Cambridge Health Alliance: Focusing on Efficiency in Healthcare Supply Chain Management

Founded as Cambridge City Hospital, today Cambridge Health Alliance is an academic community health care system serving more than 150,000 patients in Cambridge, Somerville Everett and Boston’s Metro North. The organization has grown through the mergers of several hospitals over the past two decades, and it also has an affiliation with Beth Israel Deaconess Medical Center. It now includes three hospitals and 22 health centers.

Cambridge Health Alliance is one of the largest safety net providers in eastern Massachusetts. In recent years, the organization has seen an increased focus on getting the most out of its supply chain and procurement operations.

“We oversee materials management, working with senior leadership on capital expenditures, purchasing, value analysis, daily operations, purchasing, receiving, storage and other areas,” says William McFarland, senior director of materials management. “Our team consists of people working in materials management and affiliated departments.”

Encouraging Change

One of the ways Cambridge Health Alliance is promoting change in the organization is by working with outside consultants. It is also working to ensure alignment and collaboration with Beth Israel Deaconess Medical Center.

“Although we are a separate entity, we are looking for ways to work with them as a part of a larger organization,” McFarland says. “There are three other organizations that are part of that affiliation. The whole process really started in January 2015, and we have been meeting monthly with Beth Israel’s people to look for ways to work through contractual, logistical and legal issues.”

Another process that is changing the organization stems from a 2010 reorganization of clinical alignment within the entities that are part of Cambridge Health Alliance. The alliance’s components include CHA Cambridge Hospital, CHA Somerville Hospital, CHA Whidden Hospital, CHA Foundation, CHA Physicians Organization, various primary care practices and the Cambridge Public Health Department.

“One hospital was turned into outpatient facility, for example, so we’ve had to shift our ability to serve inpatient and outpatient services,” McFarland says. “We also have the 22 health centers spread across a number of cities and towns. There has been a lot of time spent working on logistics and trying to automate large portions of the supply chain.”

Earlier this year, the organization introduced bar code scanning devices into storerooms at two hospitals to relieve some pressure on staff productivity. It is also looking at software to sit in-between databases.

“We are having internal discussions on the best way to move to a single IT platform that everything can plug into,” McFarland says. “That would allow purchasing people to deal with a single system. The state is also moving to a bundled payments environment and shifting from acute care to wellness care. We are anticipating more business shifting from the inpatient setting to outpatient and home settings.”

Working with supply chain consultants has helped the organization find opportunities to improve efficiency. Engaging in value analysis processes is also helping Cambridge Health Alliance to move from a traditional model to one that is more clinical and evidence based.

“We signed an agreement with Procured Health, and they provide clinical evidence on efficacy of equipment and help us with product research and sourcing,” McFarland says. “Expanding our e-commerce capabilities, using the global healthcare exchange network and investing in utilization, pricing and benchmark services are other focus area. We’ve spent a lot of time looking at spend patterns and tracking trends so we can work with departments and directors about where money is being spent.”

Maximizing Resources

With constant pressure to do more with less, Cambridge Health Alliance believes IT systems will be critical as it works to access data under a single umbrella. This will provide better visibility into spend and allow it to mine data when it has to put out RFPs. It also wants its IT systems to have sourcing and ERP capabilities built-in while putting contracting online. This will help the organization to be more transparent and provide users with access to their non-salary expense issues.

“We will also be collaborating with the larger network and seeing how that will change our supply chain’s structure over the next few years,” McFarland says. “That will determine if it will be consolidated or stay within the individual structures.”

Delivering supplies will also continue to shift beyond traditional environments to outpatient and home settings. Additionally, the organization is watching the evolution of the locus of control with vendors. Some vendors have grown through consolidation, reducing choice and flexibility on pricing while also impacting service levels. Since the organization is a safety net provider, less money is flowing in that direction and it can be harder to get favorable contracts.

“But we are fairly fortunate that this organization is willing to listen and change, treating supply chain as an important matter,” McFarland says. “We have a strong team here that can handle a lot and is committed to making sure users get what they need as quickly as possible. Our people understand that we support the patients and that whatever we can do to improve the lives of caregivers and patients, that is what we need to focus on.”