Future of the healthcare supply chain
Every year, for as long as I’ve been in healthcare, and that is now approaching 25 years, the industry takes stock of where it’s at and where we anticipate we’ll be in the New Year. The challenge in the healthcare supply chain, is that much of what was trending as far back as 2010 when the Affordable Care Act was passed into law, is still trending in 2015. The years preceding and those that followed have had a deliberate focus; process efficiency resulting in cost savings and improved quality of care.
In 2015, a primary focus should be on data. That’s the key to unlocking the supply chain challenges facing the industry.
The supply chain trends we’ve seen over the past couple years will continue including provider and supplier consolidation, patient care moving outside the acute care setting, reduced reimbursement levels, implementation of and integration with electronic health records (EHRs) and other healthcare business systems.
At the core of these trends is a need for quality data so that leaders can make informed, quality decisions. By quality data I mean accurate data for sourcing and procurement along with normalisation of data for reporting and predictive analytics.
As healthcare continues to focus on a cost-to-serve strategy for managing healthcare cost, accurate data is a foundation block for understanding procedure costs and its relationship to desired clinical outcomes. Built on that is system interoperability. Once data is normalised, the ability to share data across many hospital systems and their internal technology support systems begins to be the norm rather than the exception. Healthcare providers must be able to understand the relationship between clinical and supply chain data.
The fact that today there is a lack of uniformity in standardised data impedes healthcare’s ability to react faster to an ever-changing ideal future state. At the highest level, providers need better information on procedure cost so they are better equipped to know the complete cost to deliver quality patient outcomes.
In 2014, providers and suppliers started to see a catalyst for standardised product data. That said it is not easy for organisations to obtain the data in a manner that can be easily integrated into its various systems, from the enterprise resource planning (ERP) and materials management information system (MMIS), to EHRs, billing systems, and product registries for clinical research.
UDI is simply a starting point for us as an industry, but certainly an important one. Clearly, the next step is to incorporate these standards into legacy systems and operating models.
With the healthcare industry also concentrated on quality patient outcomes, the use of data will move us even closer to the patient to drive quality care. Specifically, hospitals and other healthcare organisations will be exploring ways to get technology (i.e., sensors, scanners) closer to the delivery of care (i.e., triage, ORs, recovery) to capture real-time data and compare it against large quantities of existing data to make better decisions to improve patient outcomes.
From a technology perspective, the industry is embarking on a time of ‘sensing and understanding’ in healthcare. Hospitals and other organisations will be looking to capture data closer to the patient, closer to ‘the action,’ and analyse that data to make smarter, faster, better decisions that result in predictive demand signals, quality patient care and positive outcomes.
So what are some of the things that supply chain leaders should consider in 2015?
First, they need to look at the data they are already responsible for and establish a process in order to both manage the data effectively but also ensure that the data is as accurate as possible. Part of that process is assessing the tools they’ll need in place to manage the data and get it clean. That’s not a one-time event, but rather an ongoing process of maintaining the integrity of the data.
Many supply chain teams are already capturing product data that is subsequently used for a variety of purposes (e.g. inventory management, analytics, etc.). They can use this knowledge and experience to help their organisations access the necessary data for important objectives, such as efficient patient cost-to-serve with the desired clinical outcome for quality patient care. As more emphasis is placed on criteria around EHR meaningful use, healthcare providers will need to understand the long-term impact for adherence to the criteria. Again, accurate and normalised data delivers the necessary visibility.
Next, they need to define a data automation strategy. What best-in-class hospitals are working on is a data automation strategy for creating “the perfect order,” a touchless scenario that automates the entire process from purchase to invoice to payment.
The final step is using the data to prioritise where they can have the biggest impact on process efficiency resulting in cost savings and improved quality of care. That’s actionable data and that’s the trend that needs to dominate the 2015 supply chain.
By Bruce Johnson, CEO and President, GHX
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”