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  • Vaccinating healthcare supply chains against market failure: The case of Civica Rx

Vaccinating healthcare supply chains against market failure: The case of Civica Rx

  • 20 Oct 2022
  • 9:00 AM - 10:30 PM (EDT)
  • Zoom Webinar
  • 114


  • European Organisation Design Forum Members
  • Organization Design Forum Members

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Vaccinating Healthcare Supplychains Against Market Failure: The Case of Civica Rx

Thursday, 20th October 9:00 am Eastern Time

Carter Dredge & Stefan Scholtes

Healthcare costs are out of control for three main reasons: an aging population, spiralling costs of innovations, and a systemic helplessness to commoditise essential healthcare products and services. This paper focuses on the latter, and specifically on healthcare supply chains that are dominated by oligopolistic suppliers and prone to market failure. A specific case in point is the generic drug industry, where supply is notoriously unreliable and price gauging is common, in extreme cases by more than a factor of 50. When prices are artificially capped, supply chains tend to concentrate even more, causing more frequent shortages. These market failures make healthcare unnecessarily expensive and reduce access to essential medicines, in particular for under-insured populations. 

In this webinar, through our paper we demonstrate, by way of a case study, how health systems that are exposed to market failures in their supply chains can collaboratively disrupt the chain by injecting a new competitor – a healthcare utility - into the chain. This new business competes with the incumbent firms but is based on an alternative production model. Instead of maximising profits for its owners, a healthcare utility has no owners and is set up to maximize savings and access for its customers - the health systems at the end of the supply chain, who provide essential services to patients in their communities. A uniquely transparent governance structure makes it easy for health systems to join a healthcare utility and enables the rapid growth necessary to make the new business a viable force in the supply chain. This new entrant forces the incumbents to compete on consumer value and stability of supply rather than on investor premiums and scarcity.  

Stefan Scholtes holds a degree in Industrial Engineering and a PhD in Economics from the University of Karlsruhe, Germany and has been a faculty member at the University of Cambridge’s Judge Business School since 1996. His research focuses on the design and management of healthcare organizations and health system and on health service innovation. He is founding director of the Cambridge Centre for Health Leadership & Enterprise, Chair of the Board of the largest primary care practice in the East of England, and founding Department Editor of the Healthcare Management department at Management Science.

Carter Dredge is the Senior Vice President & Lead Futurist of SSM Health—a large US-based integrated not-for-profit health system. Prior to becoming SSM Health’s Lead Futurist, Mr. Dredge served as Chief Transformation Officer and Chief Strategy Officer for SSM Health. He is the first American to be accepted into a specialized Business Doctorate program at the University of Cambridge in the United Kingdom specifically designed for senior executives that have built or lead major corporations, with the goal of creating new globally impactful management theories and organizations. Mr. Dredge currently serves on multiple boards, including Navitus Health Solutions, Lumicera Health Services, Civica Rx, CivicaScript, and Graphite Health, and co-leads the Healthcare Utility Initiative — an SSM Health partnership with the University of Cambridge Judge Business School.

Prior to joining SSM Health, Mr. Dredge worked as an executive at Intermountain Healthcare. Mr. Dredge holds a bachelor’s degree in business management/corporate finance from Brigham Young University and a Master of Healthcare Administration degree from Cornell University, where he also teaches a graduate-level course on alternative healthcare payment design. He has been recognized by Modern Healthcare magazine as one of the “Top 25 Innovators” in the United States and is a Fellow of the fifth class of the Aspen Institute Health Innovators Fellowship and a member of the Aspen Global Leadership Network.

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