Article on supply chain costs omitted the CQO movement

While heartened by the inclusion of a supply-chain article in Modern Healthcare, the Nov. 24 story “Hospitals struggle with supply costs” (p. 20) missed a tremendous opportunity. Unfortunately, the article focused on rising supply costs related to treating more and sicker patients, and failed to mention the biggest development in healthcare supply chain in the past decade: the CQO movement. Launched last year by the Association for Healthcare Resource & Materials Management, an affiliate of the American Hospital Association, the CQO movement is a strategic approach to managing the supply chain at the intersection of cost, quality and outcomes.

Changes to provider reimbursement models demand that the healthcare system think differently about costs. To support providers using this model, supply-chain professionals are upping their game, shifting away from pure volumebased discounts in a race to the lowest price. Instead, using AHRMM’s definitions, we are acting on a more holistic view of the correlation between cost (all costs associated with delivering patient care and supporting the care environment), quality (patient-centered care aimed at achieving the best possible clinical outcomes) and outcomes (financial reimbursement driven by outstanding clinical care at the appropriate costs).

While the article mentions certain tactics for managing costs, such as stan- dardizing products and managing physician-preference items, it doesn’t address the science behind those decisions. Under the CQO approach, supplychain professionals work hand in hand with clinicians to use metrics that demonstrate the efficacy of various products as they relate to clinical outcomes, as well as the cost-benefit analysis of various products—i.e., whether spending more now means spending less later over the lifetime of a patient. These concepts have particular relevance as, to the article’s point, hospitals are dealing with a twofold challenge of growing patient volume and higher acuity. Marrying the science and the business of the healthcare supply chain is a groundbreaking—and necessary—paradigm shift, one that all future discussions of hospital operating costs should be sure to include.

Christopher O’Connor President, GNYHA Services and Nexera 2014 chairman, AHRMM