McKesson : Five Health Care Supply Chain Management Trends to Know

National health expenditures are projected to top $3.5 trillion this year, according to the latest spending figures from the Centers for Medicare & Medicaid Services. Of that total:

• $360.1 billion will be spent on prescription drugs
• $63.7 billion will be spent on non-durable medical products
• $53 billion will be spent on durable medical equipment

Getting those medications and medical supplies accurately, safely and efficiently from manufacturer to user is the responsibility of the heath care supply chain. As the industry transitions to value-based care models, the health care supply chain like other segments of the health care delivery system will be under enormous pressure to improve outcomes and reduce costs.

Five recent reports reveal key trends affecting the performance of the health care supply chain now and in the future.

1. Web-based tech will push health care supply chain management market past $2.2 billion by 2021

The value of the health care supply chain management market will reach $2.22 billion in four years, according to a report from MarketsandMarkets, the business intelligence firm. That's an increase of more than 53 percent from 2016, when the firm estimated the market's value at $1.45 billion. Driving market expansion are a number of factors, including compliance with the Food and Drug Administration's Unique Identification Initiative, increasing pressure on hospitals and health systems to improve operational efficiency and profitability and rising adoption of cloud-based supply chain management solutions. 'Web-based models help to reduce operational and administrative expense,' the report said, citing that technology as a particular area of growth for health care organizations.

2. Use of data and analytics to drive supply chain management performance will increase

The need to reliably forecast supply chain outcomes will drive the increased use of advanced analytics to improve supply chain management performance. That's according to the 2017 Healthcare Supply Chain Trends Survey published in Healthcare Purchasing News. The Health Sector Supply Chain Research Consortium produced the report, which is based on a survey of supply chain executives at provider organizations and their counterparts at health care supply companies. 94 percent of the provider executives cited the use of analytics as an area of focus as did 88 percent of the supplier executives. Other data-related focus areas were: use of supply chain performance benchmarks (93 percent of providers compared with 83 percent of suppliers); integrating supply chain data with clinical data (87 percent of providers and suppliers); and improving data transparency across the supply chain (88 percent of suppliers versus 83 percent of providers).

3. Push for population health management will reshape health care supply chain management

Population health management-the art and science of keeping healthy people healthy and people with chronic medical conditions as healthy as possible-will remake health care supply chain management. That's according to a report from Global Health Exchange (GHX), a health care supply chain management company based in Louisville, Colo. Population health was one of five trends GHX said will fuel health care supply chain innovation. The other four were: a complex compliance environment; a new role of the supply chain executive; an active merger and acquisition climate; and the strategic role of data. GHX said population health 'is driving the need for a more patient-centered supply chain that supports the delivery of care where and when the patient needs it, which is not always in the hospital.' Further, GHX said, 'Patients are the only ones who experience health care in an end-to-end manner and the industry will increasingly model health care delivery and the supply chain such that it makes that experience more cohesive.'

4. Risk-based contracting between providers and suppliers will redefine supply chain relationships

As health care providers assume more clinical and financial risk under value-based reimbursement contracts with payers, they want to share that risk with their suppliers. Some 83 percent of 52 health system executives surveyed by Premier, the Charlotte, N.C.-based group purchasing organization, said it will be important for their supply chain management teams to explore risk-based contracting with suppliers over the next three years. Some 67 percent said their annual investment in supply chain management will increase over the next three years with 98 percent saying they expect to further standardize physician preference item purchases over the next three years.

5. Health care supply chain leaders will need to upgrade and expand their skill set in the future

The Association for Healthcare Resource & Materials Management and the Strategic Marketplace Initiative collaborated on a six-page career guide that describes the attributes of the health care supply chain leader of the future. The 'ideal' supply chain leader will excel in four competencies: communication, negotiation, analytics and presentation. He or she will have experience in health care, supply chain, managing people, project management and technology. They will have an advanced degree, be certified in Lean/Six Sigma and have leadership training. Their five desired personal traits are the ability to see the big picture, be an active listener, be personally effective, be flexible and be ethical. 'Traditional logistics and purchasing skills of yesterday are being replaced with data analytics, global commerce, clinical and systems integration and alternative payment models-forcing the leaders of tomorrow into a new realm of supply chain,' the groups said.

As these five trends suggest, the health care supply chain of the future will look vastly different from the supply chain of today. The need for health care organizations to improve outcomes and reduce costs will drive the adoption of new technologies, new data-driven strategies, new patient-centered delivery methods, new supply chain leaders and new types of provider-supplier contracts.

Related: Learn more about McKesson'spharmaceutical distribution services