SPECIAL FOCUS Keep supply lines fluid

ASCs, outpatient facilities shouldn’t have to fish for hospital contracts. by Rick Dana Barlow

uch of the concentration and focus on supply chain operations in non- acute care settings centers on class- of-trade complaints, ranging from contract pricing to distribution costs to effective but efficient inventory management. Many participants in supply chain opera- tions recognize and understand (even if they don’t agree with it) the argument behind suppliers charging more for the same prod- ucts delivered to acute care facilities because they’re generally distributing product in small quantities to geographically dispersed and far-flung facilities. Economically, it makes some logical sense that it costs more to deliver a case of widgets to a remote am- bulatory surgery center 100 miles away from a prominent city than a pallet of widgets to a suburban hospital. The service simply costs more.


A number of provider organizations have fought against the pricing and cost differentials by forming integrated delivery networks (IDNs) and launching a centralized warehouse or consolidated service center, assuming the responsibility for remote de- liveries as a way to demand and cost-justify unified unit pricing regardless of location. But these types of ventures as well as sound inventory management per facility type require data that streams from materials management information systems (MMIS) or enterprise resource planning (ERP) systems on the hospital side, fortified by data analyt- ics and supply data standards. As today’s healthcare organizations adopt and adapt to a continuum-of-care mindset, coupled with population health concerns, they are migrating more patient care processes — and responsibilities — to the ASCs and outpatient facilities/departments. Consequently, these sites must have a better handle on their sup- ply chain capabilities. Clearly, hospital and IDN-based Supply Chain leaders increasingly are assuming responsibility for managing product and service flow through non-acute care facilities, as demonstrated in two separate industry surveys by Strategic Marketplace Initiative (SMI) and Healthcare Purchasing News. As part of a provider survey of supply chain across the continuum of care in 2016,

SMI learned that nearly 95 percent of supply chain executive respondents were servicing non-acute care sites in their provider systems with about 75 percent of that group having done it for at least five years and up as part of their departmental duties. Moreover, nearly half have dedicated a manager or director to oversee the non-acute care program, the survey showed.

ASCs, clinics, urgent care centers and phy-

sician offices dominated the list of sites served by Supply Chain, with about 53 percent listing on average up to 100 locations being served, but few involve direct-to-home deliv- ery post discharge, according to the survey. Nearly 84 percent indicated their non-acute care supply chain program used a common information system that allowed customers to order products and services and manage other related tasks. Meanwhile, HPN found that supply chain managers directly manage the purchasing and distribution of products and services to nearly 9 non-acute care facilities on average, according to its 2016 Supply Chain Manage- ment Compensation Survey, with nearly 37 percent overseeing outpatient surgery centers and nearly 31 percent citing clinical offices. Last year’s Supply Chain Management

Compensation Survey results showed the number of facilities remained on par, but outpatient surgery centers grew to nearly 41 percent and clinical offices nearly 32 percent. For this year’s survey, preliminary results indicate continued reach into the outpatient realm with the number of facilities holding firm for the third year at almost 9, according to the 2018 survey results, with nearly 42 percent servicing ambulatory/outpatient surgery centers. HPN also replaced “clinical offices” as a survey response selection with “physician practices” and “retail/urgent care clinics” for the first time. Nearly 25 percent of survey respondents noted that they provide supply chain services to physician practices and nearly 16 percent provided supply chain services to retail/urgent care clinics. HPN will publish complete results from the 2018 Supply Chain Management Compensation Survey in the June 2018 edition. How should ASCs and other outpatient facilities/departments pay attention to sup-


ply chain operations, specifically in the area of IT and data management? HPN reached out to a number of supply chain executives with deep ties to the non- acute care segment, asking them to list and explain some of the obvious and obscure supply chain challenges that may be unique to the non-acute or outpatient segment.


Ben Winfield, Vice President, Non-Acute and National Accounts, Intalere “If supplies are generally in the area of one-third of the overhead costs in run- ning an ASC or clinic, it would stand to reason, that supplies would be a focus

area in terms of reducing or controlling costs. But in many cases surgery centers and smaller facilities cannot be as strategic regarding supply chain because of resource constraints — that could be anything from manpower, education, training, time, etc. Just keeping up with the day-to-day func- tions, because many employees are wear- ing several hats and purchasing may be dispersed, makes it difficult to bring more strategy around that area. Many centers use their nursing staff or administrator for this duty, and many times, multiple people. This leads to no time to explore best price options, off-contract purchasing, no formu- lary and “rogue” ordering. They recognize the need and they want to be proactive, but they are too busy putting out fires to engage proactively.

“In the case of a group of facilities, or mul-

tiple sites, the issue seems to multiply. Each center does their own ordering and there is no easy way to pull data to aggregate their spend and drive savings by tier level or contracting as a service.

“Following from these points is the dif- ficulty in thinking beyond just price for products and services. Because they lack resources, data, etc., there can be a lack of understanding in cost vs. quality concerns, the value of standardization and the actual total cost of ownership.”

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