Happy Friday! 

So, up the salmon and ditch the sugar?
Sugar Makes You Stupid, But Omega-3s Will Smarten You Back Up 
Though we may not have fully come to terms with it, in theory we know that high-fructose corn syrup (HFCS) is an adversary of health. Lots of work has been done looking at the effect of fructose on weight, liver function, diabetes risk, and even the growth of cancer cells. But not much has looked at the role of fructose in brain function, until now. Researchers have just reported that among the list of bodily ills that fructose contributes to, it may also “make you dumb.” Luckily, eating a diet rich in the healthy omega-3 fatty acids seems to counteract this phenomenon…

Not a shot to skip.
Fewer girls completing all three HPV shots: study
(Reuters Health) – Among girls and women who get their first human papillomavirus, or HPV, vaccine, the percent who complete all three doses is dropping, according to a new study. One of the study’s authors told Reuters Health she was aware the number of people completing the vaccine series was low to begin with, but she did not expect to see it getting even lower. “We thought that that would be increasing over time as more people became aware of the vaccine and how it was to be administered,” said Dr. Abbey Berenson, a professor at the University of Texas Medical Branch at Galveston…

Generic versions of Plavix are now available
FDA approves sales of generic versions of blood thinner by multiple companies
TRENTON, N.J. — Patients taking the popular blood thinner Plavix now have the option of getting a less-expensive pill, following the approval Thursday of the first generic versions in the U.S. That’s because the patent for Plavix, the world’s second-best-selling medicine, just expired. Plavix is taken by millions of people every day to prevent heart attacks and strokes, by preventing platelets in the blood from clumping together…

Spend Matters
Friday Rant: A Modern Paris Gun? Preparing for a Potential SAP Innovation Assault (Part 1)
Two members of the Spend Matters team had an exceedingly booked and intensive time at Sapphire this past week. Between the two of us, Thomas Kase and I probably saw a dozen demonstrations, had over twenty formal meetings with SAP team members and partners and spoke informally to over two dozen more customers, SAP solution managers and partners. Even by our usual hectic standards, it really was a completely packed and chaotic few days of learning and interaction. In the coming weeks, we’ll continue to share our learnings about SAP’s latest procurement, network and supply chain direction — digging into current and planned product releases as well as new solutions and overall market and solution directions…

Spend Matters UK/Europe
Falling out of love with Amazon
I’ve spent thousands of pounds with Amazon over the last few years. Not only CDs and books, but they’ve been excellent for odd things my parents need, as they don’t find it easy to traipse around multiple shops looking for stuff these days. But, my love for Amazon is fading. I subscribed to the Prime service last year, in order to get something urgently – to be honest I was going to cancel it within the free trial period but forgot. Oh well, I thought, having that guaranteed next day delivery is useful, even if £49 a year seemed quite a lot to pay for it…

My sensibilities are not easily offended. Yes, it still happens occasionally, but it’s fairly random and usually involves a family member. Based on the success of my anger management classes, it’s rare for me to find myself so thoroughly disgusted with something I read or see on TV that I get an urge to, you know, slash my neighbor’s tires or drive around in high traffic areas hoping someone will cut me off. This week, it happened three times. Either my constitution is slipping or it must have been an extraordinarily slow news week. To wit:

Stories about our nation’s obesity crisis have become part of our health and sciences news cycle. In fact, I think it’s fair to say that when it’s a slow news week, the healthcare news machine defaults to stories about overweight people and all of their related and costly health problems –just to stay in print. The correlation is so strong that when I notice several articles being published about obesity, I know we’re in a slow news week. But a fat tax? That got my attention. Is the U.S. government actually considering a surcharge on foods and beverages based on some calorie-based formula? Do you think the people responsible for this article simply confused flat tax with fat tax? We should be so lucky. FYI, a fat tax is a “Pigovian” class tax that in this application would be highly regressive. That’s right: “Pigovian.”

And speaking of babies, I’m not sure I’ve ever seen a Census Bureau statistic taken more out of context and used so shamelessly. For the first time in American recorded history, there are more minority babies being born than “white babies.” I’m not sure if the point being made here is some kind of twisted “caucasion call to action,” (e.g. is this what Sarah Palin really meant when she said: “Drill baby drill.”), but several credible news outlets actually linked immigration and election politics to an otherwise meaningless demographic statistic. Note that the following cartoon wasn’t inked and published in the heartland, it was published in the LA Times.

And then, courtesy of the Washington Post, we got the Romney “bullying” story –and nothing but top secret retractions ever since. Has inside-the-beltway-journalism run out of things to talk about this early in the election cycle? The Post ran a feature story intended to reveal Romney’s dark past as a high school bully. And after the story was published, the supposed eye witness protested (i.e. he said he wasn’t there) and the identified victim’s family (the victim passed away) were furious; they denied the incident ever took place and may file a suit against the Post. What’s next? Video of Romney giving his grade school teacher an apple recast as a bribery scandal?

Yes, it was a slow news week. Perhaps Bri’s afternoon roundup will restore some order.

–Tom Finn

Merril Goozner of the Gooznews has been a frequent guest contributor to Healthcare Matters. One of his latest pieces, “Funding R&D: High Prices, Overuse A Failed Strategy” caught my attention, as it highlights yet another piece of the pharmaceutical business model that doesn’t seem to be working –at least not like it’s supposed to. There is nothing new about the pharmaceutical industry’s ongoing moves to refine its operating model(s) –and outsource heavily. Clinical trials were the first to go, then manufacturing and all of its related parts. Even sales agencies have emerged in highly leveraged models that are just too turnkey to pass up. And while there’s nothing new about contract R&D either, its applications have generally been supplemental, not primary. Merrill points out that R&D’s  purpose used to be about seeking true discovery and blockbuster innovation. Now, it seems to have digressed into a practice designed to produce quick and relatively low value paths to incremental revenue.

While Merril’s opinions are loud and clear in his post –and do not necessarily reflect our opinions on the subject– he provokes some excellent thoughts.

—Much has been written about the travails of the pharmaceutical industry. Generic competition is reducing profitability as leading blockbuster drugs like Pfizer’s Lipitor lose patent protection. Biotech generic competition is on the horizon.

The industry’s sleazier marketing techniques are in decline. Physicians are turning their backs on fancy dinners and sham consulting contracts, and not just because the companies were forced to fork over billions of dollars to settle government anti-kickback suits. Starting in 2013, patients of every physician who takes money from a drug or medical device company will be able to find that fact and the amount in a publicly available internet database, courtesy of the Affordable Care Act, a.k.a. Obamacare.

Meanwhile, the udders on the cash cows that for decades made the industry the most profitable in America are running dry. The insurers who manage Medicare and Medicaid’s drug plans are watching every penny. They are forcing generic substitution wherever possible and will soon have a growing body of comparative effectiveness research to fend off charges they are rationing drugs when they turn down payment for expensive new products that are no better than the ones that are already on the market.

Over in the firms’ R&D departments, the pipeline for blockbuster products – defined as drugs that generate over a billion dollars a year – is running dry. To justify their huge research infrastructures, companies are now charging $100,000 a year and more for new drugs, which often deliver only a marginal improvement in health, especially in cancer treatments.  Industry officials publicly fret about where they are going to find revenue to develop the next generation of cures.

Last week’s news from the frontiers of medical science highlighted the problems facing an industry tripping over its existing business model, which funds R&D by getting more and more people to use its older yet still on-patent drugs.

On Thursday a Food and Drug Administration advisory committee gave its blessing to a Gilead Science pill that can prevent AIDS transmission. Truvada, a combination of two drugs used to treat people with AIDS, reduces transmission by 63 percent if taken routinely by an uninfected partner. If the FDA agrees with the committee, and it usually does, it will be the first time the agency has approved a drug that prevents person-to-person transmission of the human immunodeficiency virus that causes AIDS.

At first blush, it might appear that there’s a large market for such a pill. There are an estimated one million people in the U.S. living with HIV/AIDS. There are about 50,000 new infections each year. Since unprotected sex between an infected and uninfected partner remains the largest single cause of transmission, it might seem like there is a large market for the $11,000-a-year drug.

But as Scott Hensley at NPR’s Shots blog pointed out, doctors are not rushing to prescribe the pill for partners of their infected patients fearing they won’t stick to the daily regimen yet avoid other forms of protection (condom use). There are also nasty side effects with the drugs as there are with all AIDS medications. Gilead CEO John Martin told reporters in January he didn’t see a significant commercial opportunity from the new designation.

On Friday, the New York Times reported a new study of patients on dialysis that showed that the government’s bundled payment scheme to reduce use of an expensive anti-anemia drug – Amgen’s Epogen – had led to a small increase in blood transfusions. Dialysis clinics have dialed back their use of the drug to save money. The number of monthly transfusions grew 9 to 22 percent last year to about 10,000 a month (up from about 8,250) among the nation’s 400,000 dialysis patients.

But many renal physicians will find that an acceptable trade-off, since overuse of the drug leads to increased heart attacks and strokes among the vulnerable population on dialysis. “It might be seen as an acceptable trade-off to exchange a higher risk of cardiovascular attack for a higher risk of transfusion,” the paper noted.

In a third example where less equals more, Food and Drug Administration scientists reported in last week’s New England Journal of Medicine that widely-used bisphosphonates for preventing bone deterioration in post-menopausal women did not help women after about three years on the drugs and should probably only be used on women who are at serious risk of fractures. The drugs, which on rare occasions trigger spontaneous bone breaks and necrosis of the jaw, are often prescribed  to women whose only bone problems show up on bone-density scans.

What do all these situations have in common? Companies that developed useful therapies for particular conditions went looking for ways to get their products used by much wider populations in order to generate higher profits and money to invest in R&D. But since the benefits to those larger, less sick populations were far smaller than what had been seen in the original group for which the drugs were intended, the risks eventually outweighed the benefits.

That’s not an effective way for an industry – or a nation – to fund medical research. Industry scientists need to focus on unsolved problems like dementia or cancer, not on research that seeks to justify peddling pills to people who don’t really need them.—

Thanks again to Merril Goozner of the Gooznews.

—Tom Finn

Definition: Medical Body Area Networks (MBANs)—networks of medical devices capable of communicating with each other and/or with multiple designated hosts. For example, a MBAN might consist of various short range wireless sensors attached to a patient’s body that can update a small receiver located in the patient’s room that in turn, can send longer range signals to monitoring systems at a physician’s office or to a central host computing system.

Medical telemetry devices have long played second fiddle to the other mainstream wireless devices that we know and use every day. That’s why today’s long anticipated FCC announcement to allocate spectrum for wireless medical devices is significant. Just ask GE Healthcare and Phillips Healthcare –two of the largest manufacturers of wireless medical monitoring devices. It’s hard to build a business —and impossible to establish an industry– amidst ongoing uncertainties that have included:

• Unreliable transmission standards –Today’s action by the FCC will fix network interference issues and provide a means for network service providers to deliver quality of service (QOS) guarantees;

• No apparent cooperation or coordination between the FCC and the FDA –A level of cooperation is now “theoretically in place” with the stage set for the FCC to manage the technical aspects of these new medical devices and the FDA to handle the safety and effectiveness issues.

The FCC intends to allocate two spectrum bands for such wireless devices. One band will be designated for devices used in medical facilities and the second band will be used for remote monitoring of patients who are in their homes.

Over the next decade, it is estimated that 80% of healthcare spending will be related to chronic disease management and that a significant percentage of the related care will be home-based. This demand shift is changing the game for most SCM professionals who have spent their careers optimizing supply systems in support of even-driven, acute care, for designated facilities.

As we’ve previously reported: “The ‘center of gravity’ for supplies is shifting away from single node acute care facilities to ‘n’ node care networks where the demand for supplies, in terms of delivery/destination options, are far greater and will often include the patient’s home. Not just medical homes (Patient Centric Medical Homes), but private residences.”

Today’s anticipated announcement by the FCC has been in the works for several years. No doubt about it; it’s a champagne cork popping event for the wireless divisions of major medical device manufacturers.

And an example has been provided that’s noteworthy: If the FCC and FDA can figure out how to work together, then there’s reason to hope for the level of cooperation that’s obviously going to be needed between provider IT and SCM departments!

–Tom Finn

We’re vigilant in our coverage of all the problems caused by the lack of pricing transparency in healthcare. From our perspective, it’s a core industry problem that continues to be ignored in favor of treatment of the symptoms. And we’re not shy about pointing out that despite the industry’s claims to the contrary, the recipe for fixing the problem is 9 parts desire –9 parts out of 10. Frankly, as Healthcare Matters is owned by a parent that also owns several other online publications covering “all things supply chain,” we’re dumbfounded. It just wouldn’t be tolerated elsewhere. The resulting problems would include artificially high pricing, a consumer backlash and ultimately, government intervention. Imagine that.

So with that as a preamble, it’s with great pleasure that we guest post the following story that appeared early this morning in the Kaiser Health News. It’s not quite a solution, but it’s a start:

Shopping for the best price for a given health care need is nearly impossible. Unlike shopping for other big ticket items, there’s no place to compare prices. Providers often can’t, or won’t, quote a price for a given procedure - different people are charged different rates based on what kind of coverage they have, or whether they have coverage at all.

But now 14 states have or are setting up searchable databases designed to help people shop and compare health care options based on price and quality.

Colorado is launching its All Payer Claims Database this fall. Phil Kalin at the nonprofit Center for Improving Value in Health Care in Denver is in charge of the project, which is the result of 2010 legislation and is expected to have data from most of the claims in the state in 2013. Kalin was formerly the president and CEO of Rose Hospital in Denver and at the Henry Ford System in Detroit, Michigan. He talked about the new database on Colorado Public Radio’s Colorado Matters. The questions and his answers were edited for space and clarity.

How will consumers use this new database?

Patients will be able to go online and see how much something is actually going to cost them, and compare prices across hospitals and doctors. They’ll be able to see how much variation there is in terms of charges and costs. It will cover essentially all procedures, anything that is billed and being paid for by an insurance company.

Do we know much about price variation now? 

Very initial data shows, for example, an MRI can cost as little as $450 to as much as $3,500, with no obvious distinction in terms of quality. Other states with databases like these see prices vary as much as double from the lowest price to the highest, with no evidence of difference in outcomes.

Once everybody knows what everybody else is paying, huge price variations should go away?

Yes, again, trying to control for quality, because we want to reward people who are providing higher quality. We believe that as consumers look at this, they’re going to move toward the best value, which is the combination of price and quality.

In Colorado, half of all health care is paid for by businesses, so businesses are going to look at this same information and say, why are we sending our employers to these providers, when there’s no obvious difference in quality and there’s a huge variation in cost?

Do you expect providers to learn from the database as well?

Yes. Right now, most providers don’t know how they compare to their peers in terms of price and quality. But Grand Junction, Colorado, which has some of the lowest Medicare costs in the country has taught us that when providers get feedback on their performance, those with the lowest scores talk to those with the best scores and learn how to get better.

Who’s threatened by this new database?

Everybody has some trepidation, when you don’t know how you’re going to compare to other people. We’re being very careful to compare apples to apples, in terms of who has healthier or sicker patient populations. And before we go public with the names of providers we’ll feed the data to them so they can start doing quality improvement. So they’ll hopefully have made adjustments when providers are publicly identified in 2013.

Won’t this put teaching hospitals at a disadvantage? 

They are going to show some great difference based on cost. Teaching hospitals do have higher overhead associated with their academic missions, and [that] will probably be reflected in higher prices. It’s going to put interesting pressures on those higher cost hospitals, and raise this issue of, how do we pay for teaching, indigent care, etc? Because those are still real societal issues.

Have price and quality databases in other states proven successful in moderating costs?

It’s still early. The databases vary in the level of detail they report. They’re starting to get some traction, but it hasn’t been documented that just putting out consumer information has actually driven costs down dramatically. There’s starting to be some studies on that.

We think that as more costs get shifted to consumers, co-pays, deductibles, and as businesses and insurers put more pressure on the system, the all-payer databases are going to be increasingly looked to as important levers for making change.

If every procedure being performed in Colorado is being entered into this database, should people be worried about privacy? 

We’ve gone to extraordinary lengths to insure privacy and security. All the data has been encrypted and all personal identifiers stripped away.

Thanks again to Phil Kalin and the Kaiser Health News.

—Tom Finn

With so much talk about the company’s M&A activity in China, Cardinal surprised the Street this week by announcing its acquisition of a relatively small Chicago-area regional drug wholesaler, Dik Drug Company.  Adam Fein at Drug Channels who originally broke the story, put the company’s annual revenue at less than $500 million. Dik is a closely held, nearly 100-year-old company with customers mostly in the Midwest. The deal appears easy to get done with both sides suggesting a close later on this summer.

Cardinal’s move to purchase Dik reflects the ongoing consolidation of the drug wholesaling industry. In fact, Cardinal has probably been the most aggressive acquirer of regional drug distributors in recent years, with its 2010 purchase of New York-area Kinray for $1.3 billion being the most recent example. The Dik deal enhances Cardinal’s position with smaller pharmacies –especially those with steady, strong demand for generics.

Cardinal kept itself in the news yesterday by announcing that it has reached a settlement agreement with the DEA. We covered the story previously here at Healthcare Matters.

Briefly, the DEA believes that Cardinal didn’t do enough to monitor its sale of controlled drugs (Oxycodone and other opiate class drugs) to CVS, one of its retail pharmacy customers. To be clear, the investigation involves one Cardinal warehouse in Lakeland, Florida and several local CVS pharmacies. This time around, the settlement doesn’t include a large fine (as it did in a very similar case brought by the DEA against Cardinal back in 2008). Instead, the DEA has worked out an arrangement that calls for much closer cooperation between Cardinal and the DEA –to more effectively monitor the distribution of these controlled substances.

Since the case was brought by the DEA several months ago, Cardinal’s Lakeland, Florida warehouse has been prevented from selling these drugs and, as part of the settlement, the prohibition will continue for another two years. It will, however, be permitted to continue to ship drugs that aren’t on the controlled substances list. Cardinal has been forced to work around the problem by using other warehouses (at greater distances) that it claims has cost the company an additional $4 million in just the last quarter.

While the DEA may be “done” with Cardinal for now, it hasn’t stopped its investigation of CVS. A CVS spokesman said the company is cooperating with the investigation.

There’s a lesson here. This is one of those cases where Cardinal could have reasonably claimed –and it did– that “it didn’t know” the abuses were occurring and that CVS should have been the DEA’s target all along. But it doesn’t work that way anymore. When the DEA believes that an abuse has occurred, all players in the supply chain are now investigated. Ignorance is no longer a valid excuse. Funny thing. I never thought it was. Perhaps someone ought to tell John Edwards.

This settlement is genuinely interesting in that its resolution is less punitive than most insiders were expecting. What’s happened here is that the DEA and Cardinal have agreed to collaborate more closely to solve the problem. The DEA wants more visibility and Cardinal wants assurances that the DEA isn’t going to jump down the company’s throat each time it notices a blip in the sale of controlled substances.

“Collaboration” –there’s that word again.

—Tom Finn

Vicente Fox, Mexico’s president during most of the last decade loved to point out how US consumer demand for illegal drugs drove the market. Essentially, he pointed out how the US was largely responsible for Mexico’s surging drug trade and therefore, why America should be principally responsible for funding the solutions. Good old fashioned supply and demand mechanics are hard to argue with, so for the most part, the US government didn’t dispute President Fox’s position.

US consumers generally understand that we subsidize the R&D of the global pharmaceutical industry. Simply put, we pay higher prices. Despite that, we rarely see much in print that talks about how our marketplace –what’s different about it– creates problems, including drug shortages, in other countries.

A story that appeared in today’s WSJ focuses on drug shortage problems in the UK that are now, in large part, being attributed to the US. Of course, the weakened pound just adds to the severity of the insult, but there are other dynamics (e.g. Big Pharma getting in its last licks in contemplation of US price points soon being forced lower) that have not yet been sorted in this context.

Regardless, given the higher prices already paid in the US, it’s hard to imagine our government agreeing to subsidize solutions to such problems it may create in other country markets –isn’t it?

LONDON (Dow Jones)–The U.K. is being drained of crucial medicines by exporters who sell them on elsewhere at higher prices, putting patients’ well-being at risk, U.K. lawmakers said Tuesday.

Parliament’s All-Party Pharmacy Group called on the coalition government to find effective ways to restrict this so-called parallel trade, which is legal under European Union law but has long been condemned by drug makers. In the past, drug makers have complained about cheap parallel imports flooding into the country.

“The parallel export of medicines intended for the U.K. market is undermining the effective functioning of the U.K. medicines supply chain, and putting patients’ well-being at risk,” the APPG said in its report.

It noted that while European law provides for the free movement of goods across borders within the E.U., there is also scope to exempt certain goods if their free movement threatens public health.

“We believe the government needs to consider the use of this exemption in the best interests of U.K. patients,” the report said.

Supporters of parallel trade in medicines say that it helps stimulate competition and keep drug prices low across Europe while critics believe it disrupts supplies and prevents patients getting access to drugs at prices they can afford.

Pharmaceutical industry experts say a price gap on some medicines, fuelled by a relatively weak pound in the past and higher prices in parts of Europe compared with subsidized prescription charges in the U.K., is behind a shortage of some drugs. Medicines are exported elsewhere by middlemen such as wholesalers or pharmacies seeking quick, larger profits, meaning supplies can become exhausted quickly.

“The issue has become more acute thanks to the drug price cuts that have been pushed through in several European countries over the past three years, which have resulted in bigger disparities in prices – and therefore potentially higher profits for traders,” said Ana Nicholls, healthcare analyst at the Economist Intelligence Unit.

Drug manufacturers have tried restrict the practice by imposing quota limits for some drugs in a bid to stop such exports. But the British lawmakers said such action has made the situation worse in the country by restricting the amount of drugs in the supply chain.

APPG Chairman Kevin Barron called on the government to act.

“Other countries experiencing the same problem are now looking into the possibility of prohibiting the export of medicines, and this government needs to urgently look at what they can learn from this,” Barron said. In particular, the U.K. government must study the French government’s recent proposal to effectively curtail the export of medicines, he added.

The lawmakers’ report criticized the U.K.’s Department of Health and the Medicines and Healthcare products Regulatory Agency for poorly monitoring of the problem.

“The Medicines and Healthcare products Regulatory Agency has pledged to address shortages and to tackle those in the supply chain who are not meeting their obligations. However, beset by a lack of market-wide data the regulator does not even know which products are in shortage, much less by whom they are being exported.”

“The Department of Health has also seemed reluctant to take action without having hard evidence that patients have been affected,” it added.

A spokesperson for the Department of Health said the situation was difficult to monitor.

“There are nearly 900 million prescriptions dispensed a year, almost 11,000 community pharmacies and some 16,000 medicines, so some shortages and delivery delays are inevitable,” the spokesperson said. “We will carefully consider the recommendations the All-Party Pharmacy Group make in their report.”

The MHRA declined to comment but the U.K.’s pharmaceutical industry broadly welcomed the report’s conclusions.

“We are satisfied that the APPG has acknowledged that diversion of U.K. medicines stock to other countries by a minority of pharmacists and other traders has created significant challenges for companies supplying medicines to U.K. patients, which must be addressed,” a spokesperson for AstraZeneca PLC (AZN) said.

But Stephen Whitehead, who heads the Association of the British Pharmaceutical Industry, said the lawmakers’ recommendations don’t go far enough.

“Without the legal separation of pharmacy wholesaling and dispensing activities, the industry is unable to prioritize pharmacists whose primary concern is U.K. patients, over those who are selling medicines abroad for a profit and causing the problems in the supply chain,” he said. “The pharmaceutical industry will continue to work closely with pharmacists, wholesalers, and the Department of Health to help improve this situation.”

—Tom Finn

The supply chain sector is facing a major talent crisis. Baby Boomers are retiring in bunches and a career in supply chain management (SCM) is not the enticing draw that those of us who currently work in the profession might think it is. We need to fix that. Thank goodness the core principles of SCM transfer well across industries, otherwise, the situation in healthcare would be especially dire.

Passive approaches to recruiting talent, whether in supply chain or elsewhere, have been widely discredited. And while social media has provided new recruiting channels, far too many HR departments continue to do the same old thing; they just happen to be doing the same old thing on these new platforms.

Adapting HR departments so they can better serve the needs of the business means, among other things, getting them to take an active approach to recruiting. And when it comes to initial placement and talent development programs (e.g. training and job rotation), HR should borrow from the same cost- and time-sensitive disciplines that largely define iSCM. It makes a lot of sense.

While lean and just-in-time (JIT) “thinking” guide SCM practice, these same principles can also provide a superior operating philosophy for HR management. For example, applying the same “make versus buy” analytical rigor to hiring practice would not only be a more effective approach for the employer, but it would be better for the employee. And because demand for talent is probably easier to predict in healthcare than in other industry sectors, the transitions should be easier to execute.

As Peter Capelli, author of “Talent on Demand: Managing Talent in an Age of Uncertainty” states, “authority and accountability are pushed onto individuals and not systems, and career mobility across companies is high. Employers (i.e. HR departments) must adapt to that reality.”

The rewards for Healthcare HR departments that make these changes can be transformational –especially in competitive markets. The opportunities to lift up the business are just too promising to pass. For providers whose HR departments learn to actively recruit and/or for SCM leaders who learn to manage their talent like professional sports teams control their rosters, the competitive advantages are unmatched.

Capelli takes the “people as product” supply chain metaphor to the extreme –but it works.  A strong bench comprised of great role players and versatile athletes both capable and desirous of playing several roles works better for everyone. At a minimum, it will improve the performance of SCM departments and provide yet another practical example for the organization.

—Tom Finn

We recently reported on the actions taken by Lori Swanson, Minnesota’s attorney general, against Accretive Health, a healthcare consumer debt collection company. Her report blisters Accretive’s business practices. Briefly, it alleges that Accretive Health employees masqueraded as hospital staff and badgered patients at bedside attempting to collect on past due bills. Even worse, it says that ER patients were told that their care could be withheld (until they paid). Finally, and in stark violation of HIPPA, Accretive’s provider clients are said to have shared confidential patient information with the firm to assist in its debt collection efforts.

Not surprisingly, Accretive is fighting back. And it’s getting support from some rather curious places. For example, a week ago, Chicago Mayor Rahm Emanuel (D), President Obama’s former White House chief of staff, defended the company, asking Swanson to back off. And now, hints at a counter suit against Swanson are starting to circulate. Shockingly, it turns out that last year Emanuel led the charge for Chicago’s City Council to approve more than $6 million in tax increment financing to Accretive Health. Lots of other quid pro quos in the deal too. Can you spell C-H-I-C-A-G-O style P-O-L-I-T-I-C-S? The best part is that several members of the Council who originally approved the measure and have now become aware of the scandal have been reprimanded for having the gall to suggest that perhaps the monies should be withheld until the matter in Minnesota is settled.

To her credit, Ms. Swanson is not backing down. “The patients in Minnesota who suffered these indignities will be heard.” Not to worry, she’s got U.S. Senator Al Franken (D-Minn.) in her corner. I know what you’re thinking; you’re already liking her chances a lot better. Several weeks ago, Senator Franken questioned Accretive and couldn’t even get them to respond. In fact, Accretive just today offered up its answers for the senator.

Ms. Swanson had originally planned to hold off on her action against Accretive until she had the backing of other state AGs where similar offenses with Accretive provider clients were reported, but apparently, she didn’t have the patience –or support.

This is going to be interesting. Any bets on the outcome?

—Tom Finn

Distributed manufacturing strategies have long been en vogue and used by leading companies to ensure their continued ability to take advantage of low cost sourcing opportunities. But with the proliferation of new, cloud-based management technologies, including real time information flows, SCM professionals are discovering numerous new, if not unintentional benefits. The term “distributed” is now taking on new meaning.

Some interesting casualties of such new thinking are said to include a number of lean principles that have otherwise governed SCM best practices for the last few decades. For example, doing business with as few suppliers as possible is now starting to be argued as passé. In fact, the disruptive-SCM-topic du jour is all about how SCM practice is evolving to enable “dynamic supply chains on the fly,” a notion that is not nearly as far fetched as it sounds when considering what online marketplaces and/or exchanges can logically support if used for this purpose. Holding larger inventories is the next most obvious example –born of noteworthy supply chain disruptions these past few years.

Surely, providers and suppliers alike can opt to manage several aspects of their supply chains more opportunistically, but how does that wash with efforts to develop more collaborative relationships? For our most strategic suppliers, I’m not sure that it does.

There’s a lot of meat on this bone that we’re going to cover in future posts, but for now, allow the following story to serve as a reminder that there is rarely a substitute for common sense and experience:

–Speaking at the CIPS Pan African Conference in Johannesburg this week, Dr Iain Barton explained in order to establish a strong supply chain for antiretroviral drugs for HIV patients in South Africa, the company got up and running quickly in order to gather data and refine demand forecasting.

The company was awarded the contract to deliver the drugs throughout South Africa in December 2009. In January 2010, Barton and Ira Magaziner, chairman of the William J. Clinton Foundation, met with representatives from the country’s Department of Health (DoH) and told them they could only learn once they were up and running.

Barton, a practicing clinician for more than 10 years before moving into medical supply chain roles, said they explained to the government representatives: “The only thing we can tell you about your procurement plan is it is wrong. We cannot tell you how wrong it is. We cannot tell you how to get it right. All we can tell you is… go buy stuff.

“Go buy half of what you think it will be and tell the manufacturers you will phone them in six weeks time and tell them how fast it’s going down the pipe. Let’s actually get in the business and start delivering volume so we can understand the trends and monitor and manage the consumption.”

The company now handles a supply chain delivering the drugs to over 1 million patients in South Africa.—

With an attitude like that, I’m not surprised they won the business.

Just a little tweak or two and a distributed manufacturing strategy becomes more robust to disruption. Add-in more sophisticated logistics, real time demand visibility and interconnected networks of qualified and complementary suppliers (raw material, fabrication, sub assembly and finishing) and age old SCM governing principles give way to what? Are we talking about getting rid of lean and JIT principles or are these new technologies enabling such higher order possibilities that we’re failing to recognize them as the same?

—Tom Finn