The Healthcare Hub

Understanding Clinical Integration in the Healthcare Supply Chain

Kara L. Nadeau, Healthcare Industry Contributor

Wednesday, June 28, 2023

Clinical integration for healthcare supply chains is gaining in importance as hospitals seek to control costs and improve patient outcomes. This approach goes beyond the initial price tag and takes into account factors such as patient experience and outcomes, clinician involvement and the availability of data used to inform supply decisions.

By fostering meaningful connections among stakeholders and leveraging evidence-based insights, hospitals can achieve clinical integration and work towards the goals of improved patient experience, population health, and reduced healthcare costs.

Table of contents

Understanding clinical integration: an overview
Clinical integration strategies
Common challenges and obstacles
How to improve and optimize
Case studies of clinical integration

Introduction to clinical integration

The Association for Healthcare Resource and Materials Management (AHRMM) defines clinical integration as "an interdisciplinary partnership to deliver patient care with the highest value (high quality, best outcomes, and minimal waste at the lowest cost of care).”

A clinically integrated supply chain considers the big picture impact of supplies used in patient care. It goes far beyond the initial price tag for an item and takes into account all of the ways that item influences the clinical practice, patient experience, healthcare logistics, providers settings and time (e.g., efficiency, OR turnover), patient outcomes, complications, readmissions, etc.

Clinical integration spans the entire care continuum - how supply choices impact care from the first time a patient seeks to access care for a condition, through care coordination and health system integration in care delivery, treatment, recovery, and any (non-reimbursable and costly) post-care complications.

A clinically integrated network is fundamental to the U.S. healthcare system achieving the goals of the Institute for Healthcare Improvement’s (IHI) Triple Aim:

Improving the patient experience of care (including quality care and satisfaction).
Improving the health of populations.
Reducing the per capita cost of health care.

Then and now: how healthcare purchasing has evolved

Supply chain management in healthcare has historically diverged into two upstream purchasing paths and practices: physicians controlling the selection of high-cost physician preference items (PPI) based on their “preferences” around suppliers and products for patients, and supply chain teams primarily selecting the vast number of medical/surgical commodity products based on factors such as contracts and pricing.

That worked OK in a volume-based care and payment environment, but times have changed.

Today, with hospital operating margins still well below historical norms and payers scrutinizing the value of care delivered (costs versus outcomes), clinical and supply chain stakeholders must think differently about their product choices and efforts to achieve equitable and patient focused care.

Physician leaders are well aware of the changes at hand - and it is hitting them where it hurts - in the wallet. According to the American Medical Association (AMA) Medicare physician payment has effectively declined 26% from 2001 to 2023 when adjusted for inflation. With reimbursements shrinking, health care providers must find new ways to control costs through clinical integration.

Strategies for clinical integration: multidisciplinary teams

Hospitals seeking to control costs and improve patient outcomes through clinical integration must establish meaningful connections among physician leaders, health care providers, supply chain, finance and other relevant stakeholders, such as nursing leaders, infection prevention, representatives from single specialty groups, etc.

For many hospitals, the value analysis committee can serve as a foundation for clinical integration throughout the care continuum. Whether it is a clinician or supply chain team member proposing a new product or alternative item to one already in use, the value analysis process can facilitate timely, efficient and collaborative information sharing and discussion among all stakeholders, including physicians and other providers. They can assess the item to determine its potential value and patient care impact.

While coordination of a multidisciplinary team is key to achieve clinical integration, change in the hospital environment - especially change that impacts patient care and hospital clinical practices - typically requires sponsorship and support from the top. Physician leadership engagement is critical to achieving clinical integration.

The ability to empower physician leaders in supply decisions that balance cost, quality and outcomes as opposed to pressing decisions upon them helps to ensure change is patient focused. Engaging physicians with supply chain acumen in the hospital and an understanding of the impact of supply decisions on value-based care can help smooth transitions.

“Hospitals realized that bringing in physicians could be useful for supply chains as a whole, so you see roles like medical director of supply chain becoming more popular,” said Dr. Jimmy Chung, Chief Medical Officer for Advantus Health Partners, in a June 2023 Journal of Healthcare Contracting article. “Many of the hospitals with strong supply chains now have a medical director or physician advisor in place."

Common challenges and obstacles

Even well thought out, well-intentioned clinical integration efforts can fail if stakeholders don't effectively manage them. Provider culture, patient needs, and real life use of products must all be taken into consideration when pursing changes in healthcare supply chain strategies.

Leading with costs not patient outcomes

“The first question to ask is what attributes or outcomes of a product you're interested in,” said Cynthia Leathers, a value analysis consultant and former director of clinical integration at HCA. “What would make it better than what you currently have? It's important to start with what physicians believe is important about the product when searching for this information.”

Supply chain teams that are solely focused on lowering costs will likely face an uphill battle to achieve clinical integration. Indeed, for healthcare providers, standardization can look like a way for supply chain to limit choice unless it is positioned as a patient-focused endeavor.

While most supply chain teams clearly show clinical teams that one item is priced higher than a comparable one, or not on contract, they struggle to track patient care and outcomes back to that product (more on this topic in the "Lack of evidence section").

Successful clinical integration should position the patient as a primary focus: clinical staff want hard evidence to demonstrate a proposed product will meet the needs of patients and providers, and deliver the same or better patient outcomes. If the item offers other benefits beyond that - better coordination of patient care, more efficient workflows, improved integration of clinical tasks, lower costs, etc. - then all the better.

Underestimating supply shifts

Because supply chain is behind the scenes of clinical practice, they sometimes underestimate the impact of supply shifts on patient care quality. While a change in a high-risk, high-cost physician preference item, such as a hip implant, is recognized for its impact on patient care and therefore clearly necessitates clinical integration, supply chain might view a switch from a lower-risk, lower-cost product as inconsequential.

During her talk at 2023 GHX Summit, The Power of Empathy for Successful Organizational Change, April Imel, RN, GHX Sr. Clinical Solutions Specialist, described a supply shift that she termed Pillowgate: the supply chain team failed to secure nursing input on a change in patient pillows - leading with a focus on lower costs versus a patient-centric approach.

The nurses, accustomed to using thick reusable pillows in patient care, were surprised to find thin, disposable pillows, in their place. Imel described the disposable pillows feeling as though they were "stuffed with used Kleenex." They were so thin the care team had "unpackaged eight of them, roll/wad them up and stuff them in pillowcases just to create one of the old pillows," Imel explained. Fearing an impact to patient satisfaction, care quality and timely delivery of care, the nursing team demanded an alternative.

Later in her career, when Imel was engaged in clinical integration in supply chain, she faced a similar situation and remembered Pillowgate. In the true spirit of clinical integration, she ordered 20 different pillows for the nursing team to physically handle - all on contract - so they could assess how they would perform in clinical practice and select their preferred model. As Imel noted, the nurses were appreciative that she took their day-to-day jobs and opinions into consideration.

These kinds of meaningful connections between clinicians and supply chain and between product quality and patient care can go a long way in promoting the importance and role of clinical integration to achieve care.

Lack of evidence

In health systems, one of the biggest barriers to clinical integration is the lack of accurate and timely data on the impact of supply choices. This is a challenge for data-driven healthcare providers who want solid evidence that a change in product or process will benefit their patients and not cause harm.

Even with the ability to achieve clinical integration in the decision process, without data deemed credible by multidisciplinary stakeholders, efforts to achieve care change are likely to falter. Clinically-integrated networks that still rely on disjointed IT systems (e.g. ERP, EHR, financial, clinical information systems), and manual data manipulation to perform analytics and generate metrics will find it hard to produce the quality of evidence they need.

Tips to improve and optimize clinical integration

Actionable data and insights are crucial to achieve clinical integration. If supply chain, clinical and financial stakeholders can align on the patient-focused outcomes most desired (e.g., safe, timely, effective, efficient), they can identify the required metrics to measure supply performance and value in reaching their ultimate goal.

The IOM Six Domains of Healthcare Quality analytics framework for quality assessment can help guide the types of evidence needed for successful clinical integration:

Safe: Avoiding harm to patients from the care that is intended to help them.
Effective: Providing services based on scientific knowledge to all who could benefit and refraining from providing services to those not likely to benefit (avoiding underuse and misuse, respectively).
Patient-centered: Providing care that is respectful of and responsive to individual patient preferences, needs, and values and ensuring that patient values guide all clinical decisions.
Timely: Reducing waits and sometimes harmful delays for both those who receive and those who give care.
Efficient: Avoiding waste, including waste of equipment, supplies, ideas, and energy.
Equitable: Providing care that does not vary in quality because of personal characteristics such as gender, ethnicity, geographic location, and socioeconomic status.

Starting with evidence-based insights derived from a hospital's own supply chain, clinical and financial data can set the foundation for clinical integration success. Digging deeper, physical-level supply analytics tied to patient outcomes provide evidence-based and clinically relevant insights that help support the sourcing decisions and product standardization required to achieve care that is both high quality and cost effective.

Supplementing internal hospital cost, quality and outcomes data with objective, up-to-date, peer-reviewed literature on supplies and their outcomes, a clinical integration team can further strengthen the case for change.

Case studies of clinical integration

Here are three examples of U.S. healthcare organizations leading clinical integration efforts to achieve care that meets today's value-based objectives.

Bon Secours engaged physicians in the supply chain function with Clinical Transformation Committees and Physician Resource Optimization (PRO) teams. According to Jimmy Chung, MD, MBA, FACS, a board-certified surgeon leading their clinical transformation team in a HealthLeaders magazine article:

Clinical Transformation Committees: voting members include clinicians from each of Bon Secours Mercy Health's hospitals and operational leaders, such as OR and Cath Lab directors. They "make decisions where there is opportunity for standardization and reduction of unnecessary variation. This brings the best value for our patients," Dr. Chung explained.
PRO teams: "look at specific initiatives that may be heavily influenced by the way physicians practice," said Dr. Chung. "They deal with physician preference items—these items are generally high-priced products such as orthopedic implants."

When asked how they select physicians for these clinical integration initiatives, Dr. Chung stated, "We look for physicians who are engaged and dynamic. We look for physicians who are willing to work with peers to work toward improvement in healthcare quality and value."

Jefferson Health establishes evidence-based value analysis process

Philadelphia-based Jefferson Health has successfully transitioned their value analysis program from an individual-entity to an enterprise-wide approach focused on patient outcomes.

Jefferson’s leadership recognized their value analysis processes needed to adapt in response to the financial and operational impacts of COVID-19 with an increased level of scrutiny. They required clinical justification supported by data and evidence for product decisioning.

They created a customized request form for the value analysis process where the requester must provide evidence-based data to support their request. They also recognized the need to make more timely decisions, so their value analysis teams worked to reduce the decision-making cycle time.

Health Future saves $450,000 through clinical consensus

Health Future, an Oregon-based healthcare consortium, needed to address rising supply costs without impacting patient outcomes. Doing so required consortium-wide consensus among clinical stakeholders and a compelling argument for why vendors should lower prices.

Leveraging evidence-backed insights derived from product reviews, recall information, adverse events and a wide breadth of clinical literature, their supply chain leaders gained the “ability to approach physicians with credible information,” as stated by Libby Brown, Regional Manager, Health Future.

They achieved a recognized savings of $450K in four months through more favorable contract terms and lower costs with their suppliers of cardiac rhythm management devices.

Clinical integration in the healthcare supply chain, where clinical, supply chain and financial decision makers weigh the evidence to determine the true impact of a product on patient care quality and financial outcomes, is critical to achieving value-based care. It requires physician leadership, multidisciplinary stakeholder engagement, and access to credible data to generate actionable analytics.

As more healthcare organizations demonstrate documented success with their clinical integration efforts, they can share their best practices and lessons learned with others to drive the entire industry forward.

Common FAQs about clinical integration

Why is clinical integration important?

Collaboration among clinical, supply chain and finance teams helps to ensure supply decisions impact cost, patient care quality, and overall financial outcomes for a healthcare organization. All three factors are critical to successful healthcare delivery today.

What are some strategies for clinical integration in the healthcare supply chain?

A successful clinical integration strategy requires physician leadership engagement, an evidence-based value analysis process, and data deemed credible by those in the decision making process.

How can healthcare organizations improve clinical integration in their supply chains?

Engaging physician leaders who have experience with/interest in supply chain and the impact of supplies on overall clinical and financial outcomes can help drive clinical integration in the supply chain forward. These physician champions can, in turn, work to bring other physicians and clinicians on board with change.

Disclaimer: The third-party contributor of this piece is solely responsible for its content and accuracy, and the views expressed do not necessarily reflect the opinion of GHX.