It’s e-Procurement for Health-Care Week!

One of the areas I don’t talk much about is health-care – even though it’s one of the areas that could probably benefit the most from e-Sourcing and e-Procurement? So why don’t I talk about it? Because I don’t do any work in the area. Why don’t I do any work? Because the standard response from your average health-care (service) provider when you try to talk to them about e-Sourcing, e-Procurement, or even e-Commerce is either that (1) it’s not important, (2) it would interfere with the quality of patient care so we won’t consider it, or (3) that’s what the GPO is for.

All of these answer annoy me greatly, but needless to say answer #3 annoys me the most. Think about it – most GPOs in the health-care sector follow the standard “supplier-pays percentage of purchase” model with little oversight. How much incentive does an unmonitored “supplier pays” GPO have to reduce prices? Not much – the more they reduce prices, the less they get paid. So, after getting asked about the sector recently, I thought it would be a good time to do a series on the status of health-care and how e-Procurement could help. Since I’m not a health-care expert, I invited some thought leaders to share their views – which I’ll be posting this week.

With respect to the state of the U.S. health-care system, the McKinsey Quarterly just ran An Interview with the CEO of the Cleveland Clinic as their contribution to Innovation in Health Care where Delos “Toby” Cosgrove discusses the state of health care and how top executives can contribute to innovation and reducing the nation’s health care burden.

At a cost of about 2 Trillion annually, or 16% of GDP, it’s clear that costs need to be contained. However, the goal of health-care is to improve quality, and it is going to take real innovation to find ways to reduce costs while improving quality – especially when Toby might be right when he says that the only way to significantly reduce costs and improve quality is to reduce the burden of disease. However, when forty percent of premature deaths in the US are caused by obesity (and Toby states that 2/3s of the country is overweight and 1/3 are obese), inactivity, and smoking – how do you prevent this without changing people’s lifestyles?

However, one thing you can do is measure outcomes and develop quality metrics – then you can put a value on the health care dollar. Unfortunately, there is not a lot of information out there on what quality is or what you should measure – but Toby’s Cleveland Clinic is working on defining outcomes in every department for all common procedures and diagnoses, and is improving both the quality, and quantity, of metrics on an annual basis. Based on these metrics, they can find problems, address them, and improve quality. By improving quality, they eliminate waste, and eliminating waste reduces cost – providing a greater value for each health-care value spent.

Other things you can do will be covered in the forthcoming posts.