Industries are taking notice of the parallels between advances in manufacturing and advances in healthcare. The similarities are staggering.\nOrganizations utilizing supply chain management (SCM) are taking a serious look at digital for process improvement and enabling collaboration across suppliers. New synergies, fully engaged customers, the ability to scale with new offerings have become sources of renewed value. Does this sound familiar? Healthcare also needs new synergies between providers, a complete picture of patients' health, and the ability to adapt to new payment and reimbursement models.\nVirtually all supply chain optimization initiatives observe the same key lesson. The lesson is that collaboration between suppliers is essential for efficient and lean supply chain management.\u00a0\nThere are 12 areas where the synergies of supply chain management and healthcare management align. Today we'll be covering the first six areas of alignment. In my next column, will expand on the remaining areas.\n\nMicrosegmentation:\u00a0Consumerization\nPoint-of-sale:\u00a0Point-of-care\nServitization:\u00a0Person-centered primary care\nValue-based supply dhains:\u00a0Value-based reimbursements\nReverse logistics:\u00a0Patient readmissions\nManufacturer list price: \u201cChargemaster\u201d or provider list price\nProduct volume discounts:\u00a0Patient volume discounts\nDesign of products:\u00a0Design of care\nCost-to-build:\u00a0Cost-to-serve\nProduct Commoditization:\u00a0Population health\nRemoving intermediaries:\u00a0Cost-out initiatives\nDirect-to-consumer:\u00a0Direct-to-patient\n\n1. Microsegmentation: Consumerization\nMicrosegmentation uses technology to understand the needs of customers better. The objective is to divide a company\u2019s customers into groups to better serve those customers. The organization can then target specific customers according to microsegments to maximize the needs for each group of customers.\nIn healthcare, we call this consumerization, which involves a new product, service or interaction design. It\u2019s a reorientation of the patient experience using technology to focus on the patient and the spaces around a patient (life, the world, home, work).\n2. Point-of-sale: Point-of-care\nCashiers and checkout lines all come to mind. Point-of-sale is usually where the final manufacturing transactions occur. Point-of-sale signals the tail end of the supply chain from buy, make, store and move to sell.\nPoint-of-care, is the time when clinicians deliver healthcare products or services, or offer interactions to patients at the time of care. Paper documentation and electronic medical records can be utilized or updated during this period. This is the most recent interaction of an episode of the care (\u201cepisode\u201d) where services are provided for the treatment of conditions.\n3. Servitization: Person-centered primary care\nServitization gives manufacturers the capability to bundle services and present new solutions to customers to supplement existing product offerings. Rolls-Royce today doesn\u2019t only sell aircraft engines. It offers complete service solutions, including core operations and engine maintenance functions.\nBundled payments, of course, sound familiar with episode-based payment where payment is delivered for services from two or more providers. However, what about person-centered primary care? Person-centered primary care is about grouping services to be more flexible for patients considering their desires, family situations, values, social circumstances and lifestyles.\u00a0Person-centered primary care groups services to meet the needs of patients. Doing things with patients, not to them.\n4. Value-based supply chains: Value-based reimbursements\nValue-based supply chains (VBSC) are about partnerships with producers, processors, distributors and retailers. These separate players in the supply chain together share an environment, or economic or social values. They all have common goals.\nAsk anyone is healthcare, and they are there for a reason. They care. They want to make a difference and want to help. They provide care for our loved ones when all hope has been lost. They speak to us when we need that friendly voice. They care.\nWhen you enter a provider office and consider the multiple treatments and procedures that could result from a diagnosis, it\u2019s hard to find value alignment from each player in the healthcare supply chain. That\u2019s about to change. Value-based reimbursement is a paradigm shift and will change the landscape of healthcare for payers and providers \u2014 and, yes, change the experience for the patient, too. The population health approach moves away from fee-for-services (charge per procedure, more procedures equals more income for the provider) and steps into a world of fee-for-value. In this model, reimbursement is conditional based on the value patients receive, not the number of procedures they endure.\n5. Reverse logistics: Patient readmissions\nA forward supply chain has five main phases: (1) buy, (2) make, (3) store, (4) move and (5) sell. The terms reverse logistics, aftermarket logistics and retrologistics all refer to the reverse supply chain. A reverse supply chain changes the direction of the phases: (1) sell, (2) move, (3) store, (4) make and (5) buy. A reverse supply is used for repairs or defects, field service, warehousing and recycling. Product returns or defects are the most common use.\nPatient readmissions refer to the circumstance when a patient is admitted to a hospital within a certain period of time after an initial admission. For reference, Medicare defines readmissions as patient hospitalization within 30 days of the initial hospital visit.\nMedicare recently ratcheted up its readmission penalties. A total of 2,597 hospitals \u2014 or half the nation\u2019s hospitals \u2014 will be punished for poor readmission rates in a government attempt to curb the trend.\n6. Manufacturer list price: \u201cChargemaster\u201d or provider list price\nThe manufacturer list price is also known as the manufacturer\u2019s suggested retail price (MSRP). This list price is commonly 2.5 to 3 times the wholesale price. Essentially it\u2019s a manufacturer's attempt to standardize prices by suggesting prices for goods, services or interactions. Often resellers don't abide by these suggested prices. The solution has been the minimum advertised price (MAP). The MAP requires sellers not to sell for less than an agreed-upon price. MAPs help to establish price consistency.\nThere is some transparency in this approach. For example, if a candy bar cost 99 cents at CVS on Monday and then $12 on Friday, it would be obvious something was going on. While consumers don't get a direct benefit from the transparency, anomalies are easy to identify. In summary, retailers get a discount from distributors \u2014 customers do not.\nMost people have had a period in their lives when they had no insurance. It may have even been a one-day period between jobs when they were young. The price of candy bars does not vary that much. However, the \u201csticker\u201d price of a medical procedure is harder to notice. What if Telnet Healthcare in Dallas increased the cost for a procedure from $1,000 to $5,000? When would you notice? Seriously, take a minute to think about that. Would you ever notice? Insurers never pay \u201cchargemaster\u201d prices referred to as \u201ccharges\u201d because of bilateral agreements between insurers and providers to pay the \u201cnegotiated price.\u201d Payers get a discount from providers \u2014 patients do not.\nBetter health from supply-chain management\nSliding revenues and creeping expenses have pushed payers and providers to lean out their organizations. In many organizations, staff reductions and budget reductions have impacted operations and clinical performance.\nIndividually, the silos of the healthcare delivery system have been \u201cleaned for maximum benefit.\u201d Re-evaluating your organization from a healthcare supply chain perspective and collaborating with supply chain partners may offer the last available reduction in the cost-to-serve.