Supply chains have long been a challenge for hospitals, and now their complexity is exacerbated by relentless cost pressures and frequent supply disruptions.
Tom Lubotsky, who serves at Minneapolis-based Allina Health, said about half of the large health systems in today’s world now have a chief supply chain officer, reflecting the industry’s awareness of the strategic importance of supply chains.
He said in an interview that Allina is strengthening its supply chain strategy by moving away from decentralized procurement models and prioritizing governance and standard operating procedures.
“We still have some shadow supply chains that I’m talking about in the shadow supply chain, but what we’re going to do is insert more standard operating procedures around the look of good procurement, making sure we’re going to address the way it should be executed throughout the organization. Whether they fall directly into the supply chain, whether they’re around better procurement or not, we’re going to span across a large culture and traverse across the organization in many organizations, and it’s my scope throughout the organization.
He noted that the health system has established a non-laboratory governance team and senior leaders to oversee how money is spent on the system.
For example, purchasing services over $200,000 now requires centralized review and reasoning, rather than approval at the department level. Such changes represent a cultural shift that integrates with the overall goal of the health system, Lubotsky said.
Allina also uses physician-led clinical subcommittees, such as orthopedics or cardiovascular, to ensure that contracts for costs and services are optimized and to evaluate compliance with supplier agreements.
These subcommittees also help manage the impact of new technology purchases.
“Here, the cost can quickly get out of control within the health system. For the first four months, put it in context for you. [of the year]We bought $23 million new stuff that we didn't buy last year. Now, we've stopped a lot of things from last year, but we have to address this difference. ” Lubotsky said.
He said the goal is to balance technological innovation with financial responsibility – and work with payers to ensure that new digital tools are properly repaid.
Lubotsky added that it echoes in the digital health world in an AI-driven hype cycle.
When it comes to AI, he stressed that such technologies can unlock new and exciting possibilities throughout the healthcare sector, including supply chain management.
He noted that health systems can use AI to automate invoices, simplify contract matching, reduce manual work and ensure accurate supplier payments. He also noted that hospitals are using predictive AI to predict potential supply chain disruptions and proactively source alternatives.
Lubotsky claims it is crucial to prepare for shortages before they are insufficient – and at present, about 85% of the items that Allina orders the most are approved for replacements to switch quickly during shortages.
In addition to integrating AI into supply chain workflows, he also advised health systems to consider working with external consultants. He said Allina brought in a consultant, a move that drove $150 million in savings over two years.
As supply chain leaders in healthcare continue to innovate, Luboski believes their efforts will revolve around AI-driven efficiency and leverage optimization – not just buying the right goods at the right price, but also ensuring they are properly used in clinical practice.
Images: Getty Images, Mykyta Dolmatov
