Dobrzykowski Outlines Healthcare Supply Chain Characteristics

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With healthcare supply chain management research still in its relative infancy, David Dobrzykowski – Associate Professor in the Department of Supply Chain Management in the University of Arkansas’s Sam M. Walton College of Business – provides a framework to help guide researchers in “Understanding the Downstream Healthcare Supply Chain: Unpacking Regulatory and Industry Characteristics.” Since the vast majority of existing supply chain management research focuses on manufacturing, Dobrzykowski’s outline of the factors which make the healthcare supply chain, and healthcare delivery more broadly, distinct serves as an invaluable resource for those seeking to work in the field.

Dobrzykowski conceptualizes the ‘healthcare supply chain’ broadly, as a system comprised of medical (i.e., device) manufacturers, insurers, and providers that deliver care to patients. His article makes for a timely read in an election year in which popular Democratic hopefuls Bernie Sanders and Elizabeth Warren support Medicare for All, and the topic of government’s role in healthcare is certain to shape the presidential election regardless of who faces Donald Trump in November. Dobrzykowski gives ample coverage to government regulatory and financial influence on the healthcare supply chain. Government is typically both the primary enforcer of healthcare regulations and a nation’s largest healthcare customer. Dobrzykowski focuses on the United States, in part because its healthcare payment system is a hybrid of the four major models found worldwide. For instance, out-of-pocket payment of the sort found in China and South America coexists alongside a Medicare program that is like the single-payer national health insurance found in Canada and South Korea. America also provides an interesting case study since the United States spends more on healthcare than any other nation. 17.2% of America’s Gross Domestic Product goes toward healthcare. Meanwhile, countries like Canada (10.4% of GDP) and the United Kingdom (9.6% of GDP) spend far less per capita, while their citizens enjoy longer life expectancies and lower infant mortality rates.  As such, Americans may benefit most of all from the continued development of healthcare supply chain research that Dobrzykowski is encouraging.

Dobrzykowski outlines factors which affect coordination in the downstream portion of the medical supply chain: the hospitals, clinics, home health services, and hospices where healthcare is delivered. One of these factors is the Health Insurance Portability and Accountability Act (HIPAA) that was passed in 1996 and amended in 2013. HIPAA requires healthcare providers to take certain steps to protect their patients’ medical information. Those who fail to do so can face massive fines. Since “sharing information is fundamental to optimizing supply chain performance,” the law is one that researchers must consider when studying America’s healthcare supply chain. Dobrzykowski explores many other factors which make the healthcare supply chain unique, including: governmental inducements to use electronic records; payment systems which often give physicians and hospitals different financial incentives and concerns when it comes to inpatient care; and a funding model in which individual patients are largely insulated from the cost of care since employers, the government, and others fund 72% of total healthcare spending.

For casual readers, his article provides clear explanations for why coordination in healthcare is challenging, and how policy and regulation can influence the system. The article is also useful in the classroom, showing students how supply chain governance concepts can affect integration and the demand-driven (patient-centered) nature of the healthcare system. He also proposes numerous research topics for scholars to consider. For instance, while governmental pressure has helped spur the widespread adoption of health information technology, that technology is often used ineffectively. Since supply chain researchers “have a history of providing nuanced insights by examining mediating and contingency factors linking IT and supply chain performance,” they seem particularly well suited to the task of optimizing the use of information technology in healthcare.

Learn more in volume 55 of the Journal of Supply Chain Management.