Two new healthcare books

same sharp-eyed and creative focus that supply management has directed for years toward spend management, by careful review and analysis of major costs.  Supply chain pros have worked their way through a number of approaches – from simple cost cutting edicts, to category management, analytics, off-shoring, buying groups, hard negotiation, soft negotiation, and outright purchase of entire supplier operations.  In healthcare, however, where analytics and sheer data volume have exceeded business’ adoption of BI tools, the problem seems to be more complex.  Because instead of creating a new iPad or plastic injected molding machine, we’re moving sick and well humans into a system that is bigger and harder to see than any one system each of us has experienced.  It’s blinding.

So where are we on tackling that 17% factor?  Are there tools out there that intrepid healthcare managers can wield against rising medical costs?  Sure, we’ve got lean methods, but those very same lean methods don’t always neatly translate well to non-production services. 

Let’s take a look inside two new healthcare books to see what other tools are out there.

First, Rob Handfield’s look at BioPharma,   Patient-Focused Network Integration in BioPharma, Strategic Imperatives for the Years Ahead, by Rob Handfield, PhD, CRC Press, 2013 Followed by  Management Skills for pharmacy and Business Managers, Titus De Silva, Phd, CRC Press, 2013

Handfield, a professor at UNC, has been involved in supply chain issues for a number of years.  And now in this new book, he highlights some unique opportunity areas:

            “the spend management landscape is not well defined in healthcare.  Many different database and procurement systems exist.  The development of standardized item masters, coding structures, and nomenclatures are in a nascent form.”

And he’s right.  But right now, we aren’t hearing a lot about application of spend management cost reduction methodologies, the same ones that have been proven in manufacturing and supply chain management, in healthcare. What we’ve seen is complex, layered supply chains in which basic costs vary, and distributors and other third party entities are part of the cost landscape.

Take a look at Chapter 3 and Chapter 4 for a new approach.  The author defines the questions healthcare execs want to have answered, as well as the type of IT and processes that will lead to the right solutions:

1.       What is my total spend?

2.      Who are my largest suppliers (parts, spend, categories?)

3.      What are my largest spend segments?

4.      Which parts are growing in total spend?  Shrinking?

5.      Which parts have the largest price inflation (over a given period of time)?

6.      Am I paying more to one supplier than another for part X?

7.      Where can I quickly cut costs by taking action?

Now to the De Silva book, again, looking for cost management help. 

          Essential Management Skills for Pharmacy and Business Managers, Titus De Silva, PhD, CRC Press, 2013  

Essential Management is a comprehensive guide to specific management skills required for pharmacy management is a unique position that calls on a range of legal, ethical, operational, human resource, and financial skills.  The book is structured to address each of the key management areas with particular examples and recommendations, including problem solving illustrated case examples designed to help the reader create a patient-centered experience.   

For example, Chapter 3 covers the expected practice areas in a typical pharmacy, including management roles – planning, organizing, etc., as well as technical and professional, conceptual, ethical and human resource tasks.  The chapter ends with a revisit to an illustrative scenario.

Following on Chapter 3’s traditional layout of the business, the next chapter, 4, presents options for change and how to manage it, including overcoming resistance to change, and a brief discussion of various change models – Lewin, Kotter, Pettinger and Newton. 

De Silva recognizes the contribution to cost reductions and better patient outcomes that pharmacists can make.  He cites work that the Department of Veterans Affairs has done with pharmacists taking a bigger role in responsibility for better patient outcomes and cost:

1.      For every $1 invested in clinical pharmacy service, more than $4 in benefit was observed.

2.      Ninety-two percent of the recommendations (from the pharmacist) were accepted, which led to improved clinical outcomes in more than 30% of patients in each setting and prevented harm in 90% of cases.  Overall, cost avoidance related to all 600 recommendations was $700 each, with a total savings of $420,155.

3.      At the San Diego VA facility, where pharmacists are involved in medication therapy, patients’ outcomes were better than those reported for patients under Medicaid, Medicare, or commercial programs.

These two books prove that when hospitals and medical groups look seriously at kaizen for their operations, by, for instance,  empowering