Supply chain shortages and slowdowns continue to dominate the news cycle, a set of issues that the healthcare system has been dealing with since the start of Covid-19. From personal protective equipment (PPE) and medical supply shortages, to drug, resource and staffing limitations, healthcare delivery organizations have been hit with challenges from all sides, and have increasingly relied on new approaches and industry partnerships to make it through.
Across the healthcare supply chain, industry stakeholders and patients have had a tough past 18 months — and many face a long road to recovery ahead. From a lack of timely, consumable data and poor visibility into what’s driving supply chain failures, to a lack of information sharing and interoperability, the majority of healthcare supply chain obstacles were “hiding” in plain sight long before the pandemic.
For instance (and exacerbated since the pandemic’s onset), drug shortages and a “sick” pharmaceutical supply chain have increasingly plagued the healthcare system. A report from the Johns Hopkins Bloomberg School of Public Health details some of the contributing factors to pharmaceutical supply chain challenges both domestically and abroad during Covid-19. These include challenges from having a limited understanding of local and demand-driven drug shortages (i.e., lack of data/visibility and lack of information exchange/interoperability — the common thread).
In Johns Hopkins’ January 2021 report, The Pandemic and the Supply Chain, Joshua Sharfstein, Vice Dean for public health practice and community engagement at the Bloomberg School of Public Health, notes that “there are multiple dimensions to the challenges facing the supply chain” and that “fixing weaknesses is both an urgent task and a necessary step to improve resilience in the future.”
What’s urgent and necessary to fix healthcare supply chain issues today, while providing a strong foundation for the future? Technology, data, and the successful deployment of connectivity solutions across healthcare stakeholder groups that open up lines of communication and the delivery of actionable data.
Meeting Healthcare Supply Chain Issues Amidst COVID-19
On May 1, 2021, Michael J. Alkire stepped into his new role as CEO of Charlotte-based Premier Inc. health alliance. Alkire’s tenure with the company started when he became the chief operating officer in 2013, the same year as the company’s IPO. He then took over as president in 2019 before his CEO appointment last spring.
Under Alkire’s leadership, according to the company, “Premier expanded its member purchasing volume through its GPO portfolio from $40 billion in 2012 to $67 billion in 2021, and strengthened its member relationships resulting in consistently high retention and renewal rates.”
But in speaking with Alkire, these growth numbers never came up. His most urgent focus was on how to address critical challenges he’s seen during the pandemic, including the lack of communication across stakeholder groups and how to better leverage real-time data to tackle some of the pandemic’s biggest care delivery challenges.
Early on in the pandemic, Premier didn’t have the real time, actionable information it needed to understand the prevalence of Covid-19 and where the virus was spreading, important issues for a GPO whose role includes supply demand planning and resource allocation. “We didn’t have the data in terms of the utilization of products to care for patients. The entire industry was trying to prepare at the same time, in an already very-constrained supply chain.” Accordingly, Alkire and Premier worked to set up a private-public communication mechanism, which included the Department of Health and Human Services (HHS) and the Federal Drug Enforcement Administration (FDA), among other public and private organizations.
Data Insights Driving Industry-Level Quality Improvements
Through its extensive health system membership, Premier has developed what Alkire describes as “unprecedented access to data,” such as safety data, supply data, and electronic health records (EHR) data.” With this breadth of information, accounting for 40 percent of all U.S. hospital discharges, Alkire notes that Premier has been able to optimize its performance in three areas: margin improvement, clinical intelligence and standardization, and moving health systems to value-based care.
“Premier is able to create care quality benchmarks by collaborating with our health systems,” said Alkier, by leveraging integrated data sets to understand what systems are performing the best and what those outcomes are. “Then, we can take those insights and write them into the EHR to identify best practices,” he explained, where Premier is currently integrated with Epic, Cerner and athenahealth. These capabilities are also an area of interest for policy makers and governing bodies like MedPAC and Medicare.
Premier’s AI/ML initiatives, which fall under the company’s Pinc AI brand, are in service of driving health system quality improvement recommendations, as well as helping to more accurately match eligible patients with clinical trials, detailed Alkire. “We have the data, technology, and health system collaborations to help develop standards, report results, and analyze outcomes,” with the goal of better controlling costs, improving quality, and more effective matching in clinical trials recruitment.
In response to Covid specifically, Alkire notes that “Premier very quickly developed a machine learning and artificial intelligence (ML/AI) solution, using its own data and Johns Hopkins’ data to better track and prepare for Covid surges” regarding its distribution approach for personal protective equipment.
Enabling Innovation for Value-based Care
The industry’s shift to value-based care is very much still in progress, with different payment models continuing to emerge. Most recently, The Centers for Medicare and Medicaid Services (CMS) released five strategic objectives to help advance healthcare system-wide transformations, which included:
- Drive accountable care
- Advance health equity
- Support innovation
- Address affordability
- Partner to achieve system transformation.
Given its access to health system quality and performance data, Premier is in a unique position to drive the shift to value-based care, said Alkire, and has been advocating for policy in support of the transition. In September, Premier was part of a confab of 16 other national healthcare organizations that urged the Department of Health and Human Services (HHS) to move forward on alternative payment models (APM) to achieve health equity.
At Bon Secours, a not-for-profit health system with locations in seven U.S. states, Chief Population Officer Jean Haynes credits Premier with helping the health system shift to value-based care.
“We’ve been engaged with Premier on a dedicated assessment and planning project as we look to expand our participation in alternative payment models, including taking on two-sided risk, in selective markets,” says Haynes, adding that Premier helped the health system create transparent benchmarks “that enable us to see how we are performing compared to peers in the Population Health Management Collaborative, as well as to connect us with groups that are also high performers.”
In addition to the assessment work, Haynes notes that Premier also provides Bon Secours with guidance on ongoing advocacy, regulatory interpretation, and strategic plan impacts relative to existing and emerging rules and regulations. “Premier has directly supported multiple markets in strategic considerations relative to current and potentially future Medicare models.”
Haynes also referenced a 2020 Premier survey that found APM health system participants were best positioned to manage care through the pandemic. According to the survey, 82% of APM participants leverage care management support to manage COVID-19 and other patients, as opposed to 51% of those not in APMs.
Market Power and the Network-Driven, Vertically-Integrated Healthcare Supply Chain
Premier’s success, and ability to create value for its members, is largely due to network effects: each member health system that joins Premier’s network increases the bargaining position for Premier’s network as a whole. As described above, by aggregating clinical, financial and operational data from its membership and providing a feedback system to each member, it can allow for benchmarking performance against a set of peers, and help identify areas for quality improvement and cost control.
Alkire also stressed the importance of the vertically-integrated supply chain and why Premier has an advantage among its GPO competitors. “Not only is Premier able to negotiate the best pricing, but we’re also able to use our technology to look at areas of spend that other GPOs can’t see” to better understand what the price points are.” Through its partnerships with suppliers, Alkier said that the company was able to stand up additional production lines and source different types of inventories, which ultimately helped their health system members.
Premier is also prioritizing investing in the domestic healthcare supply chain, an important key differentiator of Premier for Alkire. “We are the only company in the healthcare supply chain that is investing in domestic companies,” including Prestige Ameritech. He also flagged that Premier has been able to help its health system members work better with employers, like Walmart, Facebook and Amazon, including through Contigo Health, a Premier, Inc. company.
Through its technology, supplier partnership, and various initiatives launched during the pandemic, Alkire says Premier has laid the foundation for resiliency in the future. “The technology we built out will be very helpful for future pandemics. We have supply chain technology that can look at stockpiles across the industry, and having that technology layer to understand what the inventory levels are is effective,” he said, adding that their solutions are available should the federal government even want to use them.
Covid-19 has been both a testbed for innovation and stress test for both health systems and suppliers. Going forward, the healthcare industry can expect to see GPOs continue to expand their core competencies, while leveraging their positions in the market to make an impact at scale.