

Also, as mergers and acquisitions continue to occur throughout healthcare, the cloud empowers organizations to realize operational and strategic efficiencies more quickly through a unified platform.

For example, if a billion-dollar health system acquires a hospital that’s a tenth of its size, the newly acquired organization can more quickly adopt standardized contracts and price synchronization, creating greater economies of scale.

Yet success hinges upon a solid data foundation and fully interoperable business processes. This strategy unleashes siloed data to enable real-time integration of other cloud-based systems such as electronic health records and supply chain processes. The result is a clinically integrated supply chain that reduces costs and supports more informed business decisions locally, regionally and nationally.

Automation

Automation is the second critical element of a healthcare supply chain’s digital transformation, yet many providers still rely on manual processes. Automation enables a healthcare organization to streamline business processes, reduce administrative work and improve efficiencies while reducing, or often eliminating, the risk of manual errors.

For example, a healthcare organization that automates the procure-to-pay process helps prevent discrepancies and ensure resolutions in real time, allowing them to take advantage of early pay discounts where they’re available. It can also further reduce costs through better sourcing and negotiations with suppliers.

For suppliers, automation contributes to a more fluid supply chain by streamlining the payments process and the delivery of supplies. Automation also creates seamless invoicing and payment interactions, resulting in greater visibility and accuracy into cash flow and cash management.

For clinicians, automation frees staff from performing rote tasks, allowing them to focus on delivering better patient care. For patients, automation helps healthcare become accessible, affordable and personal.

AI

AI, and to a large extent machine learning, enables aggregation of data across multiple organizations, quickly converting that data into insight so healthcare organizations can move from being reactive to predictive.

Those insights inform decisions that help avoid shortages in medical supplies and equipment and support more personalized treatment plans by guiding the optimal pairing of a device with a patient.

AI can help address questions such as:

  • Is the use of a particular device for a specific patient or patient cohort likely to produce a better outcome?
  • Does the device reduce the length of a hospital stay?
  • Does the device improve the quality of care?

But AI and machine learning are most effective operating through a cloud-based platform. In many ways, the cloud provides a 20-year refresh for health systems. It enables them to progress their back office and get to a federated system designed to support their need for better demand planning. This positions them for success by eliminating siloed data and creating fewer discrepancies between hospitals and suppliers. 

Digital transformation in healthcare is upon us. The result is a stronger, more resilient healthcare supply chain that improves patient outcomes and positively impacts a healthcare organization’s bottom line.

Organizations that have embraced digital transformation through the cloud, automation, and AI will see additional performance and cost efficiencies while avoiding future disruptions. 

Steve Jackson is general manager, exchange services for GHX, a healthcare business and data automation company.