Daily Archives: March 29, 2007

A (Supply and Demand Chain) Pro You Should Know

As you know, Supply & Demand Chain Executive recently announced their Pros To Know for 2007. Like Jason, I think some names were missing from that list. Jason pointed out that Mickey North Rizza and Mark Hillman were conspicuously absent.

Today I make my first nomination to the Pros You Should Know – But Don’t – List. The blogger’s supplement to the incomplete Supply & Demand Executive List. That individual is Jean-Philippe Massin, former CEO of Eutilia, and editor of www.massin.nl=”” esourcing=”” target=”_blank”>Strategic Sourcing | Europe. Jean-Philippe is one of the few bloggers on the other side of the Atlantic working hard to spread the Spend Management message over in Europe and needs to be recognized for that commitment.

Can U.S. Healthcare Be Reformed?

Although not a common topic for this blog (as my only post focussed on the topic to-date discussed The Dismal State of US Health Care), it is an important one, and a favorite of vendors like VendorMate and CombineNet. I don’t know of a single country where health care is not as good as it could be, and should be.

The reason for this post is a recent article by The McKinsey Quarterly which discussed some Universal Principles for Health Care Reform. According to the article, a health care system’s fundamental problems can be addressed if the decision makers recognize the interlocking nature of its elements.

A premise of the article is that, in health-care, regulators struggle to reconcile three competing objectives: equitable access, high quality, and low cost. Furthermore, increased supply creates additional demand for care and often fails to generate commensurately better outcomes and higher spending does not necessarily correlate with higher-quality health care. And without a comprehensive perspective, a remedy for one aspect of the health care system might generate unintended – and potentially negative and costly – implications for another part.

The authors contend that the development of a comprehensive perspective requires a framework to help guide decision making. To this end, they identified the primary elements of supply and demand and derived six principles that apply to a broad spectrum of health care systems. Furthermore, they derived a seventh principle, concerning the organizational and operational framework necessary to implement the concepts.

The principles they derived are the following:

  1. Prevent illness, injury.
  2. Ensure value-conscious consumption of services, treatments.
  3. Promote efficient creation of capacity for labor, infrastructure, innovation.
  4. Safeguard the delivery of quality by providers.
  5. Promote cost competitiveness.
  6. Promote sustainable financing mechanisms to collect and distribute funds.
  7. Build and organize capabilities of intermediaries to enable them to effectively manage the system.

With respect to each of these principles, they then define levers, or implementations, that can be used to achieve the principles. Furthermore, they also outline three main approaches to shape demand and supply: awareness, incentives, and mandates; under the pretext that local differences in health care systems need not preclude a structured, systematic approach to reform based on enduring, universal principles.

What I do not understand is why it needs to be so hard. For instance, why would not the following four principles cut it:

  • Insure that treatment services are available to anyone who needs them. (Emergency and Life-Threatening services.)
  • After insuring patients get the critical care they need, the next priority should be to prevent illness and injury in the first place.
  • Be fiscally responsible in the delivery of health care services.
  • Allow for a private, or semi-private, system in addition to a public system for alternate service provision, including provision of non-essential services.

For example, my point (3) would subsume (2), (3), (5), and (6); my point (2) would subsume point (1); my point (4) would subsume point (7); and my point (1) would seem to be the most critical of all – service is there when you need.

Now I know that it is difficult to define need, since each of us could define it differently, but I do not see why it is so difficult to bring healthcare into the twenty-first century. But then again, I do not understand how your average political system and politician can be so useless either. I guess I’m still too much of a mathematician at heart.