Part 2 – Communication vs. Collaboration: Creating a Patient Centric Perioperative Supply Chain Culture

In Part 1 of our series on implementing a patient-centric supply chain, we talked about how communication and collaboration are not interchangeable and the differences between the two need to be understood in the transition to a Value Based Purchasing environment. Now, let’s take a deeper look at how to create this shift.

The ability to successfully transition to the value-based reimbursement world depends on departmental strategic business plans that reflect the overall goals of the organization and consolidate the known strengths of your departmental contributions.

In a volume based environment, Supply Chain and Perioperative Services focus on their own goals and utilize linear communication to manage the intersections between the two cultures – Supply Chain concentrates on the organizational mandate to reduce cost and Perioperative Services on providing efficient quality patient care. Although these perspectives are generally aligned globally, the focus on departmental success tends to prioritize short term individual accomplishments instead of long range sustainable financial growth.

A patient-centric culture can be defined as an approach that evaluates all clinical and supporting activities in terms of what is best for the patient and their family/support system. It is a shift from focusing on problems to focusing on the patient.

Adapting and functioning within a patient-centric culture specific to perioperative supply chain begins with minimizing linear communication and management silos and maximizing cross-departmental collaboration. This starts by embracing the uncomfortable realization that the value of each department is no longer measured only by individual accomplishments, but rather to the level a department’s contribution optimizes cost, quality and customer satisfaction for the patient.

The conversion to a patient-centric culture will require a shift in focus from quality processes to measurable quality outcomes. The key is to re-design processes with this new patient-centric end in mind, not just making the existing process cheaper or faster. Key elements pivotal to this effort include:


  • What is value?
  • How do you define it?
  • How do you measure it?
  • Can you improve it?


  • Only that which can be measured can be improved.
  • How do you measure performance?
  • How do you measure & track the impact of efficiency on quality; is all efficiency automatically good; is there a tradeoff/a point of diminishing return?
  • How do you re-define accountability for ensuring the communication loop is completed consistently?


  • Is this process necessary?
  • What are the key steps in any process?
  • Do we really need to do this step?
  • How does this add or subtract value?
  • How does this add quality to the patient experience?
  • Does the patient and/or clinician perceive this as adding quality and value to his/her experience?

Old way of measuring departmental success: Look inward and improve the process

For decades, Supply Chain departments have measured operational improvement in terms of negotiated savings and the efficiency of core processes. Total savings, lines per purchase order, expense per adjusted patient day & adjusted discharge, inventory turns and other Key Performance Indicators (KPI), have been, and will continue to be, used to justify the organization’s investment in Supply Chain operations.

New way of measuring departmental success: Look outward and improve the system

In today’s VBP environment, these benchmarks become secondary to the overall quality, cost and customer satisfaction of the services provided. Let’s look at these one at a time.


Most of us weave the assessment of an item’s quality into our daily personal purchasing decisions. Does the name brand item actually taste better, clean more efficiently or last longer than the low cost generic alternative? The relationship between these subjective quality assessments, and our financial resources, fuel the cost/benefit analysis that influence what we buy.

In the world of healthcare, when financial resources were abundant and the reimbursement was a “cost plus” model, this analysis was an exercise that allowed a greater emphasis on preference (including paying list price and/or acquiring the latest technology) as we may have been willing to pay more for an item that we considered to be of higher quality. When financial resources are restricted, the need for collaboration between the “forces” of cost vs. perceived quality are essential.

In the VBP world, the assessment of quality must shift from clinical preference to clinical acceptability. Each organization must define these terms within a framework that includes patient safety and clinical outcomes. This framework will shift the conversation from subjective preference to the objective selection of items based on cost, defined risk and measurable patient outcomes.

In this environment purchasing decisions are made based on: documented utilization, clinical outcomes, total cost, service, vendor support, vendor reputation, market share, etc. This requires collaboration between, Physicians, Clinicians, Finance, Administration, IT, Risk Management, Audit, Supply Chain and other key stakeholders.


Most Value Analysis programs have expanded the traditional analysis of unit cost to include total cost and life-cycle cost.

Key elements of this expanded analysis include:

  • Purchase price
  • Terms
  • Shipping costs
  • Inventory costs
  • Distribution costs
  • Rebates
  • Tiered volume incentives
  • Procurement/Receiving Costs
  • Opportunity costs associated with spending financial resources vs. potential interest revenue

Customer Satisfaction

In their book: “Advanced Lean in Healthcare”, Craig T. Albanese MD, MBA; Darin R. Aaby MS; and Terry S. Platchek MD suggest the perception of insurmountable complexity in healthcare is due to the wide scale adoption of “Healthcare Exceptionalism”. “Healthcare Exceptionalism is the belief that healthcare provision is so unique, complicated, challenging, and regulated that any lessons to be learned from other industries are largely irrelevant.”

Variations of Total Quality Improvement, (and similar programs), have been around in healthcare for decades, and although improvements have been made, there can still be resistance to adopting Lean methods in the healthcare environment.

Healthcare organizations experiencing the transition to value based reimbursement recognize customer satisfaction as one of the keys to financial viability, as it is in any business. We are still learning how to apply the techniques implemented by our industrial/business counterparts to redesign processes that align with customer expectations. This requires knowing all your customers and the keys to their satisfaction.

Keys to Patient Satisfaction:

Empathy: understand the experience from the patient’s point of view

Patient is the customer & treated holistically, not just as a body needing repair

Involve everyone wisely & efficiently: as we illustrated in our previous blog post, the patient is the epicenter of everything everyone does but they can be frustrated by duplication.

Keys to Clinical Practitioner Satisfaction:

The practitioner (Nurse, MD, etc.) at the bedside has the greatest impact on the patient experience

Resources needed to provide care are available and appropriate

Technology used contributes to workflow efficiency and productivity

Data used in all information systems is standardized, meaningful, and reportable to meet the needs of all departments that use the information

Supply Chain’s role in optimizing patient & practitioner satisfaction:

The struggle to define a department’s role in the patient’s continuum of care can be simplified by accepting the premise: “In a patient centric culture, if you do not provide care to the patient at the bedside, then you work for someone who does”. From a Supply Chain perspective this means implementing processes that enable the clinician to spend more time with the patient and less time in core Materials Management functions while achieving the organization’s goals of cost savings and operational efficiency.

Key elements included in this effort:

Clinicians and Supply Chain leadership & staff must understand:

  • How their respective information systems impact each department?
  • How standardized data elements impact optimizing quality, cost and customer satisfaction. For example:
    • Standardizing data enables the implementation of Item Synchronization Interfaces reducing the manual effort associated with maintaining disparate clinical and Materials Management item masters.
    • Standardizing descriptions streamlines communication between clinical and Supply Chain personnel.
    • Standardizing UOM improves the accuracy of intraoperative documentation and corresponding usage statistics.
    • Standardizing Unit Cost improves the accuracy of case cost reporting.
  • How to optimize the financial and operational tradeoffs of using clinical personnel to manage core Materials Management functions.
  • The impact of organizing inventory to optimize cost, efficiency, quality and customer satisfaction.
  • The impact of accurate documentation.
  • How to ensure information stored in their respective information systems is capable of providing reliable, timely & accurate utilization and case cost reporting.
  • How to ensure all processes produce measurable data as needed to support ongoing cost reduction initiatives and produce accurate case costing reports?
  • How to prioritize and support the development of a clinical informatics infrastructure to guide and direct collaborative initiatives.

Collaboration means more than scheduling more meetings, fine-tuning meeting agendas and minutes, inviting more people to the meetings or listening more carefully. Even though cost, quality, outcomes and efficiency will continue to dominate the healthcare landscape, they no longer represent the end of the journey. Collaboration channels these interconnected forces to a new focal point at the center of the continuum of care: the patient.

 J2 will be presenting this information during a presentation at the Surgical Services Summit in Las Vegas in December, 2016. We hope to see you there.

Communication vs. Collaboration: Implementing a Patient Centric Supply Chain

Thriving in a Value Based Purchasing Environment

In today’s healthcare environment, communication and collaboration are not interchangeable. The differences between the two need to be understood to successfully transition to a Value Based Purchasing (VBP) environment.

Effective communication between Supply Chain & Perioperative Services professionals has been, and will continue to be, the cornerstone of initiatives to reduce surgical supply costs. Unfortunately, effective linear communication alone will not guarantee success in the future.

In 2010 the Hospital Value Based Purchasing program, established by The Affordable Care Act, reshuffled the deck. Facing a mandatory shift from volume-based to value-based reimbursement, hospitals need to redefine how departments interact. The shift from linear communication to cross-discipline collaboration provides the necessary foundation for transforming the focus of Supply Chain from Volume to Value.

Value Based Purchasing

Instead of reimbursing the hospital for goods and services that have already been provided, or reimbursing the hospital based on a nationally averaged flat fee, the VBP payment model rewards physicians, hospitals, medical groups, and other healthcare providers for meeting prescribed performance measures for quality (outcomes) and efficiency (cost & satisfaction).

Our own Jeanne Parkes, CEO, had this to say at OR Manager last year about the shift to value-based care, “A reimbursement model based on value rather than volume is here to stay. This is not yet another in a series of incremental refinements in healthcare reimbursement – it is a fundamental change in the healthcare business model.”

Impact on Supply Chain

Reduction in supply costs remains a focus of healthcare Purchasing departments. This traditionally includes leveraging the size of an organization, their GPO affiliation, and any other volume-based dynamics to negotiate better unit pricing with the Vendor community. In other words, when you’re holding a hammer, everything looks like a nail.

When combined with aggressive standardization programs, this can produce effective results and remains the go-to strategy for the reduction of supply costs across the country. To further facilitate clinical and financial collaborative decision-making, Value Analysis programs were implemented to organize product review & cost reduction activities within the framework of acceptable clinical, operational and financial outcomes.

Today however, Supply Chain personnel must expand their focus from cost containment to include “Margin Enhancement”. Even more unsettling is that revenue is no longer a known quantity based solely on volume. It is becoming a patient centric dynamic based on measurable quality & value of services provided. This requires a review of process and workflow as well as costs to ensure that supply chain practices contribute to quality patient care at the point-of-care.


The illustration on the top depicts the dynamics of a Volume driven process. The individual processes depicted here represent key touch points of the Perioperative continuum of care (blue circle). The colored circles surrounding each activity illustrate a “siloed” process reacting to the input from the previous step. Collaboration in this environment is focused on optimizing the efficacy of each individual process, (sometimes at the expense of the other processes), as a means of leveraging economies of scale. This reactive environment is like driving your car forward while staring in your rear view mirror. You can clearly see what has occurred but you’re not able to adjust to what’s happening in front of you.

The illustration on the bottom represents the Perioperative continuum of care as seen through the lens of a Patient Centric culture. The first thing we notice is that the center of the process is no longer a dollar sign. That has been replaced by the patient; the epicenter of everything we do. The individual siloes are also gone.

Based on our experience, to thrive in this new environment, organizations can no longer afford to operate as disconnected entities focused on optimizing individual processes. The fact that an individual process has been improved by 50% is irrelevant if it does not optimize cost, quality and customer satisfaction. Activity is not a result. Instead, every individual activity as part of an overall process needs to be evaluated against these questions:

  • Is my activity still necessary?
  • Am I optimizing technology and/or resources to minimize cost?
  • Do I perform my activity in a way that improves the patient care experience or quality?
  • Is my activity transparent and measureable?
  • Management siloes are becoming a thing of the past. Adapting supply chain practices in a perioperative patient-centric culture begins with establishing routine cross-departmental collaboration as the primary method of communication for impacting daily operational management.

Stay tuned for our next blog post where we discuss ways to create a patient centric culture as it relates to supply chain and how the perioperative continuum of care is seen through that lens.