Jimmy Chung, M.D., leads clinical transformation as chief medical officer for Advantus Health Partners, which specializes in making supply chain easier. We spoke with Dr. Chung about the culture of variability in health care throughout the United States that leads to waste and how we can overcome this. We also discussed the impact of pollution caused by supply chain and why a patient-centered health care system is best – not just for supply chain but the overall health care system.
As a physician leading the charge in supply chain transformation, what inspired you to delve into this particular aspect of health care?
No one sets out to go into supply chain. Most of us have supply chain find us, and that was true for me. After being in a full-time general surgery practice for 13 years, I wanted to pivot to an administrative role to have a broader impact on health care. While looking for typical physician leadership roles, I found an unusual position at a large health system seeking a surgeon in supply chain. The role was very new at the time, and I spent six months trying to identify other physicians in similar roles that I could potentially learn from. I found two across the whole country. Once I figured out what the job was about, it really resonated with me.
You talk about health care embracing a culture of variability. What do you mean and why is this so prevalent?
As a surgeon, one of the things that really bothered me was how inefficient surgeries were, not just from the operational aspect of it in terms of time management but also the products we were using. Supplies would often be opened on the back table during surgery and then thrown away without a single drop of blood on them. I was always told it would cost more to reprocess and repurpose than to just buy it new. Half of the waste baskets were full of products we never touched. One study found $1,000 in waste for each surgery. That was shocking to me. Other physicians seemed to have no knowledge of this, and it wasn’t consistent. Some surgeons wasted a few hundred dollars and others several thousand. There remains so much potential to make health care more efficient and cost-effective.
How do we break past this mindset of waste and variability?
At Advantus, we conducted an analysis of this. The supplies used during most surgeries – and particularly what gets implanted into a patient – are selected by the doctor. That makes sense on a certain level, but how they make those decisions is not always based on best practices, evidence or data. It’s mostly based on their own individual preferences, maybe who their favorite vendor rep is or what they are used to using because they haven’t had any exposure to anything else. Hospital administrators contribute to this because they want to keep their doctors happy. Vendors take advantage of this by going to the doctor’s offices or hanging out at the surgery centers to create relational ties. The reality is that variability adds to cost, but the impacts on care delivery are even more important to note. If you have to teach your operating room staff ten different ways to do something, there is more room for error which increases the chance of an unfavorable outcome for patients. Indeed, medical errors is the third highest cause of death in the US, and I believe unnecessary variability in care delivery contributes to this.
Fortunately, physicians are competitive. At one hospital, we chose cost-per-case as a metric. We measured the cost of the mesh that 25 surgeons used in hernia repairs for six months. We just showed the results to the physicians and didn’t say anything about them needing to make a change. The next six months, we saw a dramatic drop in the overall cost of mesh being used because everybody wanted to be the least expensive one. They didn’t want to be known as the most expensive surgeon. That allowed us to have a conversation about having one or two mesh vendors instead of five. This had nothing to do with quality because all of the products are equivalent. That’s true for most products out there.
You’ve emphasized the shift toward value-based group purchasing organizations (GPOs). Could you explain how these differ from traditional GPOs in addressing not just pricing but also clinical considerations?
The idea of a value-based GPO portfolio is new and innovative. The model for most traditional GPOs is to aggregate the buying power of individual hospitals so they can get better pricing from the vendors. That will work initially, but if you start inviting all of the vendors and suppliers, the advantages break down because there is no exclusivity. We are taking a better approach by creating a leveraged portfolio that is vetted from a clinical and value perspective.
Our CEO Dan Hurry has compared us to a Costco model. Walmart would have 20 different brands of cereal, and it takes a lot of time for the buyer to sort through those. We want to be more like Costco with maybe four brands, which is an incentive to the supplier because they face less competition. The customer gets a discounted price, and the store is guaranteed to sell in a larger quantity to a group of customers that have intentionally chosen to be a member of Costco. The customer wants someone else to make the choices for them from a limited number of products that they know have been vetted for quality. In similar fashion, Advantus is not going to contract with every vendor out there. We want to have strategic partnerships with specific suppliers who will agree to pricing that will be best in class for vetted products, and we want to help health systems that are ready to adopt a truly patient-centered, value-based care model.
With the health care industry contributing significantly to environmental pollution, how much responsibility falls on supply chain to make a difference?
We have a lot of work to do in terms of how we impact the environment in terms of waste and our use of energy. About 10% of carbon emissions created in this country come from health care, of which 80% is related to supply chain. There is a lot of opportunity there where we can improve the health of not just our patients but of the planet through how we partner with our suppliers, manufacturers and distributors. Supply chain has other social responsibilities, such as addressing local social determinants of health, forced labor and human trafficking, diversity and inclusion, health outcomes inequities, and global fair trade.
What’s the top way that supply chain could impact the health of patients?
I know this is not a very popular topic for physicians, but we should focus on what the patient wants. We as doctors have been trained that our opinions are best for patient care, but that’s not always the only course forward. Above all else, patients want the assurance of quality and reliability. In the airline industry, the individual preferences of the pilots are not prioritized because everything has been standardized toward safety and customer experience. Medicine should follow this model. A patient-centered health care system should be standardized toward best practices, so as a patient you can expect similar, reliable outcomes. That is the key not only to supply chain but to a health care system that keeps its community healthy.
