I interviewed Ashok Muttin who discussed Future of Healthcare Supply Chain.
Hi again, Ashok, I’m looking forward to hearing your views on the future of the healthcare supply chain and I have a few question regarding this topic and the first one is, how does one build a 2.0 version of the healthcare supply chain? For example, what is the future look like and what are challenges and then the first question is about data integrity. Can you talk about this issue regarding data integrity?
Dustin thank you very much for another opportunity to speak to you and it’s a pleasure to have this discussion. Data integrity is the foundation on which you build your entire future of the supply chain or call it as the 2.0 of the supply chain. As we see today, most hospitals and health systems have this data problem. What that means is, they have not invested sufficiently in standardizing their product's descriptions, how the products come in, the data comes in for the recall and the replacements. Then there is the data that is required to do any kind of analysis to understand their spend behavior, spend versus targets or the budgets, whatever there maybe.
There needs to be a very conscious investment in building this foundation of the data. Once you build the data right at the item master level, then when the data goes through multiple transformations i.e. from the requisition to various levels of approval, the purchase orders are created, the invoices are received,and then there is the whole data that is buried in the inventory and the warehouse management system. All of this comes together to provide a clearer picture and this foundation can be used in multiple ways for organizations to build the 2.0 version of the supply chain. Think about it as a Swiss army knife. The investments in data are going to be used in multiple ways just like a Swiss knife is going to used and unless and until the health care systems makes a conscious decision to invest in this, it’s going to be very difficult to build and run the next generation of the health care supply chain management.
What about cloud computing and open source?
That’s a very interesting question. Health care systems again have not really invested a lot in the cloud, in the SaaS, in open source and some of these newer technologies that are out there. Traditionally health care systems have been run by old ERP systems or behind the firewall systems that were originally developed, custom developed for these organizations and then, they have some layer of business intelligence that is sitting on top of these old systems. Today, they spend enormous amounts of dollars in maintaining and supporting these various, decade old systems but at the same, they are hampered by not being able to extract the data from a lot of the systems, be that to analyze the data to get a holistic view. Our suggestion in SupplyCopia is that you have to invest in the SaaS and cloud computing to be able to build the future of the supply chain.
One way to start is, to look at someone like SupplyCopia where we have highly integrated platform that can actually help them to optimize their current investments in the ERP systems but at the same time, be able to get a lot of benefits from what we have already developed and obviously, they could look at open source as one way to improve upon their performance. There is a huge open source community out there that is developing some of these applications, developing some of this code. Codes are developed by thousands of people all over the world using some of the best practices coming from not only healthcare but also outside of healthcare that can be leveraged by the health systems in order to build this the next version of the healthcare supply chain system. What that means is, if they are willing to adapt some of these standards, some of these newer technologies, they will end up spending a lot more on getting there instead of being buried in just maintaining these age old systems that never go away.
Can you talk about predictive intelligence?
Sure. As we talked about the foundation which is the data and again, the data is the core to the predictive intelligence and the analytics. There is a huge momentum happening now with reference to the big data analytics and predictive intelligence and in my opinion and based on the experience that I’ve had in the last 18 months to two years, healthcare supply chain and the management systems totally lag behind the rest of the industry. For example, manufacturing and services and dealers and distributors, if you look at those industries, they go to extreme lengths to analyze the data, understand the buying behavior and look at cost optimization. If you look at a manufacturing industry, traditionally manufacturing industry, they will go to extreme lengths to suck out a nickel cost of a hexagonal nut for example. We don’t see that sort of behavior in the healthcare systems yet.
What they could do is, they could leverage tremendous amount of data that is buried in their systems. Because of the lack of the data foundation and them being married to these old ERP systems, they are unable to extract this data, be able to analyze it and build a predictive model. The way the current model works is that it’s almost like somebody driving a car looking at the rearview mirror. What that means is, you are constantly going to be driving the car very slowly, suboptimal or constantly looking at the rearview mirror. You are going to crash somewhere, either of those options are not ideal options. We suggest that you utilize the data that is buried in your organizational systems, be that your ERP systems, your accounts payable systems, inventory management systems, order management systems, requisition, so on and so forth and then, build analytics to actually predict the future.
What that means is, this intelligence is delivered to the user at the point of consumption 24X7 without somebody having to actually ask for that information. What we propose in SupplyCopia, spend analysis and predictive intelligence, we deliver actionable intelligence to every decision maker, down and up this ladder of the supply chain at their point of consumption so that by utilizing that analytics, utilizing that knowledge, they can actually predict their outcomes and act upon those outcomes and mitigate any risks therein even before those risk have actually happened.
Thank you. My final question is, how can someone invest in these things, has your company done anything interesting?
Sure, One example that I’m giving to you is, we were working with a healthcare system here in the Northeast. That organization had roughly $3.5 billion worth of spend and by analyzing the data buried in various of their systems, we were able to bring all of the data into a centralized warehouse, be able to analyze that data, we were able to show them roughly 20 to 22% cost savings in their purchased services and anywhere 10 to 12% of savings in the med-surg spend and the biggest result that we saw was with reference to the physician preference items.
We analyze the physician preference items very minutely married that with patient outcomes, we’re able to show them a 28 to 30% cost savings in the physician preference items. What we have done is created SupplyCopia cloud that consists of the order management, the spend analysis, the requisition management, broadcasting mechanism, collaboration and an RFP engine that allows an organization to work with their existing ERP systems but at the same time, be able to identify opportunities in the first 90 days and be able to leverage those opportunities.
Well, thank you Ashok for sharing your views today and the future of health care supply chains.
Thank you very much Dustin, it’s always a pleasure to talk to you.
About Ashok Muttin
Purpose Driven Entrepreneur Reinventing Healthcare Supply Chain