How cloud technology can benefit healthcare supply chain

by | May 25, 2012

Cloud technology enables anyone — or anyone authorized — to use the Internet from anywhere to access computing capabilities and data that are hosted somewhere else, as opposed to onsite. The cloud offers considerable benefits to healthcare, which is undergoing dramatic and essential transformation without the necessary financial or technological means to support the level and speed of change required.

The term “cloud” actually refers to how the Internet has been depicted for years in diagrams and flowcharts — as a picture of a cloud. The concept itself dates back to the mid-1980s, when IBM first began leasing usage of the computing power of its large mainframe systems that, at the time, only the largest and most well-financed companies could afford to own. A decade or so later, smaller application service providers began offering Software-as-a-Service in the cloud to meet very specific business needs. The real advancement in cloud computing came when the technology enabled the major players, such as Amazon and Google, to logically partition their computing capacity in a manner that could be accessed by multiple clients in a flexible, secure and scalable manner.

Flexible. Secure. Scalable. These adjectives are mentioned most often when discussing the cloud’s value proposition, regardless of industry or application. They are certainly enticing attributes for healthcare, which faces increasing technology needs, security requirements and financial constraints. But the ability to create collaborative networks will likely be the most valuable to hospitals and other healthcare organizations.

One area in healthcare that can benefit from this technology is the role of the supply chain. There is a wealth of data in supply chain systems about products used in patient care. While hospitals have typically focused more on the price paid for products, better data capture about utilization and linkages with other systems and data can provide insights into how the products used in patient care impact both cost and quality, which will increasingly determine how providers are reimbursed.

There is also the operational role of the supply chain to consider, which is the second largest and fastest growing operating expense for most hospitals. In other industries, the cloud’s ability to facilitate supplier collaboration is seen as a source of operational efficiency and cost reduction. That value is being recognized more in healthcare. According to a 2009 HIMSS study, more than three-quarters of hospitals reported using an exchange, which offers supply chain applications in the cloud, to do business electronically with the suppliers from which they purchase the majority of their consumable products. Efforts are now underway to provide similar functionality and visibility for implantable devices. Given that implantables represent some of the highest priced and most sophisticated products used in patient care, the cloud has great potential to deliver even greater benefits from an operational, clinical and financial standpoint.