Materials managers are reaching the C-suite
"What we've seen in the past year is that CEOs and CFOs
have cut as much as they can with labor and they're getting the best product
prices possible, yet their supply chain expenses continue to go up," said
Pam Poshefko, consulting manager at Chadds Ford, Pa.-based IMA Consulting.
"They want to know why and what they can do to get those costs out."
On the product utilization side, clinicians are often
targeted for reductions and questioned about their practices, which
understandably can put them on the defensive. It can also put the MM in an
awkward position, Poshefko said.
"MMs have a lot of data from information systems, but
not a lot of knowledge from that data," she said. "They have not been
able to accurately gauge utilization, which makes it difficult to deal with
those who use the products. Without knowing whether clinicians are
over-utilizing products, there is not much to say because they are the clinical
experts and know how to use the products."
Even so, Poshefko recommends that materials managers get
together with clinicians to discuss product utilization in a
non-confrontational way.
"There is a lot of low-hanging fruit - not
in pricing, but utilization opportunities," she said. "The job is
much more than just contracting; it is teaching everyone how to better manage
resources."
MMs maturing
Bill Stitt, past president of the Association for Healthcare
Resource & Materials Management (AHRMM), says the MM's job has evolved over
the years to include many more responsibilities and is a key cog in the
healthcare financial machinery.
"Materials management is so much more than purchasing
today," said Stitt, who serves as vice president of Materials Management
for Robert Wood Johnson University Hospital in New Brunswick, N.J. "Sure,
we still manage that function and it is important, but that's really more an
output of so many other activities, rather than a principal part of our
job."
Slowly, materials professionals have become more strategic
and they are now charged with planning and implementing solutions rather than
just managing transactions, Stitt said. Along with purchasing and logistics,
materials personnel are asked to provide value analysis, manage reimbursement
and become more involved in directing general operations.
Stitt agrees that MMs need to work on diplomacy when it
comes to dealing with clinician product usage.
"We need to develop our presentation skills, our
ability to look at things strategically and learn how to talk with physicians
and clinicians even if we are not clinical ourselves," he said.
Change agents
To be sure, the conventional responsibilities of purchasing,
order placement and product fulfillment are still part of the MM job, but the
leader of supply chain operations needs to focus more on strategic global
issues for the healthcare organization, added Bill Donato, executive director
of supply chain management for the Cleveland Clinic and past president of
AHRMM.
"The materials manager is still evaluated on day-to-day
efficiencies and responsiveness, but that is only one area of focus," he
said. "You have to make sure the day-to-day responsibilities don't
distract from the strategic global view."
While materials managers are held accountable for supply
chain costs, Donato is quick to point out that much of what they are in charge
of is beyond their control. The MM's job, he says, is to operate as a
"change agent" for the supply chain.
"We introduce the data, analytics, published studies
and business details of the supply chain into the decision making
process," he said. "When you take that and work with physicians and
clinicians to integrate clinical expertise, we become very influential in the
decisions that are made on cost, quality and outcomes."
Redefining supply practices
Over the past seven years at Intermountain Healthcare in
Salt Lake City, Utah, Brent Johnson has diligently analyzed the intricacies of
materials management in order to institute meaningful change that will benefit
the organization in the future. One interesting discovery he made is that there
are common misperceptions about expenditures outside of labor.
"So many think med-surg products represent the major
part of the spend, but it only makes up about 30 percent," said Johnson,
vice president of supply chain and imaging services. "Non-clinical
products make up 40 percent, along with IT and food and nutrition."
Johnson entered healthcare supply after working in the
electric utility industry. As he assumed control of Intermountain's materials
department, his bosses gave him plenty of latitude to build a "robust,
strategic supply chain organization" seen in other industries.
His desire to transform materials management is evident:
"I think healthcare needs to be run like a business and more often than
not it isn't. That could be because of the non-profit focus and the mission of
delivering care."
Still, Johnson says his organization is "making good
strides" in reducing costs and non-labor expenses. And in the process, he
says the MM position has gained in stature and influence.
Source: healthcarefinancenews
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