Reflections on 2016

This year has been fascinating, to say the least. The outcome of the presidential race will have a lasting impact on not only the United States, but also the entire world. Most agree that it’s both shocking and sad that the election was more about vulgar locker room talk or who was deleting emails than on the real issues. The “he said, she said” exchange distracted us from extremely pressing topics such as the future of the U.S. healthcare system and the Affordable Care Act (ACA) (or as many say, the UN-Affordable Care Act). If I based this on my personal insurance premiums alone, I would have to agree. The topic, however, is much deeper than increased premiums; they are simply a bellwether of what is taking place within the healthcare ecosystem.

In my first Supply Chain column, I suggested that 2016 would be like navigating Jurassic Park—the post ACA ecosystem was becoming an “eat or be eaten” environment. Nearing the end of 2016, many now echo this sentiment. I didn’t know what would take place or where the ecosystem would ultimately head, but I knew for certain that changes were coming and we had better be prepared to navigate. I feel 2017 will bring more of the same, but at an accelerated pace. Therefore, let’s refresh our memories of my 2016 columns so we’re prepared.

In January/February 2016, I set the stage by saying “there are many dangers looming and you must be careful navigating. Incorrectly traversing any portion of the ecosystem can land you in danger, just like with Steven Spielberg’s dinosaur playground. While these dangers may not be prehistoric creatures enjoying you for lunch, the business ramifications of poor decisions made by not correctly navigating the ecosystem can be just as disastrous and expensive.” This was not only applicable in 2016, but also, a fitting setting for 2017 and beyond.

I had stated that I do not advocate a social system where all components are controlled and harmonized by one entity such as the U.S. government. On the contrary, I believe that the free enterprise system grounded in capitalism has, can, and will allow healthy competition, which will be best for all within the ecosystem. How we compete, however, will be critical. We must work together as a village where the patient comes first. Take an honest look at your personal 2016 ecosystem and retrospectively assess relationships with others. Was the patient always the point of focus? If yes, thank you; if not, why not?

In March, I explained the difference between a supply chain, value chain, and care chain. Once the differences are understood, it’s easier to recognize why there’s a tug-of-war between them. Much of today’s healthcare ecosystem tug-of-war pits cost savings against patient care, which has many concerned and feeling helpless. Many call this the “eat or be eaten” cycle. I have a better explanation for it—a tug-of-war between the supply chain and the “care” chain, or a push vs. pull philosophy. A push philosophy pushes what is affordable toward the patient (supply chain approach), while the pull philosophy involves determining what is best for the patient, and then configuring (pull) the value chain to support it (care chain approach). I cited an example where life-improving therapies using capital equipment were eliminated because “nobody could afford capital”—so let’s just go down the “disposables” path. This decision, purely driven by supply chain economics, was not in the best interest of the patient care chain. We are in a push mode, and losing focus on the patient. Instead, let’s determine what’s best for patients and then configure (pull) the solution.

In April, I introduced readers to the concept of color-coded thread mapping, the concept of developing a route between point B (the patient) and point A (the manufacturer). This ensures we keep the patient as the point of origin, and not the final destination—a subtle but extremely important enunciation that determines whether a “push” or “pull” approach to patient care is utilized. The concept maps out the steps of a care chain as they evolve to calculate the cost of a delivered unit of therapy—the cost of the product plus the logistics cost plus the therapy delivery cost throughout the care chain. In over 35 years of experience, I have come to realize that less than 10 percent of care chains are actually mapped out, and about 5 percent actually remain intact after the exercise as there are always opportunities to improve. Where opportunities for improvement don’t exist, there will at least be an understanding of why that’s the case. Care chain maps are critical to understanding the concept of landed cost (described later).

Miss Alignment was introduced in May. If you fail to align your care/value/supply chains with the optimal direction for the organization, you will simply implement the wrong execution of the right idea. You may have had the best of intentions, but failed to align your configuration and actions correctly. Readers were introduced to a model I created and continue to tweak—OE-Tier5 methodology. This methodology isn’t rocket science, and the simpler it’s kept, the more effective it becomes. Further, the OE-Tier5 journey will be as valuable as the destination itself. Finally, I made an important distinction between focus and alignment. You can have all the focus in the world, but if it is not properly aligned, you will fail, just as Miss Alignment did.

In June, the narrative was to ensure that leaders of any type configure their care chains utilizing various lenses. I introduced a tried and true concept I have utilized called AOE (Approach, Offering, Environment). Approach is how an organization conducts business in the portion of the ecosystem it serves and establishes a plan to arrive at where it ultimately wants to be. Offering is what the organization must provide the industry in the way of products, services, and capabilities. It is synonymous with the chain of chain configuration and determines precisely what is needed for a company to alter course. The environment is most important and can change dramatically. Organizations must always be prepared to respond. For “Star Wars” fans, environment is the Force. And, as Yoda always preaches, those allied with the Force will know when changes are coming.

In the July/August column, I stressed that professionals within the healthcare ecosystem need to stay close to their “True North.” I shared an experience mentoring a young supply chain professional about the importance of being motivated by “service to patients.” “City Slickers” was the movie reference, specifically when Curly drives his fellow comrades to discover the “one thing” that really matters, or “one thing” that combines mission with passion. I endorsed this as a subtle but significant trait for supply chain professionals—combining mission (supply chain execution) with passion (the patient), which creates the care chain.

I also encouraged my young mentee to read Bill George’s bestseller “True North,” which addresses the introspective look at who you are as a person, leader, and organization. I was in a supply chain role at Medtronic plc in the late 1990s when George was leading the company through an unprecedented expansion similar to today’s rapid consolidation.
Medtronic’s true north is to restore individuals to full life. Similar to today, in the late 1990s, one of the best ways to restore more individuals to full life was with a global supply-care chain that could treat more patients per second than any company on earth. I fondly remember being in a small meeting when George was outspoken about taking care of the patient first, and the “rest would follow.” He was right; don’t forget that Wall Street rewarded George and Medtronic with multiple stock splits, proving that a focus on the patient (care chain) could co-exist with a focus on the supply chain (cost).

I reflected on the 20th anniversary of the Supply Chain Operations Reference Model (SCOR) in September, and made connections to an MPO article I wrote more than 10 years ago. I offered a behind-the-scenes look at the creation of the model—now an ANSI standard. This model is a must for anyone in a supply chain, or better, care chain role. As one of the proud co-authors, I described how the SCOR model originated in a small conference room 20 years ago and its impact on society today.

October offered a sad case study where a rogue hospital sourcing agent, Boomer, was more interested in landing the best price from a supplier than considering the greater cost to the organization and ultimately, the care chain. Readers saw how Boomer took the form of Tom Cruise’s character in “Jerry Maguire,” only considering price. He was later busted by Dr. Told Yaso who had warned that if the sourcing organization ignores the patient and simply goes after price, the cost to the organization would be great­—and ultimately it was.

In that article, I described an all-too-often utilized electronic auction/portal process that leads to wonderful short-term gains at the expense of long-term ill to the organization and patients. I described how the outsourcing (i.e., firing) of the purchasing organization and a GPO-based auction completely bypassed the importance of patient therapy, which should have come first.

In conclusion, I have tried throughout 2016 to share several real-life experiences from my past 35 years in the industry, while referencing some of my favorite movies, which always prove to be useful. I have attempted to illustrate that although supply chain and various models like OE-Tier5 or SCOR are not rocket science, they are indeed required. Watching movies is also required! Haphazardly moving through “Jurassic Park” is not wise; careless sourcing a’la “Jerry Maguire” is not wise; ignoring “Star Wars” changes in the force post-ACA is not wise; working in the healthcare space without a “True North” is not wise. As we close 2016, I will reference a sentence with which I started the year—“While you may oppose some of my positions, we will likely agree that the healthcare ecosystem is an extremely rewarding environment in which to coexist, since its mission is to restore health and patients’ lives.” Let’s remember Medtronic’s Bill George, who said, “If we focus on the patient, all the rest will follow.” 

(Editor’s Note: All of Oleksy’s columns can be viewed online at http://bit.ly/mpocolumns)