The healthcare intelligence revolution: supply-chain management for healthcare

There is a supply chain revolution impacting healthcare. It’s called the “Intelligence Revolution.”

Intelligent supply chains will be a game changer for healthcare. Big data analytics are transforming care delivery. The U.S. healthcare landscape is shifting and causing providers to revisit their care delivery models. Fee-for-value instead of fee-for-service, physician shortages, digitization of healthcare and shifts toward outpatient services are challenging conventional care models. Care providers must utilize data to create information, information to create intelligence, and use new this intelligence to drive decisions. 

  • Manufacturing supply chain management covers the entire process from raw products, services, and interactions through to the end customer. 
  • Healthcare supply chain management covers the entire process from raw products, services, and interactions through to the end patient. 

Moving the supply chain levers for health

Four primary levers must be effectively coordinated and integrated to improve organizational, operational performance: buy (purchasing), make (operations), move (logistics), and sell (marketing). With these functions linked supply chains work extremely well when they don’t this pattern encourages excessive outsourcing.

Linking the supply chain level is essential. This is the case whether we are talking about manufacturing supply chains or healthcare supply chains.

The manufacturing supply chains involve:

  1. Buy: Purchasing e.g. goods from suppliers (supplier)
  2. Make: Operations e.g. operational functions for the organization (manufacturer)
  3. Move: Transporting e.g. the logistics of shipping products to the right place (wholesaler)
  4. Sell: Marketing e.g. linking what customers need and want (retailer)

The healthcare supply chains involve:

  1. Buy: Sourcing, contracting e.g. optimize health networks (care contractors)
  2. Make: Manufacturing equipment e.g. CT Scanners, prosthetics, and lab equipment (manufacturer)
  3. Move: Hospitals provide care e.g. nursing homes, urgent care centers, and Patient-Centered Medical Homes (providers)
  4. Sell: Insurer health plans e.g. health benefit and plan offerings to members (insurers)

How do you know if your organization is building new strengths within your healthcare supply chains?

  1. Has your organization created sufficient scale for care delivery?
  2. Do you focus more on the outpatient (retail) than inpatient?
  3. Are there direct-to-consumer and direct-to-patient products offered by your organization?
  4. Do you look past episodal cost to end-to-end healthcare supply chain costs?
  5. Is data standardization the norm, offering insightful, intelligent analytics on care delivery?
  6. Have you clearly identified the top five partners in your healthcare supply chain?
  7. Have the scope of products been expanded to improve logistics and lower the cost-to-serve?
  8. Has your organization moved from a business-to-business model to business-to-consumer model for care delivery?
  9. Is leadership educated about the financial differences between the inpatient cost-to-serve and the cost for remote monitoring such as telehealth capabilities?

How do healthcare organizations achieve operational performance? The answer is we get creative and look to innovation in other industries. 

Is your organization operating as healthcare supply chain?

There are three simple checks that determine if you’re an organization is running as a manufacturing supply chain: Customer Relationship Management (CRM), Supply Chain Management (SCM), and Supplier Relationship Management (SRM).

Three different but similar questions offer insight into whether your organization is operating as a healthcare supply chain.

  1. Does your organization have a Patient Relationship Mangement (PRM), to focus on the downstream interactions between the provider and the patient? Focusing on: Market, price, sell, call center, and order management.
  2. Is the organization running a Healthcare Supply Chain Management (HCSCM) program focused on internal processes and operations within the organization? Focusing on: Strategic planning, demand planning, supply planning, fulfillment, and remote care services.
  3. Are processes and programs in place around Payer Relationship Management (PE-RM) to focus on keeping the patients upstream and coordinating care? Focusing on: sourcing, negotiating, buy, design collaboration, and supply collaboration.

Manufacturing for healthcare

There are many parallels between the advancements in supply chain management and healthcare management.

  1. Microsegmentation: Consumerization
  2. Point-of-Sale: Point-of-Care
  3. Servitization: Person-Centered Primary Care
  4. Value-Based Supply Chains: Value-based reimbursements
  5. Reverse Logistics: Patient Readmissions
  6. Manufacturer List Price: “Chargemaster” or Provider List Price
  7. Product Volume Discounts: Patient Volume Discounts
  8. Design of Products: Design of Care
  9. Cost-to-Build: Cost-To-Serve
  10. Product Commoditization: Population Health
  11. Removing intermediaries: Cost-Out Initiatives
  12. Direct-To-Consumer: Direct-to-Patient

In my next two articles, I’ll elaborate on each of these similarities and explain the correlation. 

The next generation of care delivery

Are you interested in the next generation of supply chain management and big data analytics? Innovative companies are connecting purchasing, operations, logistics, and marketing through blockchain technologies. This offers customers, suppliers, and producers something they didn’t have. Truth, not trust in their supply-chain. Healthcare delivery systems are taking notice.

Why invest in data analytics (DA)? DA is the first step towards a healthcare supply chain, and data is critical to understanding disease.


Read all 3 parts of this supply chain for healthcare series below

Part 1: The healthcare intelligence revolution: supply-chain management for healthcare

Part 2: Synergies of supply chain management for healthcare

Part 3: Reinforcing healthcare delivery with a supply-chain management perspective

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Peter is a healthcare business and technology executive, recognized for Digital Innovation by CIO 100, MIT Sloan, Computerworld, and the Project Management Institute. As Managing Director at OROCA Innovations, Peter leads the CXO advisory services practice driving digital strategies. Peter was honored as an MIT Sloan CIO Leadership Award Finalist in 2015 and is a regular contributor to on innovation. As Head of Information Technology, Peter was responsible for Connecticut’s Health Insurance Exchange’s (HIX) industry-leading digital platform transforming consumerism and retail oriented services for the health insurance industry. Peter championed the Connecticut marketplace digital implementation with a transformational cloud-based SaaS platform and mobile application recognized as a 2014 PMI Project of the Year Award finalist, CIO 100, and awards for best digital services, API, and platform. He also received a lifetime achievement award for leadership and digital transformation, honored as a 2016 Computerworld Premier 100 IT Leader. Peter is the author of Learning Intelligence: Expand Thinking. Absorb Alternative. Unlock Possibilities (2017), which Marshall Goldsmith, author of the New York Times No. 1 bestseller Triggers, calls "a must-read for any leader wanting to compete in the innovation-powered landscape of today." Peter also authored The Power of Blockchain for Healthcare: How Blockchain Will Ignite The Future of Healthcare (2017), the first book to explore the vast opportunities for blockchain to transform the patient experience. Peter has a B.S. in C.I.S from Bentley University and an MBA from Quinnipiac University, where he graduated Summa Cum Laude. He earned his PMP® in 2001 and is a certified Six Sigma Master Black Belt, Masters in Business Relationship Management (MBRM) and Certified Scrum Master. As a Commercial Rated Aviation Pilot and Master Scuba Diver, Peter understands first hand, how to anticipate change and lead boldly.