University at Buffalo School of Management

"For a joint replacement, for example, we get a predetermined reimbursement to cover the entire episode of care, and if there are complications or re- admissions, that's all out of pocket expense for us," Khan says. "It helps the patient because it ensures coordinated, best-quality care. We also stand to gain if we're able to keep our expenses down and become known as a provider of choice for these procedures." Nationally, the Affordable Care Act has begun to take the value-centered model one step further with Accountable Care Organizations (ACO), in which doctors, hospitals and other providers manage the health of an assigned population together, based on a set budget and quality indicators. When an ACO succeeds in both outcomes and cost, the group shares the savings it reaped for the Medicare program. "As we wean ourselves off the fee-for-service model, there have been issues in implementation, but most people in the industry say the concept is strong," Zielinski says. "Right now, it's like trying to change the wheels on a racecar going 100 miles an hour. The reimbursement system is the tires, but the system is still peeling down the track." Race to arms Industry experts agree that, by some measures, the United States far outpaces its developed peers in emergency and crisis care, medical and pharmaceuti- cal research, and technological advancements. "It's amazing that you can take an individual's angiogram and, by using a 3-D printer, create their vascular system so the surgeon can practice on the exact anatomy and defect he's going to touch in the patient," Cropp says. Three-dimensional printing has undeniably im- pacted medicine for the better. But can there be too much of a good thing? On pharmaceuticals, the U.S. spends double the OECD average, and competition for the latest technology has led to a medical arms race, in which hospitals and other facilities compete to bolster their arsenals of expensive equipment. "I see a lot of waste in the health care environment," says Jurriaan de Jong, assistant professor of operations man- agement and strategy. "When I worked in manufacturing oper- ations management at Starbucks, if we invested in a new $1 million production line, we had to be sure we needed that equipment, or we needed to increase prices and that wouldn't fly. Those market forces don't apply in health care because the patient — the customer — often doesn't know the ultimate cost." Management students analyze supply chains at kaleida health During the spring semester, 10 students in the Master of Science in Supply Chains and Operations Management program worked to help optimize how Kaleida Health, Western New York's largest health care provider, serves its patients. For their integrative study course, students formed two groups and analyzed different areas of the $1.2 billion organization. One group focused on materials management processes at Buffalo General Medical Center, the other on strategic sourcing and value analysis for Kaleida Health overall. The materials management group attended a surgery at Buffalo General Medical Center and toured health care supplier Cardinal Health. They looked at how operating room supplies are prepared and identified opportunities to reduce waste. The value analysis group studied the supplies doctors use through- out Kaleida Health and developed a process flowchart for the entire organization. From the school's Operations Management and Strategy Department, Nallan Suresh, UB Distinguished Professor and chair, and Jurriaan de Jong, assistant professor, served as faculty advisors for the project. "With the rising cost of health care, reducing supply chain costs while maintaining high clinical quality is more important than ever," says De Jong. "These students are spearheading efforts to improve supply chains in a hospital environment." Kaleida Health representatives Rick Tresmond, vice president of supply chain management; Diane Artieri, director of materials management; and Janet Bezinque, director of value analysis, all worked closely with the students throughout the project. Tresmond says the project was informative and collaborative. "We hope to create an alliance between the two organizations to support the clinical sector in supply chain management strategies," he says. "I look forward to future engagements with the university." x — Kevin Manne Autumn 2016 Buffalo Business 13 De Jong From left: Hongtao Wang, Akshay Belawadi, Ying-Long Wang, Siddarth Prakash and Shaochen He.

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