Matter. Julie Williamson
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of your pizza. Bought an Apple computer? You can track its progress through the production and delivery stages with the click of a button, and thanks to its seamless integration with logistics firms like UPS, you can watch its progress on a truck to your house. Speaking of apples, you can even find out exactly where a real apple in your local grocery store came from, which farmer grew it, and how it arrived at the store—all with the simple click of your camera phone and a tracking code on the apple. Each of these everyday products can be traced with ease through the supply chain, even by a consumer—it is so simple we usually don’t even stop to think about it (except when we are wondering where the heck our new computer is, or why the delivery driver is taking so long).
Now imagine you are having $35,000 knee replacement surgery (or maybe you actually just did and are catching up on some reading). You are going to have a device implanted into your body that is destined to be there for a very long time, costs tens of thousands of dollars, and will have far-reaching effects on your health and well-being. Given how much it costs and where it is going, you would assume that you would wake up from surgery knowing exactly which artificial knee, which screws, and what other types of objects were put inside you. You’d likely be wrong. From the lot number to the exact device serial number, medical devices, or “implantables” as they are known in healthcare, are actually incredibly hard to track. The complexity of the supply chain, together with the intricacies of the operating room and the myriad players involved, make it a high-pressure, fluid process, where pieces and parts are quickly traded in and out to accommodate your precise needs and the physician’s preferences for how to address your particular situation, neither of which will be fully known until surgery has started. As a result, the only system of record for identifying what was and was not used, and who will be billed for what, is often the operating room garbage bag.
You think we’re joking about the garbage bag. We’re not. Until a few years ago, and even today in many of the world’s hospitals, the method for tracking inventory used during surgery is to collect discarded packaging from the trash for identifying markers that can provide a list of products used during the hectic operating room experience. This is coupled with the records taken by the operating room nurse and the manufacturer’s representative, if he or she was in the room during the procedure. That’s what is used to create a purchase order, and to identify what may have been implanted in your body.
It doesn’t take a genius to realize that this is a problem. First, it is an extremely manual process with a high margin of error. In one study conducted by VUEMED and presented at the IDN Summit and Reverse Expo in 2013, billing inaccuracies were found in 100 percent of procedure records evaluated. Even more interesting, 80 percent of the records erred by overbilling patients, and 90 percent erred by underbilling.1 So it wasn’t unusual for the same person to be overcharged and undercharged on the same invoice! The net annual cost of waste, loss, and expiration in the US medical system alone is estimated in the billions of dollars, in part from processes like the garbage bag approach to inventory management, which seems ironically apropos.
Second, inaccurate and manually collected data can make it difficult to track down the patient if there is a recall or a problem identified with the part. We can do it with cars (think about those recall notices you get in the mail periodically), but not the often lifesaving devices inside your body.
Now consider this waste, and the potential threats to patient safety, in the context of the broader aims of the system. No matter where you sit in healthcare, you are focused on what’s known as the Triple Aim. The Institute for Healthcare Improvement, which coined the term in 2008, defines the Triple Aim of healthcare as simultaneously improving the patient’s experience of care, improving the health of populations, and reducing the per capita cost of healthcare.2 Clearly, the way implantables were being managed was in conflict with all three of these goals. It is a complex problem that matters a great deal to suppliers, providers, and patients across the entire system. The company that could solve it would create massive value and be established as a company that truly matters. But this problem was even tougher, because no one company could actually solve it. It would require an industry-wide effort led by a company with an elevated perspective: the ability to challenge assumptions, to be optimistic about the possibility of solutions, and to explore the unanswered questions to find answers that would work. What really mattered was being able to define and facilitate the full solution, even if you weren’t in a position to deliver on that full solution.
Governments, insurers, manufacturers, providers, and even patients wanted to understand why it was so hard to track implantables. What was each of the players doing at their step in the process that was causing the challenge, and why weren’t they fixing those steps? What industry assumptions and beliefs were preventing solutions from being created? What types of interdependencies were at play and would need to be addressed to create a viable solution? One company with an elevated perspective had the insight to ask these questions, envision a solution, and get the right participation from others to answer them. That company was Global Healthcare Exchange (GHX). Founded by a coalition of healthcare suppliers, this Colorado-based company has established itself in the unique position of connecting suppliers and providers in the healthcare supply chain, committing both parties to the accurate exchange of data, in real time, to advance the Triple Aim of healthcare.
From its early focus on provisioning clean and accurate data exchange, GHX has taken on many edges of disruption since it was founded. GHX has been involved in some of the toughest problems in the industry: e-commerce in the company’s early days; then contract synchronization, price accuracy, data sharing, and interoperability; and, more recently, new opportunities in vendor management and cross-industry solutions for challenges like accurately tracking implantables. Its CEO, Bruce Johnson, feels that GHX has learned through experience to deliver on the basics really well, earning the right to take on the bigger challenges that matter even more to the industry by proving its ability to deliver value to “both sides”—suppliers and providers. In doing so, the company has built robust knowledge and insight no one else has, giving its leaders an elevated perspective on the healthcare supply chain.3 They are using that perspective to get the access to the people and relationships they need to create high-value, impactful solutions that involve many different players in the industry—the solutions no one company can craft alone. The result? For implantables, the industry has collectively defined a solution and has taken the first steps to clawing back some of those lost billions in waste, loss, and expiration, among other improvements. And that’s just a small (and recent) part of GHX’s business and the value it has delivered over the years.
We see GHX as a clear example of a company that invests in and delivers on an elevated perspective that uniquely positions it in the industry. Ever since GHX was created, its leaders have continually sought new edges of disruption for themselves and their industry. For example, in 2010, the executive team set out an incredibly ambitious goal, what Bruce and his team called “5 in 5.” In five years, they wanted to drive $5 billion out of the cost of healthcare. How? By tackling some of the biggest cost challenges and inconsistencies in the supply chain. With this singular goal in mind, the company set out to create systemic change that would deliver these savings, and in the process would also improve patient outcomes and experiences. You will learn a great deal more about this fascinating company and how it uses its unique position and perspective to continually define new edges of disruption in the chapters to come (spoiler alert: GHX not only delivered on 5 in 5; it exceeded its goal). For now, though, let’s turn to you, and think about how you might define your edge of disruption—the first step in developing an elevated perspective.
Take a minute and think about critical questions your buyers might need answered about a new market they are entering, legislation that is changing your industry, or a product they are developing. Like many in the healthcare industry, maybe they need to solve three apparently conflicting problems: lowering cost, improving outcomes, and making customers happy. Perhaps they are evaluating a new technology, or trying to figure out next year’s business risks. Your buyers are looking for someone with an elevated perspective to help them think through those types of questions. Where do they go for answers? Who do they ask? Would they come to you? Are you or your company known for an elevated perspective, or as a trusted partner who can bring a different vantage point and can ask good questions that they aren’t thinking to ask for