Applying supply chain concepts to make healthcare delivery more efficient

David Dobrzykowski, an assistant professor of supply chain management at Rutgers Business School, looks at the healthcare industry from an operations standpoint so he’s keenly interested in finding ways to improve coordination and communication among providers and, generally, helping healthcare providers improve efficiency, quality and patient satisfaction.

In papers published recently in the Journal of Operations Management and Decision Sciences, Professor Dobrzykowski and his co-authors examine how operations and supply chain management concepts such as use of information technology, partnering and vertical integration can produce better outcomes for patients while improving efficiency for providers.

The following are excerpts from a conversation with the professor about his research and his view on the future of the U.S. healthcare industry. To hear Dobrzykowski explain his view on healthcare delivery and how it can be improved, watch him on video.

"Historically, healthcare has been delivered in a very fragmented sort of way. Consider the effects on information sharing. We access care from one physician and then, perhaps, need follow up care from another provider only to find the information needed from the first encounter is not available when we need it. Many times patients are dissatisfied because the system appears to be very complex and not well integrated."

"My research looks at how we can improve the coordination between physicians and hospitals or among physicians in hospitals. One of the major challenges we experienced in the industry was that physicians and hospitals were not often well aligned financially. A physician could be reimbursed under one system and a hospital reimbursed using a very different methodology so many times, their goals could actually be in conflict. But even if they were reimbursed using the same type of methodology, because they weren’t operationally integrated, it was difficult to deliver care in a coordinated way."

"The process of being discharged is an example of the absence of coordination. A patient can be told they are “ready” to be discharged, but the process takes hours because of missed handoffs. Delays could occur because the physician was not available to sign a discharge summary or the discharge instructions were not reviewed with the patient or patient transport wasn’t arranged or some other glitch in the system. Imagine if you went out to eat and the hostess was not available to seat your party or the waiter missed the handoff with the kitchen and your dinner arrived three hours after your order was placed? In this service environment, everyone is financially aligned and the restaurant coordinates the work of the hostess, the waiter and the chef using defined operational processes and information technology infrastructure that supports service delivery. In health care, a lack of alignment and operational systems can result in process breakdowns, which generate waste, inefficiency, poor quality and low patient satisfaction. However, most people agree that healthcare delivery does face unique challenges that differentiate it from other service process industries. What my research looks at is how we can adapt operational and supply chain best practices from other contexts into healthcare to better coordinate the work of physicians and hospital-based clinical staff."

"Consider financial alignment: If you look across the board, you may be surprised that recent studies state that around 25 or 30 percent of physicians are actually employed by a health system or hospital. This varies by specialty, and there are certainly specialties like cardiology where employment penetration is higher. If you ask that same question five years from now, it will be substantially higher because we’re in another wave of physician employment. As providers reorganize around reimbursement systems that previously incentivized volume – or encounters – and now incentivize value for the consumer. Now, with the Affordable Care Act and may different types of reimbursement methodologies like value-based purchasing, accountable care organizations and patient center medical homes, the federal government is incentivizing better coordination of care. With that, we’re seeing another wave of physician employment."

"The system I envision in the not-so-distant future is one that is very patient-centric, one where value is rewarded among providers in terms of the way they’re paid, one where patients are well informed both in terms of how to improve their health and well-being but also in terms of having information available to them to make educated decisions about when and where to access care. Much like we do when we purchase a big screen TV, we will we make purchases based on the cost, quality and the features that we desire."

"Much of the focus today is on how we incentivize providers, but the truth is, it’s really a disincentive because if hospitals are unable to achieve certain quality standards that the government sets, reductions in their reimbursements will result. So, there’s a tremendous competition among hospitals to improve quality and as a result, there’s a major emphasis on trying to improve how hospitals operate. This positions operations and supply chain management thinking front and center to offer potential solutions. Given the uncertainty that healthcare leaders face, we’re trying to create operations systems that allow us to sustain whatever the future holds. It's an incredibly interesting time to work in healthcare.”

Professor David Dobrzykowski played a major role in developing Rutgers Business School's new Master of Science in Healthcare Services Management. The program is designed to train managers of healthcare provider organizations to improve organization performance through effective implementation of health information technologies and data analytics. Read more about the program.