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Exploring the Journey of Supply Chain Transformation in Three Global Health Systems

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Canadian researcher Dr. Anne Snowdon’s research provides new evidence that supply chain infrastructure, enabled by global standards, offers inventory savings, reduced labour costs per case, and, most importantly, evidence of reduced Never Events that can cause harm to patients.

Research findings demonstrate a 4:1 to 7:1 return on investment for hospital organizations who introduced supply chain infrastructure, enabled by global standards adoption, which significantly reduces inventory costs and labour costs.

The newly published research report The Impact of Supply Chain Transformation in Health Systems: Alberta Health Services, Mercy Health, National Health Service consists of three international case studies:


Alberta Health Services
– Canada
The National Health Service
– U.K.
Mercy Health
– U.S.

Alberta Health Services – Canada

Alberta Health Services’ (AHS) supply chain strategy began in 2010, when it became Canada’s first province-wide health system, bringing together all 13 regional health units across the province.

Global standards were introduced across a range of business processes including inventory control and procurement across the province. Global standards made it possible to track and trace products and equipment across the province to achieve a better understanding of what inventory is being used, how often and when it needs to be replenished.

Supply chain tracking and traceability, enabled by global standards, supported AHS to:

  • Accurately track and trace every product across the province using a unique Global Trade Identification Number (GTIN)
  • Establish a provincial item master of 100,000 products
  • Achieve a 7:1 return on investment

Read the business case summary

National Health Service – U.K.

The U.K.’s National Health Service (NHS) introduced supply chain tracking and traceability after a series of high-profile cases underscored the need to strengthen patient safety to create transparency across the system.

Starting with six hospitals trusts, the NHS set out to increase the traceability of their supply chain, enabled by global standards, to improve patient safety, increase clinical productivity and realize operational efficiencies.

The NHS highlighted the integration of clinical and supply chain staff as a key condition for the successful implementation of supply chain infrastructure. Clinician leadership was a key factor in decisions to standardize product use linked to best outcomes for patients.

Since the adoption of global standards, the NHS has seen:

  • A projection of £1.5 billion in inventory savings when supply chain infrastructure is scaled across all 154 trusts
  • Each hospital trust demonstrated an average savings of £2.4 million realized from inventory optimization and clinician time savings, redirected from managing supply chain processes to patient care—on average, the equivalent of 16 full-time staff per trust
  • A return-on-investment of 4:1 in inventory savings has been documented in the six trusts. The ROI is expected to be much higher once clinician time savings and patient safety outcomes are taken into account
  • 93% of implants are now being accurately tracked, a critical asset which can be leveraged in the event of a product recall

Read the business case summary

Mercy Health – U.S.

Mercy viewed supply chain as a strategic health system asset to improve operational, clinical and financial performance. Mercy was experiencing declining reimbursement models for case costs and viewed supply chain best practices as a strategy to advance and strengthen system performance.

With greater supply chain transparency through global standards adoption and point of care barcode scanning in the Perioperative program, Mercy has been able to reduce inventory waste, improve accurate capture of products used in care, and improve efficiency during surgical procedures.

By implementing supply chain infrastructure, including global standards, in their perioperative program, Mercy has:

  • Reduced Never Events in their hospitals by 70% through point-of-care scanning in the Perioperative programs in two hospitals
  • Reported a 29% reduction in labour costs per case in the Perioperative program
  • Grown its revenue by $81 million over a four-year period since implementing supply chain tracking and tracing at two of their 45 hospitals
  • Reported a 33% reduction in supply cost per case in the Perioperative
  • Uncovered $2.4 million in unrecognized inventory assets
  • Optimized charge capture of product use in surgical cases which generated $13 million in revenue

Read the business case summary


From The Impact of Supply Chain Transformation in Health Systems: Alberta Health Services, Mercy Health, National Health Service (2018)

  • Grass roots engagement by clinical staff is critical to the success of supply chain infrastructure implementation. When clinical staff understood the value of data generated by supply chain infrastructure, clinicians assumed leadership in supporting the use of point of care scanning and leveraging supply chain tools to increase quality of care, safety, and efficiency in care delivery.
  • Integrating supply chain staff with clinical staff created awareness and knowledge of the value of supply chain and data to inform quality of care for patients and support cost savings for clinical programs. Supply chain staff were able to optimize inventory informed by clinician expertise, while clinicians were able to provide care to patients with greater efficiency and productivity.


Dr. Anne Snowdon’s 2016 paper Visibility: The New Value Proposition for Health Systems examines current evidence of medical error, and the opportunity supply chain infrastructure in health systems offers as a strategy to strengthen patient safety, and optimize operational efficiency in health care delivery. These are some of the highlights from that research.

From Visibility: The New Value Proposition for Health Systems (2016)

  • Health systems are unable to track and trace products used during patient care, and are unable to link product use to patient outcomes. Hence, patients do not have access to product information used during care processes. The ability to track patient outcomes linked to product use is very limited, adverse events are not tracked across health systems and recalls are manual in most jurisdictions.
  • Health organizations do not have the digital tools and supply chain infrastructure required to enable automated “double-checks” to alert clinicians to proactively manage risks and protect patients from harm.
  • Health systems do not track product performance, or systematically undertake post-market evaluation linked to patient outcomes, that can identify what products and care processes offer the best outcomes for patients. The lack of traceability of outcomes linked to care processes and product use limits industry from accessing real world evidence of product outcomes to support innovation in product design.
  • Health system leaders often lack knowledge of supply chain and logistics best practice as supply chain management is not well developed in health management curricula.

What is Supply Chain Visibility?

Supply chain infrastructure in health systems enables traceability of every product, every patient and every care process that is tracked digitally and linked to patient outcomes to determine the products and care process that achieve the best outcomes for patients and under what conditions.

GS1 global supply chain standards are a key enabler to supply chain tracking and traceability to support quality of care that is safe for patients and reduces health system costs.

Currently, no country in the world, including Canada, has implemented supply chain infrastructure scaled across entire health systems, supported by global standards. However, those organizations who are starting to implement supply chain infrastructure are seeing a high return on investment and demonstrable effects on patient safety.


The National Movement

 

Learn about GS1 Canada’s National Movement for global standards adoption.

Safer, More Efficient Care Starts with a Simple Scan

Download the National Movement Booklet