Why the Healthcare Sector is in Desperate need of B2B Integration

B2B integration can spur medical organizations to reduce supply chain management efficiencies, comply with Affordable Care Act provisions and devote more resources to direct patient care.

The healthcare industry can benefit substantially from B2B integration and other technologies that automate and streamline communications. The sector has often suffered as a whole from efforts to go digital. Initiatives such as the U.S. government’s incentive-laden $30 billion project to make electronic health records ubiquitous have experienced significant growing pains. Adopting new information technologies en masse is difficult, especially in an industry that has traditionally relied on paper-based communication. However, integration and automation across the supply chain promises substantial benefits for more efficient, resourceful healthcare.

Investment in EHR is Growing

Investment in EHRs is growing, but not at the rate that federal planners originally hoped. Although more than 40 percent of hospitals have adopted EHRs, according to a Robert Wood Johnson Foundation report, many struggle with meaningful use. Industry members with a more realistic perspective on the long, slow process of building adoption have lauded the industry’s progress. However, they also observe that the realities of healthcare means that adoption has to happen a lot faster than it would in another sector. Dr. Ashish Jha, co-author of the report and an associate professor with the Harvard School of Public Health, said as much to U.S. News & World Report.

“The news here is mostly good, but we shouldn’t declare victory yet,”  said Jha. “In other industries it takes about 10 years after technology is adopted to see real efficiencies. My hope is we’ll see that more quickly in health care. We don’t have 10 years to waste.”

Too many silos

The resistant attitude many doctors have exhibited toward EHR adoption is characteristic of the health industry supply chain in general. Silos abound in the sector, with virtually every member operating semi-autonomously and often inefficiently. Specialization is partially to blame. In a typical scenario, a hospital negotiates with multiple suppliers for a certain product, according to The Wall Street Journal’s Joseph Walker. While the hospital may settle on a discounted product, the doctor doesn’t end up using it.

“The nature of the supply chain today is these reps today open up their trunk, bring in the devices to the doctor, and that’s what gets implanted,” Steven Chyung , vice president at Sisters of Charity Leavenworth Health System Inc., told Walker.

This practice, left unchecked, results in recurring inefficient practices. The sprawling nature of the healthcare supply chain make it a top candidate for B2B integration.

Will the Affordable Care Act drive adoption?

Healthcare organizations will likely not have 10 years to improve their meaningful EHR use. Part of the Affordable Care Act’s sweeping healthcare reform efforts are to exact stricter penalties on healthcare organizations that resist EHR adoption. Jha told the Report that the these disciplinary measures should not be discounted as a motivating factor. Organizations stand to receive less funding if they’re not using EHRs, so penalties would soon outweigh the cost of upgrading.

In response to the ACA​, hospital supply chains are changing. B2B integration is now prioritized as a cost-saving measure in the face of resources allocated to other digital initiatives. If healthcare organizations have to digitize their records and patient interactions anyway, it makes sense to devote time and energy to optimize the supply chain.

B2B integration for streamlined supply chains

The organization and discipline of hospital supply chains were not previously top concerns for medical organizations, wrote Forbes contributor Steve Banker. The ACA has also driven holistic supply chain evaluation. Increasingly, the old model of volume-based reimbursement is being replaced by incentivized, performance-based model. A patient who is treated and then readmitted for the same ailment will now have a negative impact on the provider. It is in these organizations’ best interest to eliminate inefficiencies and extraneous tests.

Procurement and order management represent big opportunities for healthcare organizations to save, Banker wrote, especially in networks with more than four hospitals connected. Ordering and warehouse management systems allow organizations to make better use of resources. For example, by consolidating its supply chain and adding centralized, automated management tools, the University of Pittsburgh Medical Center realized a payback on its investment in just six months. Labor inefficiencies generally make this sort of supply chain application take two years to pay back.

Your B2B Integration Partner

B2B integration can play a big role in drastically reducing the complexities of supply chain management and order management in healthcare. Not only will it help organizations comply with ACA evaluations and continue to receive funding, it will free up additional resources that can be reinvested in research, facilities and direct patient care.