July 21, 2022The Provider Supply Chain: The Foundation of Health Insurance and Benefits

If you are a healthcare Payer or Plan Sponsor, then you are in the business of managing a complex, sprawling, and critically important Provider Supply Chain.

A supply chain is the network between a company and its suppliers required for the company to create and distribute a specific product or service to their customers. This network includes different activities, people, entities, information, and resources. Companies develop supply chains so they can reduce their costs and remain competitive, however an optimized supply chain results in lower costs and a faster production cycle making supply chain management a critical process for active company investment.

If we apply this concept to healthcare Payers, their supply chain is the mix of all the channels through which healthcare services are purchased. This includes direct contracts with Providers, relationships with networks and other vendors that contract with Providers, other entities that help support care delivery behavioral health and telehealth vendors and even PBMs. This ecosystem of healthcare service Providers represents a health Payer’s Provider Supply Chain.

In essence, a core business function of a Payer is bringing together this supply chain of Providers on one side, with health care consumers on the other. In the middle, Payers negotiate wholesale and ultimately, retail prices for health care services and procedures. The Provider supply chain is by far any Payer’s largest expense, and largest opportunity to move the needle on improving financial performance in a competitive landscape that is becoming ever more concentrated[1].

Much like in a retail supply chain where there are inventory management tools and partners, in healthcare, there is a diverse array of vendors, networks and partners that help organize each Payer’s universe of Providers to make the multitudinous potential sites of care more consumable for the Payer to work with. However, the industry is becoming increasingly complex as Providers consolidate, new alternative payment methods are introduced and technology advances enable alternative care delivery settings such as digital health, remote patient monitoring devices and even hospital at home models.

As the healthcare industry increases in complexity, Payers need to leverage these models to be competitive, but their ability to connect with each of these supply chain partners on an EDI driven, point-to-point basis becomes less tenable, and unlike in a retail supply chain, there are few options available to facilitate these connections in an easy manner that offers the flexibility and scalability that healthcare Payers need. More often than not, Payers are forced to manage their Provider Supply Chains with a combination of the claims management system, BI software, and even spreadsheets. In short, selecting and then connecting to partners in the healthcare industry today is very complex and complicated.

The problem is multi-faceted. Healthcare pricing is opaque and highly variable. Payers don’t have all of the data or the internal capabilities they need to design optimal solutions for their member population. When a Payer overcomes this hurdle, they then have to build individual data connections to each supplier. Creating each connection is often a lengthy, complex, and expensive project that often results in poorly executed EDI systems connectivity, with limited interoperability. This integration complexity also creates a very real barrier for the Payer to be able to further augment or continue to optimize their network.

At MacroHealth, we are modernizing the healthcare supply chain, making the buying and selling of healthcare simple and powerful for the healthcare finance professionals who are dedicated to guiding members and patients to the best care, at the best price, for the best outcomes.

Our first-of-its-kind SaaS platform leverages data science and industry standard interoperability to provide each Payer with a secure, cloud-based Intelligent Health MarketTM– a custom set of highly curated solutions for purchasers of healthcare services specific to their member population.

The journey to modernize a Provider Supply Chain begins with a data-driven supplier evaluation, analyzing past and current healthcare purchasing performance to equip Payers with an unbiased view of the Provider networks and healthcare services that bring the most value and best fit the needs of their member population. Then, our platform enables Payers to streamline their optimized supply chain by connecting them to chosen partners in their healthcare ecosystem through a single, efficient connection point. This connection leverages industry standard EDI or FHIR based interoperability to automatically transform and route enrollment, claims, and other administrative transactions to and from every partner, providing Payers with the power to engage with multiple vendor partners. By leveraging a cloud-based technology stack, Payers can modernize their Provider Supply Chains without disrupting their business processes or increasing administrative and IT burden.

When payers optimize and connect to their healthcare supply chain through the MacroHealth platform, they can leverage improved provider access, lower healthcare costs, achieve better margins, increase operational efficiencies, and foster membership growth.

Interested in learning more? Contact us today for no-risk, no-cost examples of how to modernize your Provider Supply Chain with the MacroHealth platform.

[1] https://www.ama-assn.org/system/files/competition-health-insurance-us-markets.pdf

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