Strategic Supply Chain for Better Patient Outcomes with Dr. Jimmy Chung, the Chief Medical Officer at Advantus Health Partners

[00:00:02] [SPEAKER_01]: Hey everybody and welcome back to the Outcomes Rocket.

[00:00:06] [SPEAKER_01]: And thanks for joining us for this series from HFMA 2024.

[00:00:11] [SPEAKER_01]: We're providing fresh insights with people that I had a chance to meet from some of

[00:00:16] [SPEAKER_01]: the most innovative companies changing the game of revenue cycle and finance in healthcare.

[00:00:21] [SPEAKER_01]: And for today's insights interview, I have the privilege of hosting Dr. Jimmy Chung.

[00:00:27] [SPEAKER_01]: He's the Chief Medical Officer at Advantus Health Partners.

[00:00:31] [SPEAKER_01]: He's a board certified surgeon with over 25 years of experience in direct patient care,

[00:00:36] [SPEAKER_01]: physician leadership and healthcare administration.

[00:00:39] [SPEAKER_01]: He's been a renowned clinical thought leader across supply chain,

[00:00:43] [SPEAKER_01]: which is the area that we're going to be focused on today's interview for over 10 years.

[00:00:48] [SPEAKER_01]: Dr. Chung, thanks so much for joining us today.

[00:00:50] [SPEAKER_00]: Thank you. It's a real privilege.

[00:00:52] [SPEAKER_01]: For sure. And hey, I really enjoyed connecting with you while at the conference

[00:00:56] [SPEAKER_01]: to kick things off, let us know a little bit about you and what got you into

[00:01:02] [SPEAKER_01]: healthcare but also revenue cycle. That's quite the shift from physician to revenue cycle.

[00:01:07] [SPEAKER_00]: Well, I'll just clarify it's not revenue cycle, it's supply chain,

[00:01:11] [SPEAKER_00]: which from a financial perspective sometimes seems like they're at opposite ends.

[00:01:17] [SPEAKER_00]: But let me, I'll just briefly tell you a little bit about my journey.

[00:01:23] [SPEAKER_00]: When I was a surgeon in practice, obviously I loved taking care of patients and

[00:01:29] [SPEAKER_00]: I got quite good at this. I thought I was very good at what I was doing.

[00:01:34] [SPEAKER_00]: One thing that I knew that I would eventually do is getting to physician leadership and

[00:01:39] [SPEAKER_00]: healthcare administration because I really am passionate about changing

[00:01:43] [SPEAKER_00]: the state of healthcare in our country.

[00:01:46] [SPEAKER_00]: And as a surgeon, one thing that I know I always noticed was all of the products

[00:01:52] [SPEAKER_00]: were being used in the operating room that went to waste.

[00:01:55] [SPEAKER_00]: On the back table, which is supposed to be the sterile field, I often saw a lot of

[00:02:02] [SPEAKER_00]: products like sponges and instruments that had been open for the case

[00:02:06] [SPEAKER_00]: that without even a single drop of blood were being thrown away.

[00:02:10] [SPEAKER_00]: And some of that, of course, had to do with claims of sterility and infection

[00:02:15] [SPEAKER_00]: control and so forth. But a lot of it was because we just didn't have a standard as

[00:02:20] [SPEAKER_00]: how we can minimize waste and utilize appropriately products and resources that we have.

[00:02:28] [SPEAKER_00]: And when I started my journey into healthcare administration, roughly, I want to say 13, 14

[00:02:36] [SPEAKER_00]: years ago, one of the jobs that really piqued my interest was in supply chain.

[00:02:42] [SPEAKER_00]: At the time as a physician, I had no idea what that was. In fact, before my interview,

[00:02:46] [SPEAKER_00]: Google supply chain figure out what that meant.

[00:02:51] [SPEAKER_00]: And this is actually a true story that when I talked to the recruiter and I felt that I was

[00:02:59] [SPEAKER_00]: interested in the job, but didn't really know what it was, it was like a director of medical

[00:03:05] [SPEAKER_00]: value analysis or something like that. And I said, I'm a surgeon.

[00:03:09] [SPEAKER_00]: So according to your job description, I think I'm qualified for this job.

[00:03:14] [SPEAKER_00]: But can you tell me a little bit more about it? Because I'd never heard of this job before.

[00:03:19] [SPEAKER_00]: I've heard of the typical medical director and CMO, and the recruiter said,

[00:03:23] [SPEAKER_00]: oh, well, we're hoping you'd tell us because we'd never heard of it before either.

[00:03:28] [SPEAKER_00]: So to put it in a few words.

[00:03:30] [SPEAKER_00]: Oh my gosh.

[00:03:31] [SPEAKER_00]: So long story short, it was a very unique position that I was very lucky enough to

[00:03:36] [SPEAKER_00]: identify and apply for. And very soon after I started the position, I realized what it was

[00:03:44] [SPEAKER_00]: a component of a supply chain called value analysis, which is to assess the total value

[00:03:52] [SPEAKER_00]: of products and resources as it pertains to health care.

[00:03:57] [SPEAKER_00]: And being able to identify opportunities where we can optimize that value through a process

[00:04:03] [SPEAKER_00]: called value analysis. And then creating that system for physicians across a newly,

[00:04:09] [SPEAKER_00]: I guess, wasn't a merger necessarily, but it was a newly focused large IDN of about 32 hospitals.

[00:04:16] [SPEAKER_00]: They were having issues with centralizing their supply chain processes and having

[00:04:23] [SPEAKER_00]: that communication with their physicians. So I think they wanted to hire a surgeon who

[00:04:29] [SPEAKER_00]: has an understanding resource utilization and then create the value analysis process

[00:04:35] [SPEAKER_00]: across the system. So that was how I got into supply chain.

[00:04:39] [SPEAKER_00]: And then I decided to try to learn more about supply chain by joining ARM,

[00:04:45] [SPEAKER_00]: which is the Association for Health Care Resources and Materials Management,

[00:04:49] [SPEAKER_00]: which is that professional division under American Hospital Association.

[00:04:54] [SPEAKER_00]: So once I joined them, I tried to learn more. Eventually I got on their board as their first

[00:05:00] [SPEAKER_00]: physician board member and eventually became chair. So I have to say, I really enjoy

[00:05:05] [SPEAKER_00]: being in the supply chain world. It's a very small, tight, passionate people,

[00:05:11] [SPEAKER_00]: a group of passionate people and very intelligent and just a really nice community.

[00:05:17] [SPEAKER_01]: HOFFMAN That's really great, Dr. Chong. I love that. And you gravitated to this role.

[00:05:22] [SPEAKER_01]: That story about the recruiter is hilarious. Well, let me tell you about the role. You

[00:05:30] [SPEAKER_01]: did that. And now here you are. And thank you, by the way, for correcting me at the beginning of

[00:05:35] [SPEAKER_01]: the interview. Rev cycle, supply chain, two very different things. And much of the discussions

[00:05:41] [SPEAKER_01]: at HFMA were around revenue cycle, but supply chain is a critical part of the entire financial

[00:05:49] [SPEAKER_01]: standing of a health system. And Dr. Chong, maybe you could help us understand

[00:05:54] [SPEAKER_01]: more about the company and what you guys are doing and any recent news or insights

[00:05:59] [SPEAKER_00]: you want to share about what you guys are up to. CHOCHATWONG Sure. Yeah. Well, in a nutshell,

[00:06:05] [SPEAKER_00]: I think supply chain has been undergoing some tremendous transformation in the industry.

[00:06:12] [SPEAKER_00]: In the old days, supply chain used to be called materials management.

[00:06:15] [SPEAKER_00]: Most of us were, and I wasn't involved during that time, obviously, but most of supply chain

[00:06:20] [SPEAKER_00]: was in the basement opening boxes and things like that. Literally supply chain offices or

[00:06:25] [SPEAKER_00]: management offices were next to the morgue. And so there's a lot of ongoing joke about that. But

[00:06:31] [SPEAKER_00]: as healthcare itself becomes more cost conscious and now migrating towards a value-based

[00:06:39] [SPEAKER_00]: model, supply chain becomes a much more strategic and broader function for a hospital system

[00:06:51] [SPEAKER_00]: where it's no longer just about products, but really strategic management of all non-labor

[00:06:58] [SPEAKER_00]: resources. And when I said it's on the opposite end of revenue cycle, in a sense,

[00:07:04] [SPEAKER_00]: it is because we're managing expense for the most part. Now, a lot of the products that we may

[00:07:11] [SPEAKER_00]: procure has impact on reimbursement and surgical volume and things like that. But

[00:07:18] [SPEAKER_00]: for the most part, supply chain is all about finding efficiencies, reducing waste,

[00:07:23] [SPEAKER_00]: reducing unnecessary variation, and reducing the total cost of care delivery. So that

[00:07:30] [SPEAKER_00]: cost of delivering care improves the value of the care that's actually experienced

[00:07:36] [SPEAKER_00]: from the patient perspective as well as costs to our community and our society.

[00:07:40] [SPEAKER_00]: So there's a lot of tremendous change in the supply chain industry. Everything from

[00:07:49] [SPEAKER_00]: that very first tier sourcing to distribution to logistics, but also from my specific focus,

[00:07:56] [SPEAKER_00]: which is the clinical integration, is are we producing, are we procuring products

[00:08:01] [SPEAKER_00]: that will ultimately result in good patient outcomes and patient experience?

[00:08:06] [SPEAKER_00]: And are we reducing harm? Are we reducing errors? Are we actually appropriately utilizing

[00:08:14] [SPEAKER_00]: the resources that we have to ensure that the patients get the care that they need?

[00:08:19] [SPEAKER_00]: And so integrating that clinical aspect into supply chain function becomes a much more high

[00:08:27] [SPEAKER_00]: level strategic function that in many hospitals and hospital systems is up in the C-suite

[00:08:34] [SPEAKER_00]: level. And it's a very exciting field to be in. Now, our company, what's unique about

[00:08:40] [SPEAKER_00]: what we're doing is that we've also identified that in the supply chain industry that involves

[00:08:47] [SPEAKER_00]: not just hospitals but suppliers, group purchasing organizations and so forth,

[00:08:54] [SPEAKER_00]: there's a lot of waste and inefficiencies as well. So most hospitals in this country

[00:09:01] [SPEAKER_00]: are members who will procure their products through one of three large GPOs. And as the

[00:09:09] [SPEAKER_00]: current GPO model expands, some of us, and with no disrespect, might jokingly call them

[00:09:16] [SPEAKER_00]: three. We refer to them as the big three. And oftentimes some people might describe them

[00:09:22] [SPEAKER_00]: as a cartel or a monopoly because they're so big that it's hard to make any significant

[00:09:28] [SPEAKER_00]: change. And from the supplier perspective, if you know that the only way you can get into a

[00:09:35] [SPEAKER_00]: hospital and get a hospital contract is through a GPO, then you really have no choice and you

[00:09:43] [SPEAKER_00]: don't get any real price protection. You don't get any exclusivity because you're in there

[00:09:48] [SPEAKER_00]: competing with everybody else. And from the provider perspective, you can take advantage of

[00:09:55] [SPEAKER_00]: savings through purchasing through a group purchasing organization because you're doing it

[00:09:59] [SPEAKER_00]: on at scale and taking advantage of the economy of scale. But then again, there's really no

[00:10:06] [SPEAKER_00]: additional value, especially if you're a large IDN that you can get because you can just do

[00:10:13] [SPEAKER_00]: it yourself. And there's been a lot of criticism of the current GPO model.

[00:10:18] [SPEAKER_00]: And we saw that as an opportunity to create a different kind of maybe I would say,

[00:10:23] [SPEAKER_00]: personally, it's not a company logo or anything like that. Personally, I might consider it almost

[00:10:29] [SPEAKER_00]: like an anti where our model for the GPO is to create value by starting from the clinical

[00:10:38] [SPEAKER_00]: need so that if we know that we take care of these patients for these conditions and

[00:10:45] [SPEAKER_00]: will perform these surgeries, what products do we need? And then we scoured the marketplace

[00:10:50] [SPEAKER_00]: to see which industry partners would share our vision the most and create value together.

[00:10:57] [SPEAKER_00]: And we limit our portfolio to those those partners only, we don't try to put in every

[00:11:04] [SPEAKER_00]: vendor on our portfolio like the other GPOs would. So while it might appear to

[00:11:15] [SPEAKER_00]: reduce the choices that a perhaps a hospital or physician might have, we're actually narrowing

[00:11:22] [SPEAKER_00]: the choices deliberately to maximize the value to both supplier and provider and ultimately to

[00:11:29] [SPEAKER_00]: the patient. So that's the model that we're using. Some of the innovative things that you

[00:11:34] [SPEAKER_00]: you're asking about that we've already achieved, creating very strong unique partnerships with

[00:11:40] [SPEAKER_00]: the giants in the industry like Medline, GE, Tronic and other large companies towards this

[00:11:47] [SPEAKER_00]: vision has really attracted a lot of attention and I already gained a lot of savings for not

[00:11:54] [SPEAKER_00]: just for Bonsacoma Mercy Health but some other hospitals as well. So we're really excited about

[00:11:59] [SPEAKER_01]: moving forward in that direction. That's great Dr. Chong. The innovation, the business model

[00:12:04] [SPEAKER_01]: innovation is really something that we could all focus on and literally create value out of what

[00:12:12] [SPEAKER_01]: we already have just by thinking differently and deploying a model like Dr. Chong did.

[00:12:17] [SPEAKER_01]: Actually when we were together at HFMA, Dr. Chong you gave the analogy of Costco and I think

[00:12:22] [SPEAKER_01]: that analogy of what you just talked about, everybody loves Costco. You go get great value,

[00:12:28] [SPEAKER_01]: there's less choices but all the choices that are in there are high value for you.

[00:12:32] [SPEAKER_00]: Right, exactly and there's some psychology behind that because if you and I think the analogy

[00:12:39] [SPEAKER_00]: that I made as well is that let's say you're a mother who has five kids

[00:12:45] [SPEAKER_00]: and each of the five kids wants a different breakfast cereal. Well then maybe you'll take

[00:12:50] [SPEAKER_00]: them to Walmart or some other large super center where you can have choices between 20-30

[00:12:55] [SPEAKER_00]: different brands of cereal and say okay kids you choose what you want. I don't want to have

[00:12:59] [SPEAKER_00]: to deal with unhappy kids but that's not economically sustainable if you translate

[00:13:07] [SPEAKER_00]: that into healthcare. If you are a mother who has five kids and says you know what

[00:13:13] [SPEAKER_00]: we're just going to get Cheerio because it's healthy, it's economical and if I go to Costco

[00:13:20] [SPEAKER_00]: I can get it at bulk for a much lower price and you guys are going to get the same nutrition

[00:13:25] [SPEAKER_00]: and if you're ready to have that conversation with your kid, you go to Costco, you don't waste

[00:13:30] [SPEAKER_00]: time looking at the shelves that's already there, pick it up and you go. That's efficiency

[00:13:35] [SPEAKER_00]: and that's what we want and that's what we want to create for the hospitals that are ready

[00:13:40] [SPEAKER_00]: to go down that value-based care path and we know it's a challenge, we know it's not easy.

[00:13:45] [SPEAKER_00]: Some hospitals still have five kids who want different things and they cater to it but again

[00:13:50] [SPEAKER_00]: that is not a sustainable healthcare model. We know that so for the future we want to make sure

[00:13:55] [SPEAKER_00]: that we have a value-based clinically vetted portfolio that's ready and available to go for

[00:14:02] [SPEAKER_00]: those hospitals that are ready to join us on our journey. Amazing Dr. Chung, that is such

[00:14:08] [SPEAKER_01]: a great way to close. I appreciate you coming to our interview here and providing such incredible

[00:14:14] [SPEAKER_01]: insights from the conference but also from the work that you do every day. What call to action

[00:14:19] [SPEAKER_01]: would you leave our viewers and listeners with and where's the best place they could get in touch

[00:14:23] [SPEAKER_00]: with you and your company to learn more? Yeah, I would just say that I know that the

[00:14:29] [SPEAKER_00]: audience was HFMA attendees or those who couldn't attend. I would say as a physician,

[00:14:37] [SPEAKER_00]: I encourage and empower financial professionals or finance professionals to

[00:14:43] [SPEAKER_00]: care about the clinical outcome and care about clinicians and that I hear a lot of finance

[00:14:51] [SPEAKER_00]: professionals say things like, well it's not up to me because it's a clinical decision,

[00:14:56] [SPEAKER_00]: I can't really tell doctors what they can and can't do. And I would challenge you to rethink

[00:15:02] [SPEAKER_00]: that. That we all have, if we collaborate and we work together, we all have expertise and

[00:15:09] [SPEAKER_00]: the lens through which we look at healthcare and ultimately I truly believe that we all want the

[00:15:15] [SPEAKER_00]: same thing, which is the highest value care for our patients. And if you're in a position to

[00:15:21] [SPEAKER_00]: make some significant change and you want to contribute to that conversation with your

[00:15:26] [SPEAKER_00]: physicians to say maybe we can find additional efficiencies if we just do this differently

[00:15:31] [SPEAKER_00]: and come up with those ideas, I would say please speak up and be involved in that discussion.

[00:15:38] [SPEAKER_00]: I'm easy to find. You can find me on LinkedIn or on our website, advantagehp.com.

[00:15:47] [SPEAKER_01]: Outstanding Dr. Chung. Thank you for that and we'll be sure to include your LinkedIn,

[00:15:53] [SPEAKER_01]: the company's website, on the show notes. And folks, that endorsement here feels,

[00:15:59] [SPEAKER_01]: it's powerful, right? Dr. Chung is challenging us to say we could do something about this,

[00:16:04] [SPEAKER_01]: think about, go with it with empathy. But it's okay to challenge if it's going to make the

[00:16:09] [SPEAKER_01]: system more sustainable and better for everyone. Dr. Chung, thanks so much for being with us.

[00:16:14] [SPEAKER_01]: This has been a really great pleasure. Thank you very much for having me.