DeLuca: “The distribution network typically used by IDNs to service their non- acute care operations drives toward a low- volume distribution provider. The network is typically not served by a Consolidated Service Center. However, the control and compliance goals are the same. Providers must use the same rigor around formulary management with their non-acute business as they use with their acute care business. This ensures committed volume to their distributor of choice (e.g., Amazon, McKes- son, Seneca, etc.). However, a challenge does present itself in the non-acute care arena — switching costs — which are often times as low as a new distributor walking in the front door and asking, ‘What are your top 15 items by volume? I’ll lower the price by X percent, and you can buy directly off my eCommerce site.’ The progressive [Supply Chain leader] understands this challenge,

and uses the economies of scale provided by their ERP system and online marketplace to thwart it and add control and compli- ance. The footprint of items in a physician’s office should look the same in office 1 as it does in office 400. Drive formulary control across the non-acute care setting to achieve further savings.” Jackson: “ASC staff members are not

trained on how to effectively manage a large and complex supply chain. Hospitals have Materials Management departments, staffed by trained Materials Managers. An ASC likely has a nurse who has been given the responsibility to manage supplies, but was trained to be a nurse, not a materials manager.

“ASCs also may have limited use and or adoption of available supply chain tech- nology. Effective supply chain technology platforms are available for ASCs, yet there

has been a limited rate of adoption by ASCs to either fully utilize their existing operating system supply chain functionality, and/or utilize existing bolt-on materials manage- ment systems, which can interface with their current operating systems. Adoption rates are low due to the perception that the extra technology costs do not outweigh the benefits, or just lack awareness that they are available

“ASCs transact with multiple layers of vendors, which creates challenges related to effective price management, [purchase order] management and invoice recon- ciliation. This is exacerbated by limited adoption of supply chain technology. ASCs also tend to have very limited stocking and storage space, which creates a demand for just-in-time inventory replenishment, which leads to stockouts and expedited shipping rates.” HPN

Tips, tools for managing ambulatory/outpatient facility supply chain

Healthcare Purchasing News asked supply chain executives working in the ambulatory/outpatient arena for overt and covert ways to help an ASC or outpatient facility/department improve its supply chain operations. They shared more than 40.


Ben Winfield, Intalere Most simply, software, through even a basic materials management information system, can provide bench- marks and goals for organizations to use to reduce extreme variability in pricing in both commodities and implants. Data derived from a materials management information system (MMIS) can also assist in: • Aggregation — Systems can collect the proper data to aggregate spend across multiple facilities. Today, many work in silos and aren’t leveraging their buying power.

• Tier Optimization — An IT platform provides the data to assist facilities in optimizing tiers and adjusting spending to achieve the higher, more cost-effective tier levels.

• Purchase Orders — Today, many organizations have multiple POs from possibly hundreds of vendors at each site. With an IT platform, facilities can assure POs are pulled in one system and paid more efficiently and correctly.

• Formulary Purchasing — Many facilities do not have a purchasing manager, therefore, there are many people ordering. With an IT platform, a formulary can be built and pre-approved to ensure purchases are contract-driven. This can also minimize off-contract or rogue spending.

• Contract Compliance Purchasing — An IT platform will help drive contract compliance, which will lead to better vendor relationships and offer better negotia- tion leverage with those vendors.

• Comparable Items — An MMIS system can also provide alternatives, clinically equivalent comparables that can possibly be purchased at a better price. This will drive better purchasing decisions and savings.

• Paying the right price — Just because you placed an order for an item at a given price does not mean you will be invoiced for that price. MMIS can ensure

a 3-way match so that you realize the savings you are projecting on the front end.

Jeff Lawrence, Inventory Optimization Solutions (IOS) • Order preparation — I’ll go out on a limb and say we agree pen, paper and Post-its might not be the best method for capturing products that need to be reordered. Bar-code scanners that easily capture barcode labels on all needed products from all vendors can save a tremendous amount of time.

• Order approval — Getting purchase order (PO) ap- proval before submitting to suppliers is critical to sav- ing money, and while conceptually this makes sense, it doesn’t always get prioritized. Shifting approval to the front end of the purchasing process can drive sig- nificant reductions in orders for products that aren’t needed. Example: An approver may know there’s more product in the nurses’ closet or that a sister facility is overstocked a particular item. People often believe they don’t need to approve orders before they’re submitted — that approving an invoice is doing the same thing, but that can cause an organization to purchase products that aren’t needed, so always shift approvals to the front end of the purchasing process.

• Order submission — We need to streamline order submission, so supply chain personnel aren’t logging into multiple websites, standing by fax machines or waiting on hold with customer service. Technology that places orders via electronic data interchange (EDI), email or autofax is a huge time saver.

• Two-way vendor communication — By leveraging EDI technology, users can establish a pipe from their system to their supplier network that exchanges in- formation both directions. Send out a PO and receive back an electronic order acknowledgement, know when that product has been put on the truck and is on its way, and get an electronic invoice.


• Mobile apps — 92 percent of Americans have smart- phones, and constantly have their device in their hand — even at work. With this, business apps on mobile devices are game changers. New supply chain apps can help by supporting the user wherever they are. Users can submit orders electronically from an app that in turn, an approver can approve and instantly submit. Mobile apps can help users complete an ac- curate ordering process easily and seamlessly.

• Tracking costs for better business management — I recently spoke with a large surgical department director who used two numbers to manage his business: Total revenue and total cost. We have to run our businesses with numbers. As we push more patient interactions outside of the hospital, we need to capture information to know costs by location, depart- ment, specialty, physician, patient, case, etc. Today, technology can help managers at ASCs manage their business plans against real numbers, performing tasks like tracking the movement of inventory across the entire non-acute network.

• Product formulary — One of the biggest challenges for multi-location organizations is defining a list of best practice/contracted products and enforce purchase compliance across multiple locations. Users can work with a GPO to define products that can be standard- ized and make sure contracts are activated. A GPO can help work with the suppliers to make sure contracts are activated and the ASC is receiving contracted prices. Then items can be loaded into the procurement system so all locations and departments are buying off the same list of contracted products. It’s key that the procurement system includes all vendors and all products, and makes the shopping experience easy for all locations.

• Cloud based solutions — Selecting cloud-based technology delivers real advantages to a multi-facility ASC organization. Being able to implement a system — especially one that’s customized per facility, but

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