Challenges and Solutions in Supply-Chain Management

VueMed has been in the medical supply-chain game for a few years shy of two decades. MedLearn spoke to co-founder Lana Makhanik, to learn how she sees the industry developing as new technologies and new obstacles emerge.

Jason Henninger: You and Arnold Chazal began the company in 2005. What needs did you see that inspired you to start the company?

Lana Makhanik: We started off as management consultants for medical device companies, helping them evaluate both clinical efficacy and clinical use of their products, as well as other operational concerns. This is how we came upon a lot of the supply chain problems with medical devices, particularly in hospitals. We were dealing with specialty procedure areas like Cath labs, interventional radiology, and the OR, where these types of devices and supplies effectively constitute the essential component of the patient care process. Without these devices the procedures don’t exist, right?

There are thousands, tens of thousands, of these devices being used and they all require tracking, tracing, reordering, and assurance that they’re still safe to use and not expired. All of those operational components have been left up to the individual departments to determine how to manage that process. How to ensure things are safe, how to reorder them, it’s all been sort of ad hoc and often done by clinicians.

We witnessed all of this as consultants. It’s difficult for people to document what they’re using at the point of care when it’s done manually, on paper, or using stickers. There are inaccuracies on patient charts as a result. If items aren’t documented properly, it’s difficult to know what it is they have to reorder. There’s no visibility about what they have on hand at the time. Is it safe to use? Has it expired? Has it been recalled? Where is it located in the hospital? Basic operational things like that were missing. That’s what prompted us to look for a solution, how to use technology to improve inventory management. At the time, Cloud-based solutions were just beginning to emerge. We asked ourselves, how can we use that technology to create greater visibility and inventory optimization?

JH: How serious is the revenue lost through supply chain mismanagement?

LM: In our experience, up to 50 percent of procedures or patient cases have some sort of billing issues in terms of supplies, meaning incorrect items were documented or items weren’t documented that should have been, not documenting the appropriate quantities, or not having appropriate billing codes to be able to then get appropriate reimbursement. All of these components we see as part of today’s environment. As a result, the billing-related errors and charge issues are quite significant.

JH: When you work with your clients, do you provide them with data for self-analysis?

LM: Most of the time our clients come to us without good inventory-related data. So, if they don’t have effective data capture tools, an example of the way it manifests is that you have someone who’s in charge of the billing process and takes the clinical records and the physician’s notes, and starts comparing them, looking at what kind of procedure this was. They’ll say, I see that this is a stenting procedure, and there’s the stent, but they also should have used this type of product and that type of product, and I don’t see them documented here. There’s nothing they can do about it other than going back to the clinician to follow up to see if they forgot something or ended up doing something other than what they notated. It manifests itself in this sort of post-procedural review. I gave you an example of something that can be spotted, but there are a lot of times when it can’t be spotted where items never get submitted for charges.

JH: You must get a ton of data from your clients. Beyond accuracy in patient records, charge capture, and maintenance of supplies, what other uses for data are you looking into?

LM: We gather data on every inventory-related transaction. We’re monitoring items from the moment they enter the organization and then throughout their lifecycle until the point of care. Items can be moved from one location to another, removed from inventory for reasons other than patient use—for example being loaned to another facility or replaced with something new—whatever the case may be.

And of course, we’re monitoring everything that’s being used during the patient encounter itself, so you know what the actual patient utilization looks like, both for the patient’s record as well as in terms of the supply chain implications. What has left the organization? What do we have on hand? What needs to be reordered? What should we be maintaining in terms of supplies on hand, at any given time for each of the different SKUs? Are there any SKUs that are not being utilized, and should we consider consolidating or exchanging them altogether? When hospitals don’t have this information and aren’t paying attention or doing anything about it, that’s what creates waste.

JH: There seems to be a disconnect between the speed at which technology moves in healthcare and the speed at which it’s implemented organizationally. Is that a speedbump you encounter?

LM: Once upon a time when we were just getting started, the technology may have been a barrier, but these days it’s a point well understood that technology is an opportunity for greater automation and efficiency gains. And given the focus of most organizations, especially post-COVID, people clearly understand the opportunities technology can bring in terms of automation, efficiency, predictability, and better risk management around what’s happening in the supply chain. I would say that, at this point, it’s not technology that’s a barrier so much as mindshare, getting through to them despite myriad projects and priorities that providers are always in the midst of.

JH: You mentioned COVID. How did the pandemic affect VUEMED?

LM: We’re a Software as a Service company, so we can usually weather these things successfully and continue to support our customers with valuable data to help them forecast and predict the things they’ll need in the future, given the issues that the pandemic created. In terms of the pandemic’s impact on the supply chain, it had a tremendous impact on the focus in general. People suddenly realized the importance of the supply chain, meaning things don’t just magically appear on your shelf. It doesn’t matter if it’s a five-cent item you’d never thought twice about. It became an issue of “Hey, I don’t have this cheap and ubiquitous item and now cannot care for my patient.” So, there’s a direct correlation between the supply chain and what happens at the patient’s bedside.

Now that an understanding of this correlation has been firmly established, it’s provided us with opportunities to really make an impact around things like building supply chain resiliency, finding ways to build additional automation, building better relationships with suppliers, and diversifying risk. This isn’t just healthcare-related; these issues are being talked about throughout the supply chain world across all industries. To summarize, instead of optimizing for cost, which is what the healthcare industry has done all along, we now have to optimize for risk.

JH: Things started out on paper, then moved to barcodes, then RFID. What do you think is the next step in technology?

LM: It’s always tempting to think of technology as something that can make a great leap, and often it can, but the way we talk about it with our customers is, “Don’t think about it in terms of the specific type of technology. Think in terms of the specific problem you’re trying to solve and figure out what technology is going to be most useful.”

For example, there’s nothing wrong with barcode scanning under certain circumstances, the same way that pen and paper is perfectly acceptable for taking notes sometimes. RFID has fantastic uses for very granular tracking and tracing, and for a chain of custody information. It’s a technology that automates data capture, like how Amazon Go stores use vision tech—a whole bunch of cameras looking on and interpreting the data together with AI—that’s another type of technology that may eventually come into play in clinical spaces.

It’s exciting to think of, but it’s also important to understand how that technology is going to solve a specific problem and to realize that data capture by itself is not the end goal. You have to interpret the data and know how it’s going to feed into different systems. You have to know what to do with the data, how to act on it, what framework you have to create accountabilities, how this information is used, and how it impacts your processes and operations.

JH: What is the main difference between you and your competitors?  

LM: First, we use a variety of methodologies including barcode scanning, RFID, and visual or touch-based applications, whatever makes the most sense for the use case or the problem we’re trying to solve. Second, we focus on what we call centralized item management. We spend a lot of time making it easy for customers to capture the information about an item and know exactly what that item is.

We’re taking it upon ourselves to maintain the market identity of each item so there’s no doubt when it’s encountered in clinical practice. That market identity is effectively a source of truth. No matter if it exists in its own item master or happens to have been entered into the clinical system or not, our system is going to capture and recognize that item. A third differentiator for us is that we don’t just focus on technology. We call our implementations “programs.”

We work with customers to set up daily, weekly, and monthly protocols, as well as oversights and Key Performance Indicators, and we help them monitor how their actions are impacting the bottom line. It’s great that they’re going to automate things. It’s great that they’re going to have all this data. But what are they going to do with this information? And how are they going to use the information to actually improve operations?