Becker's Hospital Review

Executive Briefing: Managing the Non-Acute Care Supply Chain 43 Sponsored by: As Hospitals Rapidly Expand Into Ambulatory Care Sites, How Can They Better Manage Supply Chain? By Molly Gamble A s hospitals, health networks and health systems continue to extend their reach into alternate sites of care, including physician practices, the supply chain grows in complexity. Supply spend increases as more practitioners align with the organization. Physician practices are geographically dispersed and significantly outnumber the number of hospitals. Clinics and offices have a limited capacity for storing and organizing inventory, and the professional buyer does not exist as it does in the health systems' corporate headquarters. Instead, office staff often play multiple roles, with one of those roles including the management of supplies. Practices also have limited technology resources and tools to manage, track and organize supplies, which can result in a lack of transparency throughout the supply chain. While hospitals, health networks and health systems grow through the addition of physician practices, there are not necessarily more resources to manage this larger book of business and a more complex supply chain, says Bill Barr, vice president of healthcare services at Henry Schein Medical, a distributor of medical supplies, pharmaceuticals and equipment. Physician practices typically do not have professional buying staff, which can present challenges during integration and for coordinating supply purchases across a system. Thus, many hospitals, health networks and health systems are in need of a partner to better manage supply chain variability. Managing noise and variability Some variability is inherent — depending on physicians' specialty and preference — but it can drive significant cost increases throughout the system if not properly managed. Supply chain has implications for providers' quality, as well. As hospital systems move patients and procedures from the acute-care setting to physician practices, it's critical for supply chain processes to be as efficient and seamless as possible. "A rapidly growing physician practice business can create a lot of noise for supply chain leaders if things aren't efficiently handled," says Chris Verhulst, general manager of healthcare services with Henry Schein Medical. "As supply chain leaders inherit project responsibility assigned by the C-suite, they don't have the luxury to hire additional support personnel," says Mr. Verhulst. "Collaborating with distribution partners who have access into non-hospital settings can be part of the solution." There are three critical tasks every supply chain executive should be aware of as they look to standardize and drive contract compliance to reduce variability in supply chain: rostering, letters of commitment and price activation. Rostering means ensuring every site is appropriately documented for enrollment into its group purchasing organization so each site can access manufacturer GPO contracts. For letters of commitment, every site must sign paperwork to ensure access to contract tier levels to receive pricing negotiated by the health system. When it comes to price activation, not having prices activated on a site-by-site level can significantly impact savings in the supply chain. When contracting for individual practices within a health system, the distributor must get authorization from manufacturers for each and every site of care on behalf of the health system customer. While this sounds basic, "contracting teams look at it as herding cats," says Mr. Verhulst. "There are so many moving parts between practices, contracts and enrollment." Health systems that are proactive in collaborating with distribution partners can avoid or minimize much confusion as physician practices are onboarded. This can result in greater savings capture, improved physician satisfaction and an aligned relationship between the GPO, manufacturer, distributor and health system. "Ensure critical parties are aligned. The supply chain leader, the GPO and the distributor should be in one conversation. This ensures people are on the same page and action items are delegated to the appropriate party," says Mr. Barr. South Nassau Communities Hospital's strategy to enhance supply chain for community-based practices South Nassau Communities Hospital in Oceanside, N.Y., a 435bed acute-care facility, has been a part of the South Shore Communities of Long Island since 1929. In January 2012, South Nassau Communities Hospital collaborated with its medical staff to launch a physician hospital organization. Now called the South Nassau Physician Hospital Organization, the PHO is comprised of 160 participating physician members canvassing private practices in three counties of Long Island. Utilizing the hospital's relationship with a GPO, the Greater New York Hospital Association, the PHO was afforded with the ability to tap into a large healthcare association. As participating mem-

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