In the face of growing materials costs, healthcare organizations are striving to make care more cost-effective for patients. Behind the scenes, where their work is practically invisible to patients and frontline caregivers, supply chain and materials management professionals are constantly looking for creative ways to manage costs.

Along with increased healthcare utilization and the unique challenges posed by the COVID-19 pandemic, healthcare organizations are experiencing higher costs than at any other time in recent memory. Additionally, the move to a value-based reimbursement model, as mandated by the Affordable Care Act, has posed challenges to those who manage hospital and health system supply chains.

The Association for Healthcare Resource & Materials Management’s (AHRMM) Cost, Quality and Outcomes (CQO) Movement offers a solution to these issues. In this approach, managers examine the relationship between cost, quality and patient outcomes. Rather than look at each piece of the puzzle as a stand-alone entity, they determine how the components work together to optimize patient outcomes.

CQO rationale

Supply chain professionals have historically managed expenses for healthcare organizations, including the price of supplies and the processes involved in the procure-to-pay cycle. They’ve developed strategies to streamline operations and make the best use of limited resources. But historical approaches that prioritize lower costs above all else don’t work in today’s healthcare model. Costs can’t be the sole driver of purchasing decisions, where reimbursement is tied to the value of the care delivered.

For the supply chain to help healthcare organizations thrive, more than just cost must be factored into the equation. Otherwise, healthcare organizations can’t succeed in the new healthcare landscape. That’s why the combination of actual costs, quality indicators, and outcomes measures can give healthcare organizations’ supplies and materials managers a more accurate measure for controlling costs.

CQO applications in the real world

CQO certainly has its merits, but to make it work, all stakeholders must be on the same page. One of the biggest challenges to implementing this approach is clinician buy-in. Transparency and open dialogue are required to make CQO effective.

While healthcare organizations are data rich by nature, they must find a way to make disparate departments’ data meaningful to each other. Physicians must better understand how the cost of supplies drives financial solvency, while supply chain professionals need to understand how specific supplies impact the delivery of care. When physicians and supply chain managers engage in conversations that make prices, quality and outcomes clear to all, they can find common ground that better supports patients and the organization.

Let the team at Cenmed be a partner in your organization’s supply chain optimization processes. Reach out today and tell us how we can help to support your mission in Healthcare, Research and Science TM.