Though deep in the medtech world for long time, I can still remember the impressions I had when I first entered 12 years ago after a nearly a decade in specialty chemicals. I vividly recall in 2004 chasing after a sales rep with whom I was riding as we tried to track down some rental assets lost in the bowels of the hospital. I remember taking little stickers from the box of a pacemaker and pressing them into a logbook while the physician dictated notes into a tape recorder at the end of a case. The rep explained that he needed the stickers for his company to issue an invoice. And I remember climbing out of a massive SUV while the spine rep with whom I was riding explained the concept of “trunk stock.” Feeling a bit bewildered by this new world, and yearning a bit for my old specialty chemicals domain, where suppliers differentiated themselves by making transactions and supply chain simple for their customers, I asked myself:
- Doesn’t anyone here think about value chain?
- Where is the supply chain integration?
- Why haven’t Lean or Six Sigma practices permeated this industry?
There have been starts down this path, of course. There are consulting practices that focus on hospital efficiency. Orthopedics companies have helped their hospitals build programs that get their patients mobile and systematically lay out a schedule from surgery to recovery to discharge that improves outcomes and reduces length of stay. In vitro diagnostics is an example of an area where industry has been proactive in helping hospitals to get more efficient, offering workflow consulting and solutions that are integrative across instruments, information systems and automation to optimize cycle time, minimize staff and remove errors.
But this thinking still doesn’t go far enough in my view. As our customer the hospital focuses on balancing cost vs. quality, while driving throughput in the face of falling reimbursements, and eventually as it moves toward bundled payments, I expect this thinking will accelerate. This provides exciting opportunities:
- Supply chain solutions from distributors to stake out differentiated positions—better EDI, replenishment, procedure traceability and RFID solutions are all waiting for big innovation.
- Manufacturers that create customized solutions for that integration and automate with their partner institutions
- Technical solutions that remove the dependence on manual transactions and once and for all professionalize the business of managing pricing, rebates and GPO fees
It’s time to get serious about viewing the hospital as a factory, and the space between industry and providers as a value chain.
For more on this topic, please read more from a roundtable discussion we recently convened at ZS.