Data and evidence anchor healthcare’s financial renaissance

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Data and evidence anchor healthcare’s financial renaissance

April 05, 2021
Health IT

For example, during the peak of COVID-19 lockdown, a large health system in the mid-Atlantic region used the “downtime” to achieve reduction goals that would help offset the pandemic’s financial impact. The supply chain team initiated vendor reduction strategies as a cost saving method. They first targeted high-spend orthopedic categories, including hip, knee and shoulder replacements. The team shared real-time data that drilled down into device utilization, cost-per-case variation and outcomes. Access to this information helped engage surgeons in the product and vendor decision-making process. Together, the teams selected a single vendor for joint replacement implants. The standardization then opened the door for additional contract negotiation with the vendor resulting in significant price cuts due to volume. The collaboration resulted in more than $12 million in annual savings. The supply chain and clinical teams then used the same approach for breast reconstruction surgery. Data and clinical evidence along with surgeon insight allowed them to identify a single source for two categories (mesh and implants). By reducing the number of vendors from four to one for these categories, the team was able to cut the organization’s annual spend for these items in half - a net saving of $3 million. Furthermore, there is no high-level research evidence suggesting these sourcing changes will have any impact on clinical outcomes.

Evidence and data can also help us identify situations in which a technology or device no longer has meaningful impact. Not long ago, use of Continuous Passive Motion (CPM) machines following lower extremity surgery was a mainstay of post-operative care. Clinical literature has since proven CPM machines don’t have a meaningful impact on successful rehabilitation or postoperative function. The same is true regarding the use of antibiotic loaded cement to prevent against postoperative infection in reconstructive joint surgery. Clinical evidence now indicates antibiotic cement should only be used in cases that produce higher risk of infection or on patients who present a high-risk of infection, not all joint replacement patients.

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Healthcare’s road to financial recovery will be a group effort and the first place to start is around reducing wasteful spending to help us recover millions of dollars. Hospitals and health systems can draw insights from the marriage of supply chain, financial and clinical data teams to source supplies that demonstrably deliver the best quality care at the lowest cost. Forward thinking physicians will welcome these conversations and become active participants when provided accurate data and reliable clinical evidence.

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