Jeff Lawrence, Vice President, Business Development, Inventory Optimization Solutions (IOS)

“Many ASCs share the persistent supply chain challenges of disconnected systems, process gaps, high- ly manual tasks, and dis- parate data sets. For these organizations in particular, too much paper and too many manual processes make it very difficult for managers to perform even foun- dational tasks well. For example, it’s hard to know if they’re getting the best price on purchased products. Limited reporting and analytic capabilities make it difficult to run their multi-facility business efficiently. And often, using paper-based processes means there’s no way to run an integrated supply chain throughout the continuum of care.”

John Cunningham, D.Sc., Chief Client Officer, Lumere “Data ordering/manage- ment systems: Supply Chain needs meaningful system-level insights to make the best purchas-

ing decisions. However, when disparate software systems aren’t integrated across facilities, collecting and aggregating the right data can be extremely difficult. A lot of ASCs use multiple methods outside of the materials management information system (MMIS) — when one exists — to acquire products. For example, they may call in for overnight delivery or same-day trunk stock from sales reps. This can lead to unnecessary shipping and freight costs as well as higher, off-contract pricing. I’ve seen many outpa- tient facilities that track products ordered over the phone and using a pen and legal pad. Clearly, that kind of analogue tracking is a roadblock to effectively analyzing order history and product need.

“Inconsistent or nonexistent item masters/ formularies: As we see healthcare systems increasingly shift toward value-based care, widespread, unwarranted clinical care varia- tion makes it impossible to effectively control costs and provide consistent care. However, without the right focused initiatives, sustain- able product standardization can be difficult to achieve, regardless of location. Outpatient facilities often don’t have visibility into what products are on contract and or on formulary. This inevitably leads to greater variation, especially when physicians are accustomed to having access to a range of products from multiple vendors. “Inventory management: In some inven- tory processes, outpatient facilities have to wait longer to receive supplies. This can lead to ‘just-in-case’ ordering and stock-

ing — meaning that clinicians will order products whether the need currently exists or not, unintentionally causing excess or duplicate inventory. Because supplies are usually housed in multiple locations and infrequently audited, you end up with a large carried expense and the potential for expired stock.”

Michael DeLuca, Executive Vice President, Operations, Prodigo Solutions Inc. “Large IDNs — with some exceptions — that have huge non-acute care business units are using visualization

technologies like Tableau or Business Intel- ligence solutions like IBM Cognos to report out. But what are these providers doing with the data? How are they effectuating change in their organizations? I still believe that some basic blocking and tackling is missing in the healthcare supply chain. Average contract utilization is still 57 percent, and only a hand- ful of IDNs are using demand planning and thinking about forecasting demand to lower the cost curve, and an average of 30 percent of spend is not tied to a purchase order. These are the basics and represent the first inefficien- cies and cost savings initiatives that should be used from the data being gathered. And these basics should absolutely apply to the non-acute continuum. Non-acute care opera- tions should not be immune from the same contract compliance, procure-to-pay efficien- cies, and cost savings goals as their acute care counterparts.”

Scott Jackson, General Manager, Healthcare Services, Henry Schein Inc. “Twenty-five percent to 30 percent of an ASC’s budget is consumed by supplies. This compares to just 10 percent to 15 percent in the hospital setting, and 3 percent to 5 percent in a clinic setting. An ASC’s over- all financial performance is significantly impacted by how well they manage their supply chain.”

Obscure Winfield: “Something we are hearing more often from members is lack of systems’ in- teroperability. Those who are maybe ahead of the curve and have initiated some sort of automation or technology solution are find- ing, in some cases, that systems are not able to communicate with each other, causing new challenges they had not anticipated. So in automating and hoping to take steps forward in becoming more strategic about supply chain, they have actually been faced with new challenges.” Lawrence: “Many of the Supply Chain managers I talk with will say their supply


chain processes aren’t particularly good. But the hard part is defining what ‘good’ — or especially best-in-class — might look like. Among ASCs, there aren’t easy ways to obtain and share best practices. In my role, I work across many organizations, and have found I can offer industry perspective to help determine specific supply chain objec- tives, then compare those to best practices. Once an organization has objectives clearly defined, a roadmap can be developed, and the work to improve supply chain efficien- cies by implementing new technology and business processes can begin. “The key to ensuring success is getting

executive support as objectives are defined, systems are evaluated, and finally, new technology is selected. Through executive leadership, effective communication to the entire organization can take place, letting team members know of the strategic deci- sion to more effectively manage supply chain. In many organizations, it helps to leverage leadership to present the value to the organization, the value to the indi- vidual, and to reinforce the need for regular reviews for compliance and success. Having top-to-bottom organization alignment of this key initiative drives toward a stronger supply chain. Cunningham: “To optimally drive effi- ciency and manage variation, Supply Chain must have focused conversations with phy- sicians that are driven by patient outcomes, not cost. Historically, physicians and Sup- ply Chain have at times struggled to align on these issues, and Supply Chain is often hesitant to leverage the work they are doing with acute care clinicians to make positive changes in the ASC space. Overcoming this mindset can be a huge cultural shift. “Depending on the size of a system’s outpatient facility presence, supply spend and utilization data can have a significant impact on system-wide decisions. However, outpatient facilities typically are not stake- holders in the strategic sourcing process and aren’t involved in decision-making. Additionally, the data that they use when considering product contracting or con- version are often incomplete, resulting in unmet needs. “Freight and shipping costs often only appear on invoices and are notoriously difficult to manage and mitigate when data are lacking or inaccessible. For ASCs receiving high-dollar implants and devices, these costs add up quickly. Supply Chain regularly addresses these costs in the acute setting; however, outpatient facilities fre- quently have products arriving via multiple avenues, which means that Supply Chain must ensure no fees are paid that unless they were previously negotiated.”

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