How digital health care can give providers an edge

The case for a digital supply chain

Digitizing the supply chain offers a cost-effective opportunity for health care providers to deliver the right product to the right patient at the right time. Building a digital supply chain will also position health care organizations to leverage technological advances designed to improve data flow and analytics, provider-patient connectedness, asset tracking, and regulatory compliance.

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What's driving the need for digital supply chains?

Health care organizations face a range of challenges that are prompting them to consider setting up digital supply networks (DSNs):

• Optimizing costs: Payment model changes emanating from health care reform, rising costs and shrinking margins, and the health care industry’s transition from a focus on volume to value are pushing providers to look for new ways to manage resources and reduce enterprise-wide costs. 
• Reducing unnecessary variation: By digitizing common processes, hospitals may reduce the likelihood of poor outcomes due to error and variability, while at the same time freeing up employees to engage in higher-value activities.
• Enhancing patient care, delivery, and engagement: Not only does having an efficient digital supply chain save hospitals money, it can lead to higher patient satisfaction by redirecting staff time to patient care, reducing waiting times, and lowering the number of rescheduled appointments.
  
• Addressing new value-creation priorities: Areas such as brand loyalty, operating agility, and resource engagement and management are commanding greater attention from health care executives. Excelling in these areas calls for analyzing current processes—including supply chain management—and making changes that will spur clinical and business innovation.

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Health care digital transformation with DSNs

For health care providers beginning their DSN transformation at ground zero, a key to unlocking value is to start by digitizing the core. Digitizing the core is an enterprise-wide undertaking in which a common technological platform, often an integrated enterprise resource planning (ERP) system, links and shares information from central business functions such as finance, purchasing, supply chain, marketing, and others. Digitizing the core can help health care providers address supply chain issues by collapsing the traditional, linear supply chain and creating a connected, smarter, faster, and more responsive digital supply network.

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Beyond the digital supply chain: Digital supply networks

Supply chains traditionally are linear in nature, with a discrete progression of design, plan, source, make, and deliver. Today, however, many supply chains are transforming from a static sequence to a dynamic, interconnected system that can more readily incorporate ecosystem partners—health care providers, life sciences companies, and others—and evolve to a more optimal state over time. This shift from linear, sequential supply chain operations to an interconnected, open system of supply operations could lay the foundation for how organizations compete in the future.

We call this interconnected, open system a digital supply network (DSN). DSNs integrate information from many different sources and locations to drive the physical act of production and distribution¹. The result can be a virtual world, which mirrors and informs the physical world. By leveraging both the traditional and the new, such as sensor-based data sets, DSNs enable integrated views of the supply chain network and rapid use-case-appropriate latency responses to changing situations.

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Digital supply chain examples

Health provider DSNs operating within an integrated ERP system primarily focus on connecting four component parts or nodes—plan, source, deliver, and support—which serve as the main operating levers within the industry’s supply chain life cycle. Here are examples of each:

• Plan: Using data to plan and track influenza medication
  Leveraging real-time data to forecast seasonal demand for influenza medication provides a clearer picture of where the medication doses sit in the hospital’s supply chain, verifies that the right supplies are available for the right patient at the right time, and allows the hospital to redistribute supplies to locations of highest need during a shortage. 
• Source: Using blockchain to track assets across the care continuum
  Blockchain’s immutability provides a basis for product traceability from materials provider to manufacturer to health care provider to consumer and could aid in investigations of how opioids are getting into the wrong hands. 
• Deliver: Improving inventory visibility
  By adopting leading-practice technologies such as radio frequency identification (RFID) and digitizing the supply chain at the point of use, health care providers and vendors can improve visibility into consignment inventory at the patient bedside and adjust direct movement of inventories in real time to areas experiencing shortages.
• Support: Building automations within accounts payable
  A national not-for-profit health system with operating revenues of $15.9 billion completed a request for proposal project to build three automations within its accounts payable department. Project timeline was 10 weeks, with the potential for further automations within accounting, finance, and managed care contracting.

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The DSN control tower

A next step for hospitals and health systems that have solidified their digital core is to consider implementing a DSN control tower. This scalable, adaptable, and centralized hub uses technology, processes, and talent to compile and exploit supply chain data, execute increasingly dynamic business models, and provide analytics and information to support executive decision-making.

A DNS control tower help solve the health care industry’s most pressing supply chain issues:

• Optimizing cost: Conventional supply chain models typically track inventory and purchasing; however, a supply chain control tower can provide more real-time visibility into these areas and offer powerful artificial intelligence (AI) capabilities that move beyond a traditional support model. For example, the control tower can build trend analyses that recognize purchasing anomalies in real time and promptly alert appropriate decision-makers.
• Reducing unnecessary variation: The control tower reduces likelihood of human error by constantly collecting and analyzing data and using its machine learning capabilities to recognize the optimal path for executing a process. In addition, the control tower can alert decision-makers when there are deviations from that path.
• Enhancing patient care, delivery, and engagement: A digitally connected control tower enables proactive, strategic data interpretation to better identify low-value activities and facilitate root-cause analysis. The control tower can then direct automation of the more menial tasks to free up staff time for more impactful activities.
• Addressing new value-creation priorities: The control tower helps health care providers achieve real-time decision-making and improve customer response time.

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Creating value through a health care digital transformation

Implementing a digital supply network is one way that hospitals and health systems can move toward a broad, enterprise-level digital transformation to enable seamless, integrated health care. When a DSN is coupled with innovations, such as machine learning, process automation, data analytics, and 3D printing, organizations can progress their health care provision from reactive to proactive and from preventive to predictive to gain a clinical and operational edge.

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¹The rise of the digital supply network: Industry 4.0 enables the digital transformation of supply chains,” Deloitte University Press, 2016.