Negative financials, low population growth, and excess inpatient capacity cited as reasons communities—especially rural areas—may lose their independent hospitals, including access to nearby clinical laboratory testing and anatomic pathology services
Could America’s independent rural hospitals actually disappear
altogether? Metrics compiled by multiple healthcare monitoring organizations
suggest that, with the increase in mergers and acquisitions of health networks,
it’s a distinct possibility.
If so, what would happen to all the clinical laboratories affiliated with and servicing those hospitals? And how might hospital-based medical laboratories that are absorbed into larger healthcare networks be required to alter their workflows? For almost three decades, the clinical laboratory profession has seen similar hospital acquisitions lead to consolidation, standardization, and regionalization of the medical laboratories inside these hospitals. Often these organizational restructurings mean layoffs of lab managers and medical technologists.
Probably the more serious challenge is what will happen to
all the rural patients who cannot get to larger health networks located in
urban settings.
Hospital Closings Create Risks for Rural Communities
Experts say rural hospitals—especially providers serving
small populations in southern and midwestern states—are in precarious positions
going forward.
Kaiser Health News (KHN) reported in August that more than 100 rural hospitals closed since 2010, and these closures have serious implications for patients, such as a lengthy transport to another hospital’s emergency department.
“Across America, rural patients spend more time in an ambulance than urban patients after a hospital closes,” Alison Davis, PhD, Professor of Agricultural Economics at the University of Kentucky, and Executive Director of the Community and Economic Development Initiative of Kentucky, told KHN. Her team analyzed ambulance call and transport time data and found that a trip can grow from an average of 14 minutes before a hospital closed to 25 minutes after, KHN reported. (Photo copyright: Northern Kentucky Tribune.)
430 Rural Hospitals Likely to Close!
Rural hospitals usually do not have many nearby competitors. So, what brings so many of them to the brink of closure? According to a Navigant (NYSE:NCI)) analysis of more than 2,000 rural hospitals, “21% are at high risk of closing based on their total operating margin, days cash-on-hand, and debt-to-capitalization ratio. This equates to 430 hospitals across 43 states that employ 150,000 people!”
Navigant identifies the following as factors in the decline
of these struggling rural hospitals:
“Low rural population growth;
“Payer mix degradation;
“Excess hospital capacity due to declining
inpatient care; and
“An inability for hospitals to leverage
technology due to lack of capital.”
Navigant goes on to state, “Further review of the community
essentiality (trauma status, service to vulnerable populations, geographic
isolation, economic impact) of rural hospitals at high financial risk suggests
64% or 277 of these hospitals are considered highly essential to their
community’s health and economic well-being. In 31 states, at least half of
these financially distressed rural hospitals are considered essential.”
After reviewing the 2,000 rural hospitals Navigant’s analysts concluded that, unless trends reverse, one-in-five rural hospitals (21%) risk closing, a news release stated. And these hospitals are “essential” to the area’s residents.
“We show that two in three of these hospitals are considered highly essential to their communities: that’s 277 hospitals nationwide,” wrote David Mosley, Navigant’s Managing Director, in a STAT blog post. “Furthermore, if these hospitals close, already fragile rural economies will crumble while residents will be forced to travel long distances for emergency and inpatient care.”
Fierce Healthcare noted that “Of Montana’s 12 at-risk rural hospitals, all of them are considered essential to their communities. Kansas has 29 total at-risk rural hospitals with 25 of them—or 86%—considered essential to their communities. Georgia and Mississippi have seen 77% and 61% of their essential rural hospitals at financial risk, respectively.”
Navigant’s list of states with the highest percentage of
rural hospitals at risk of closing includes:
Alabama: 21 hospitals (50%)
Mississippi: 31 hospitals (48%)
Georgia: 26 hospitals (41%)
Maine: eight hospitals (40%)
Alaska: six hospitals (40%)
Arkansas: 18 hospitals (37%)
Oklahoma: 17 hospitals (29%)
Kansas: 29 hospitals (29%)
Michigan:18 hospitals (25%)
Kentucky: 16 hospitals (25%)
Minnesota: 19 hospitals (21%)
Comparing Independent Hospitals to Health Networks
But it’s not just rural independent hospitals that are
struggling. Modern
Healthcare Metrics reports that 53% of all stand-alone hospitals in the US
have suffered operating losses during each of the last five years (2012 to
2017). Conversely, about half (26%) of health system-affiliated providers have
lost money.
Statistics compiled by the American Hospital Association (AHA) show there are approximately 5,000 non-federal acute care community hospitals in the US. In 2017, about 75% of them were part of multi-hospital systems, an increase from 70.4% in 2012, Modern Healthcare Metrics data indicated.
Average length of stay increased 6.4% at
independent hospitals, while it decreased at health system hospitals by 23.5%;
Occupancy rates fell to 43.6% from 53.9% at
independent providers, compared to rates falling to 53.7% from 61% at
system-owned hospitals;
Independent hospitals seem to rely on patients
having longer lengths of stay;
Hospices and skilled nursing facilities compete
with stand-alone hospitals.
Change is coming to parts of the nation that depend on
independent hospitals, and it’s not good. Medical laboratory leaders are
advised to prepare for serving patients who may lose access to nearby tests and
diagnostic services. On a positive note, medical laboratories in independent
hospitals that consolidate with healthcare systems could bring expertise,
adding value to their new networks.
Genetic data captured by this new technology could lead to a new understanding of how different types of cells exchange information and would be a boon to anatomic pathology research worldwide
What if it were possible to map the interior of cells and view their genetic sequences using chemicals instead of light? Might that spark an entirely new way of studying human physiology? That’s what researchers at the Massachusetts Institute of Technology (MIT) believe. They have developed a new approach to visualizing cells and tissues that could enable the development of entirely new anatomic pathology tests that target a broad range of cancers and diseases.
Scientists at MIT’s Broad Institute and McGovern Institute for Brain Research developed this new technique, which they call DNA Microscopy. They published their findings in Cell, titled, “DNA Microscopy: Optics-free Spatio-genetic Imaging by a Stand-Alone Chemical Reaction.”
Joshua Weinstein, PhD, a postdoctoral associate at the Broad Institute and first author of the study, said in a news release that DNA microscopy “is an entirely new way of visualizing cells that captures both spatial and genetic information simultaneously from a single specimen. It will allow us to see how genetically unique cells—those comprising the immune system, cancer, or the gut for instance—interact with one another and give rise to complex multicellular life.”
The news release goes on to state that the new technology “shows
how biomolecules such as DNA and RNA are organized in cells and tissues,
revealing spatial and molecular information that is not easily accessible
through other microscopy methods. DNA microscopy also does not require
specialized equipment, enabling large numbers of samples to be processed
simultaneously.”
The images above, taken from the MIT study, compares optical imaging of a cell population (left) with an inferred visualization of the same cell population based on the information provided by DNA microscopy (right). Scale bar = 100 μm (100 micrometers). This technology has the potential to be useful for anatomic pathologists at some future date. (Photo and caption copyrights: Joshua Weinstein, PhD, et al/Cell.)
New Way to Visualize Cells
The MIT researchers saw an opportunity for DNA microscopy to
find genomic-level cell information. They claim that DNA microscopy images
cells from the inside and enables the capture of more data than with
traditional light microscopy. Their new technique is a chemical-encoded
approach to mapping cells that derives critical genetic insights from the
organization of the DNA and RNA in cells and tissue.
And that type of genetic information could lead to new precision medicine treatments for chronic disease. New Atlas notes that “ Speeding the development of immunotherapy treatments by identifying the immune cells best suited to target a particular cancer cell is but one of the many potential application for DNA microscopy.”
In their published study, the scientists note that “Despite enormous progress in molecular profiling of cellular constituents, spatially mapping [cells] remains a disjointed and specialized machinery-intensive process, relying on either light microscopy or direct physical registration. Here, we demonstrate DNA microscopy, a distinct imaging modality for scalable, optics-free mapping of relative biomolecule positions.”
How DNA Microscopy Works
The New York Times (NYT) notes that the advantage of DNA microscopy is “that it combines spatial details with scientists’ growing interest in—and ability to measure—precise genomic sequences, much as Google Street View integrates restaurant names and reviews into outlines of city blocks.”
And Singularity Hub notes that “ DNA microscopy, uses only a pipette and some liquid reagents. Rather than monitoring photons, here the team relies on ‘bar codes’ that chemically tag onto biomolecules. Like cell phone towers, the tags amplify, broadcasting their signals outward. An algorithm can then piece together the captured location data and transform those GPS-like digits into rainbow-colored photos. The results are absolutely breathtaking. Cells shine like stars in a nebula, each pseudo-colored according to their genomic profiles.”
“We’ve used DNA in a way that’s mathematically similar to photons in light microscopy,” Weinstein said in the Broad Institute news release. “This allows us to visualize biology as cells see it and not as the human eye does.”
In their study, researchers used DNA microscopy to tag RNA
molecules and map locations of individual human cancer cells. Their method is
“surprisingly simple” New Atlas reported. Here’s how it’s done,
according to the MIT news release:
Small synthetic DNA tags (dubbed “barcodes” by the MIT team) are added to biological samples;
The “tags” latch onto molecules of genetic material in the cells;
The tags are then replicated through a chemical reaction;
The tags combine and create more unique DNA labels;
The scientists use a DNA sequencer to decode and reconstruct the biomolecules;
A computer algorithm decodes the data and converts it to images displaying the biomolecules’ positions within the cells.
The visualization above was created from data gathered by DNA microscopy, which peers inside individual cells. It demonstrates how DNA microscopy enables scientists to identify different cells (colored dots) within a sample—with no prior knowledge of what the sample looks like. (Photo and caption copyright: Joshua Weinstein, PhD, et al./Cell.)
“The first time I saw a DNA microscopy image, it blew me away,” said Aviv Regev, PhD, a biologist at the Broad Institute, a Howard Hughes Medical Institute (HHMI) Investigator, and co-author of the MIT study, in an HHMI news release. “It’s an entirely new category of microscopy. It’s not just a technique; it’s a way of doing things that we haven’t ever considered doing before.”
Precision Medicine Potential
“Every cell has a unique make-up of DNA letters or genotype. By capturing information directly from the molecules being studied, DNA microscopy opens up a new way of connecting genotype to phenotype,” said Feng Zhang, PhD, MIT Neuroscience Professor,
Core Institute Member of the Broad Institute, and
Investigator at the McGovern Institute for Brain Research at MIT, in the HHMI
news release.
In other words, DNA microscopy could someday have applications in precision medicine. The MIT researchers, according to Stat, plan to expand the technology further to include immune cells that target cancer.
The Broad Institute has applied for a patent on DNA
microscopy. Clinical laboratory and anatomic pathology group leaders seeking
novel resources for diagnosis and treatment of cancer may want to follow the MIT
scientists’ progress.
As hospitals are forced to innovate, anatomic pathologists and medical laboratories will need to adapt to new healthcare delivery locations and billing systems
As new challenges threaten the survival of many hospitals worldwide, medical laboratories may be compelled to adapt to the needs of those transforming organizations. Those challenges confronting hospitals are spelled out in a recent report from management consulting firm McKinsey and Company with the provocative title, “The Hospital Is Dead, Long Live the Hospital!”
A team of analysts led by McKinsey senior partner Penny
Dash, MB BS, MSc, looked at nine trends affecting hospitals in North America,
Europe, Asia, and other regions. These trends, the authors contend, will force
hospitals to adopt innovations in how they are structured and how they deliver
healthcare.
Here are nine challenges hospitals face that have
implications for medical laboratories:
1. Aging Patient Populations
“Patient populations are getting older, and their needs are becoming more complex,” McKinsey reports, and this is imposing higher cost burdens. The US Census Bureau projects that by 2030 approximately 20% of the US population will be 65 or older compared with about 15% in 2016.
The federal Centers for Medicare and Medicaid Services (CMS) reports that this age group accounts for a disproportionate share of healthcare costs. In 2014, CMS states, per-capita healthcare spending was $19,098 for people 65 or older compared with $7,153 for younger adults.
The Census Bureau graphic above illustrates how the age of the US population is changing. People are living longer, and as Dark Daily reported in May, this could present opportunities for medical laboratories and anatomic pathologists, as early detection of chronic diseases affecting older patients could ultimately reduce treatment costs. (Photo copyright: US Census Bureau.)
2. Patients Are Behaving More Like Consumers
“Patients—along with their families and caregivers—expect to
receive more information about their conditions and care, access to the newest
treatments, and better amenities,” McKinsey reports.
Clinical advances are increasing the range of treatments that can be performed in outpatient settings, McKinsey reports. The authors point to multiple studies suggesting that patients can receive better outcomes when more care is delivered outside the hospital. Dark Daily has often reported on the impact of this trend, which has reduced demand for in-hospital laboratory testing while increasing opportunities for outpatient services.
4. Move Toward High-Volume Specialist Providers
Compared with general hospitals, specialized, high-volume “centers
of excellence” can deliver better and more cost-effective care in many
specialties, McKinsey suggests. As evidence, the report points to research
published over the past 12 years in specialist journals.
Some US employers are steering patients to top-ranked providers as part of their efforts to reduce healthcare costs. For example, Walmart (NYSE:WMT) pays travel costs for patients to undergo evaluation and treatment at out-of-state hospitals recognized as centers of excellence, which Dark Daily reported on in July.
UnitedHealthcare’s new preferred lab network also appears to be a nod toward this trend. As The Dark Report revealed in April, the insurer has designated seven laboratories to be part of this network. These labs will offer shorter wait times, lower costs, and higher quality of care compared with UnitedHealthcare’s larger network of legacy labs, the insurer says.
5. Impact of Clinical Advances
Better treatments and greater understanding of disease
causes have led to significantly lower mortality rates for many conditions,
McKinsey reports. But the authors add that high costs for new therapies are
forcing payers to contend with questions about whether to fund them.
As Dark Daily has often reported, new genetic therapies often require companion tests to determine whether patients can benefit from the treatments. And these also face scrutiny from payers. For example, in January 2018, Dark Daily reported that some insurers have refused to cover tests associated with larotrectinib (LOXO-101), a new cancer treatment.
6. Impact of Disruptive Digital Technologies
The McKinsey report identifies five ways in which digital
technologies are having an impact on hospitals:
Automation of manual tasks;
More patient interaction with providers;
Real-time management of resources, such as use of hospital beds;
Real-time clinical decision support to enable more consistency and timeliness of care; and
Use of telemedicine applications to enable care for patients in remote locations.
All have potential consequences for medical laboratories, as Dark Daily has reported. For example, telepathology offers opportunities for pathologists to provide remote interpretation of blood tests from a distance.
7. Workforce Challenges
Many countries are contending with shortages of physicians,
nurses, and allied health professionals, McKinsey reports. The authors add that
the situation is likely to get worse in the coming decades because much of the current
healthcare workforce consists of baby boomers.
An investigation published in JAMA in May indicated that, in the US, the number of active pathologists decreased from 15,568 to 12,839 between 2007 and 2017. In January, Dark Daily reported that clinical laboratories are also dealing with a generational shift involving medical technologists and lab managers, as experienced baby boomers who work in clinical laboratories are retiring.
8. Financial Challenges
In the United States and other countries, growth in
healthcare spending will outpace the gross domestic product, the McKinsey
report states, placing pressure on hospitals to operate more efficiently.
9. More Reliance on Quality Metrics
McKinsey cites regulations in Canada, Scandinavia, and the UK that require hospitals to publish quality measurements such as mortality, readmittance, and infection rates. These metrics are sometimes linked to pay-for-performance programs, the report states. In the United States, Medicare regularly uses quality-of-care metrics to determine reimbursement, and as Dark Daily reported in July, a new Humana program for oncology care includes measurements for medical laboratories and anatomic pathology groups.
The McKinsey report reveals that several trends in
healthcare are forcing healthcare leaders to adopt new strategies for success.
The report’s authors state that their “results show that contemporary
healthcare providers around the world are facing several urgent imperatives: to
strengthen clinical quality; increase the delivery of personalized,
patient-centered care; improve the patient experience; and enhance their
efficiency and productivity.”
These pressures on hospitals typically also require
appropriate responses from clinical laboratories and anatomic pathology groups
as well.
Panel of experts in healthcare and the clinical laboratory market identify key trends and discuss how innovative medical laboratories are adding value—and getting paid for that value
Effective clinical laboratory leadership in today’s value-based healthcare system means demonstrating value within an integrated delivery network. After all, as fee-for-service payment for clinical lab tests gives way to value-added reimbursement arrangements, all medical laboratories will need to justify their share of a value-based payment.
But how can clinical
laboratories alert physicians and their parent hospitals to the real value they
offer to improve patient outcomes and reduce healthcare costs? Though lab leaders
may understand their medical lab’s complexity, accessibility, and impact, the
question is how to direct the effort. The answer lies in a risk that some laboratory
directors may not have considered.
Value-based healthcare systems include hospital-based medical laboratories as an essential part of their integrated health system. And, to lower the cost of care, healthcare systems involved in value-based care know they must become better at coordinating care and offering precision medicine services to their patients.
Year-by-year, more integrated health systems are learning how to eliminate gaps in care and become more proactive in delivering care that helps keep patients healthy. However, the task of leveraging the clinical laboratory in a strategic approach to demonstrating value in those health systems remains daunting. One of the goals of the Clinical Lab 2.0 model developed by the Project Santa Fe Foundation clinical laboratory organization is to demonstrate how labs can achieve two goals:
Create added-value services that improve patient care; and
Have health insurers, accountable care organizations (ACOs), and health networks pay remuneration to the clinical labs for those added-value services.
Pathologists,
Clinical Chemists, and MTs Leave Thy Medical Labs
Expert panelists of a recent webinar hosted by Dark Daily and sponsored by Sunquest Information Systems suggested ways that clinical laboratories could better position themselves to be an asset for their organizations. One way to do this is to get their clinical pathologists, PhDs, and medical technologists out of the lab and engaged with physicians, nurses, and other clinical staff in specific ways that influence the healthcare organization’s overall performance in delivering better patient outcomes at less cost.
“Our labs have
to be equal partners instead of recipients of where things are going,” he stressed.
“We need to be, if not in the driver’s seat, at least in the front seat.”
Mark Dixon (above), President of the Mark Dixon Group LLC, moderated the webinar, which was sponsored by Sunquest Information Systems and The Dark Report, sister publication of Dark Daily. Dixon has more than 30-years’ experience as a health system CEO and COO. He said TriCore and other labs are succeeding at value-based healthcare using methods that are well-defined and available for all clinical laboratories to learn. For example: TriCore has found that certain health insurers are willing to not only pay their laboratory differently, but also meet with the lab’s pathologists and leaders to negotiate value-based care arrangements. (Photo copyright: Mark Dixon Group.)
Fundamental
Changes That Will Impact All Clinical Laboratories
The panel
speakers discussed how clinical laboratories can strategically position
themselves to be successful in today’s evolving healthcare industry. They
predicted several fundamental changes would take place or continue. These
changes include:
A
continued shift away from pure fee-for-service payment (volume) to value-based
reimbursement that rewards improved patient outcomes;
More
discussion regarding prevention of illnesses, chronic diseases, and personal
responsibility;
More
focus on primary care and proactive care;
Rapid
advances in science and technology that will spark development of new healthcare
applications;
Continued
trend toward consumerism, as more patients pay a larger portion of their
healthcare expenses and shop for hospitals, doctors, and labs; and
Intense
cost pressure on healthcare organizations and their medical laboratories.
It was noted
during the panel discussion that, even as the US spends more than any other
country in the world on healthcare, it has some of the worst overall outcomes.
Customers Rapidly
Becoming Stakeholders
“I always think in terms of stakeholders and the number one
stakeholder for any clinical laboratory or healthcare system is always the
customer,” said Peters. “The lab’s customer is the ordering physician. So, it’s
important that labs ‘speak their language’ and understand that the physician’s
customer is the patient.”
Clinical laboratories also must be aware of what a
particular healthcare system is trying to accomplish. “Lab leaders should stay
in constant touch with where the market is, where the system is, and where
reform is,” said Oravetz. “And realize there are things that can be done today
to set up for what’s coming tomorrow.”
Terese said that
for a clinical laboratory to survive during this rapid transformation of
the US healthcare system—or at least continue to thrive—it needs to engage with
the strategic and clinical initiatives guiding every health system around the
country. “There is tremendous opportunity for clinical laboratories to not only
support that transition, but to actually help drive it,” he said. “There’s
nothing wrong with thinking of your medical laboratory as a leader of these
initiatives, versus just as a follower of what the organization is doing.”
Key elements of
the webinar that will be of interest to clinical laboratories include:
Examples
of clinical laboratories navigating the transition from volume to value-based
care;
Discussion
and update on fundamental changes coming to the US healthcare industry that
impact clinical laboratories;
The
case for demonstrating the value of clinical labs to healthcare organizations;
and
Eight
ways to elevate the value of clinical labs within an integrated healthcare network.
The experts on this special discussion panel agree that US
healthcare and the clinical laboratory marketplace is in a time of transition.
Pathologists and medical laboratory scientists have an opportunity to position
themselves as leaders and changemakers to the benefit of patients, as well as their
parent hospitals and health networks.
This free webinar can be a critical tool for leadership
training within every clinical laboratory. It can be used to give lab managers
and lab staff fresh insights into the changes happening in healthcare. Insights
that can guide strategic planning and inspire laboratory-led projects to
collaborate with physicians and improve patient care.
Download this webinar for free by clicking here. (Or, copy and paste this URL into your browser: https://darkintelligenceprogramsondemand.uscreen.io/programs/listen-learn-lead-uncover-ways-you-can-position-your-lab-as-a-strategic-pillar-of-the-healthcare-organization.)
First used to track cryptocurrencies such as Bitcoin, blockchain is finding its way into tracking and quality control systems in healthcare, including clinical laboratories and big pharma
Four companies were selected by the US Food and Drug Administration (FDA) to participate in a pilot program that will utilize blockchain technology to create a real-time monitoring network for pharmaceutical products. The companies selected by the FDA include: IBM (NYSE:IBM), Merck (NYSE:MRK), Walmart (NYSE:WMT), and KPMG, an international accounting firm. Each company will bring its own distinct expertise to the venture.
This important project to utilize blockchain technologies in
the pharmaceutical distribution chain is another example of prominent
healthcare organizations looking to benefit from blockchain technology.
Clinical laboratories and health insurers also are collaborating on blockchain projects. A recent intelligence briefing from The Dark Report, the sister publication of Dark Daily, describes collaborations between multiple health insurers and Quest Diagnostics to improve their provider directories using blockchain. (See, “Four Insurers, Quest Developing Blockchain,” July 1, 2019.)
Improving Traceability and Security in Healthcare
Blockchain continues to intrigue federal officials, health network administrators, and health information technology (HIT) developers looking for ways to accurately and efficiently track inventory, improve information access and retrieval, and increase the accuracy of collected and stored patient data.
In the FDA’s February press release announcing the pilot program, Scott Gottlieb, MD, who resigned as the FDA’s Commissioner in April, stated, “We’re invested in exploring new ways to improve traceability, in some cases using the same technologies that can enhance drug supply chain security, like the use of blockchain.”
Congress created this latest program, which is part of the federal US Drug Supply Chain Security Act (DSCSA) enacted in 2013, to identify and track certain prescription medications as they are disseminated nationwide. However, once fully tested, similar blockchain systems could be employed in all aspects of healthcare, including clinical laboratories, where critical supplies, fragile specimens, timing, and quality control are all present.
The FDA hopes the electronic framework being tested during
the pilot will help protect consumers from counterfeit, stolen, contaminated, or
harmful drugs, as well as:
reduce the time needed to track and trace
product inventory;
enable timely retrieval of accurate distribution
information;
increase the accuracy of data shared among the
network members; and
help maintain the integrity of products in the
distribution chain, including ensuring products are stored at the correct
temperature.
In the FDA’s February announcement, Scott Gottlieb, MD (above), the FDA Commissioner at that time, said, “For the drug track-and-trace system, our goals are to fully secure electronic product tracing, which provides a step-by-step account of where a drug product has been located and who has handled it, [and] establish a more robust product verification to ensure that a drug product is legitimate and unaltered.” It’s not hard to imagine how such a tracking system would be equally beneficial in clinical laboratories and hospital pathology departments. (Photo copyright: FDA.)
Companies in the FDA’s Blockchain Pilot
IBM, a leading blockchain provider, will serve as the
technology partner on the project. The tech giant has implemented and provided
blockchain applications to clients for years. Its cloud-based platform provides
customers with end-to-end capabilities that enable them to develop, maintain,
and secure their networks.
“Blockchain could provide an important new approach to further improving trust in the biopharmaceutical supply chain,” said Mark Treshock, Global Blockchain Solutions Leader for Healthcare and Life Sciences at IBM, in a news release. “We believe this is an ideal use for the technology because it can not only provide an audit trail that tracks drugs within the supply chain; it can track who has shared data and with whom, without revealing the data itself. Blockchain has the potential to transform how pharmaceutical data is controlled, managed, shared and acted upon throughout the lifetime history of a drug.”
Merck, known as MSD outside of the US and Canada, is
a global pharmaceutical company that researches and develops medications and
vaccines for both human and animal diseases. Merck delivers health solutions to
customers in more than 140 countries across the globe.
“Our supply chain strategy, planning and logistics are built around the customers and patients we serve,” said Craig Kennedy, Senior Vice President, Global Supply Chain Management at Merck, in the IBM news release. “Reliable and verifiable supply helps improve confidence among all the stakeholders—especially patients—while also strengthening the foundation of our business.”
Kennedy added that transparency is one of Merck’s primary
goals in participating in this blockchain project. “If you evaluate today’s
pharmaceutical supply chain system in the US, it’s really a series of handoffs
that are opaque to each other and owned by an individual party,” he said,
adding, “There is no transparency that provides end-to-end capabilities. This
hampers the ability for tracking and tracing within the supply chain.”
Walmart, the world’s largest company by revenue, will
be distributing drugs through their pharmacies and care clinics for the
project. Walmart has successfully experimented using blockchain technology with
other products. It hopes this new collaboration will benefit their customers,
as well.
“With successful blockchain pilots in pork, mangoes, and leafy greens that provide enhanced traceability, we are looking forward to the same success and transparency in the biopharmaceutical supply chain,” said Karim Bennis, Vice President of Strategic Planning of Health and Wellness at Walmart, in the IBM news release. “We believe we have to go further than offering great products that help our customers live better at everyday low prices. Our customers also need to know they can trust us to help ensure products are safe. This pilot, and US Drug Supply Chain Security Act requirements, will help us do just that.”
KPMG, a multi-national professional services network
based in the Netherlands, will be providing knowledge regarding compliance
issues to the venture.
“Blockchain’s innate ability within a private, permissioned
network to provide an ‘immutable record’ makes it a logical tool to deploy to
help address DSCSA compliance requirements,” said Arun Ghosh, US Blockchain
Leader at KPMG, in the IBM news release. “The ability to leverage existing
cloud infrastructure is making enterprise blockchain increasingly affordable
and adaptable, helping drug manufacturers, distributors, and dispensers meet
their patient safety and supply chain integrity goals.”
The FDA’s blockchain project is scheduled to be completed in
the fourth quarter of 2019, with the end results being published in a DSCSA
report. The participating organizations will evaluate the need for and plan any
future steps at that time.
Blockchain is a new and relatively untested technology
within the healthcare industry. However, projects like those supported by the
FDA may bring this technology to the forefront for healthcare organizations,
including clinical laboratories and pathology groups. Once proven, blockchain
technology could have significant benefits for patient data accuracy and
security.
