In an earlier blog post, Scott Alexander, vice president of innovation at ROi (Resource Optimization & Innovation), described how ROi used innovation to re-imagine the supply chain and develop solutions to drive greater efficiencies, reduce costs, and produce sustainable change. In the second half of APQC’s conversation with Scott, he discusses ROi’s biggest wins, its future plans for continuing to solve global health problems with supply chain solutions, and key focus areas for other organizaitons.
Scott Alexander will be a Key Note presenter at TCU’s 2015 Innovation in the Supply Chain Conference June 3-June 5. Attend the event to learn more about how ROi transformed its founder Mercy Health System’s supply chain operations from a cost center into a successful new business model.
In your opinion, what has been one of ROi's biggest wins?
As I think of all the services we have created, I think the biggest win is not necessarily one of our services, but rather the attitude that created ROi and continues to sustain it. There is an appreciation that we have to constantly evaluate how we satisfy our customers’ needs (clinicians and others), have an objective view on what we choose to outsource by evaluating what we look to vendors to do, evaluate what we want to insource and take on ourselves, and evaluate how we consolidate and distribute these services in a way that ultimately is going to help the customer the most. I think that the biggest win is getting the attitude right; then the services and offerings will fall out of that.
What are ROi’s future plans for continuing to solve global health problems with supply chain solutions?
ROi’s future plans are to continue to invest in innovation. I am new to the organization. I think just the fact that we now have a vice president of innovation for a supply chain company in health care is big. There is a commitment here, and I think it boils down to an appreciation of what our legacy is and where our industry needs to go. Historically, supply chain has not had the voice it ought to in answering the challenges that we are seeing in the industry. So it is no surprise that we spend too much for quality care,. If you think about it, supplies account for the second largest behind labor and fastest growing expense for a health care provider.
If I were to come to you and say that I need you to help me improve my business, but I said you weren’t able to look at up to 40 percent of the business’s spend, which according to many reports, supply chain is comprised of, you would say that is an impossible task. But that is the reality of where a number of hospitals are today. They haven’t necessarily appreciated the role that supply chain needs to have in health care. As a result, it is incumbent on ROi as an innovator to collaborate with others in the industry and focus in on why it is important to have supply chain at the table and how to invest in offerings that will improve the efficiency and effectiveness of health care systems.
What are three key areas you would advise other organizations to focus on concerning health care supply chain management?
We are all at different stages in our journey in terms of the role supply chain has in an organization in a hospital system. Supply chains have to bend the cost curve that is affecting hospital systems across the country. It is incumbent upon supply chain leaders to prove the value of supply chain. If we are going to make meaningful impacts on the cost of delivering care, it has to be done with supply chain represented at the decision-making table. The number one thing supply chain organizations should do is drive themselves into a position that allows them to have an equal voice in terms of how to improve the economics of health care.
The second area I would recommend organizations focus on is understanding customer needs. If you think about how to successfully create an innovation, it has to start from understanding what your customers’ needs are. Part of understanding those needs involves understanding the clinicians and why they may want to do what they want to do and in the way that they want to do it. Understanding what the drivers are for the folks in finance and around the entire organization is also important. Supply chain cannot be a silo if it is going to have a voice in the conversation.
The third key area organizations should focus on is building relationships. It is important to build relationships with the clinical team and understand what they are trying to get done and how they are trying to go about doing it. Then tackle how to help them improve outcomes, which broadly speaking is what the clinical side of a hospital is going to be looking at. How do you help them improve outcomes while driving the cost down? It sounds like those things may be in conflict, but our experience has been quite the opposite. When you can engage in a productive dialogue with the clinicians for a hospital, what you find a lot of times is the thing that improves outcomes will also help to address supply chain costs and the costs of delivering care. Having that dialogue helps you build stronger relationships with your clinicians. You will have a clearer sense of how to partner together to drive value.
