Becker's Hospital Review

43 Executive Briefing: Alternate Care Networks Sponsored by A s healthcare reform continues to spur changes in all sectors of the industry, alternate care networks are gaining in volume as well as popular- ity. In fact, joining and growing integrated provider networks and care systems is the second top strategic priority for healthcare executives over the next three years, ac- cording to a recent survey conducted by the American Hospital Association. Such alternate care networks — which result when acute-care hospitals acquire or affiliate with outpatient physician prac- tices — are expected to grow in the coming years, for two main reasons. First, outpa- tient volume growth is far outpacing that of inpatient. Sg2, a healthcare analytics firm, projects outpatient volumes will grow 17 percent in the next five years while inpatient volumes fall 3 percent. At the same time, physicians are increasingly looking to affiliate with hospitals and health systems. According to CareCloud's Practice Profitability Index report, the percentage of independent physicians looking to sell their practices rose from 21 percent in 2013 to 24 percent in 2014. At the same time, the number of physicians planning to remain in- dependent fell from 60 percent in 2013 to 53 percent in 2014, according to the report. As health systems align more closely with physician practices, many extend their processes and structures to the outpatient groups, and supply chain efforts are no ex- ception. "Today's environment is changing rapidly," says John Gaida, senior vice president of supply chain management of Arlington- basedTexas Health Resources. "Health- care reform has pushed organizations to broaden their focus from birth to end of life, causing hospitals and health systems to scramble into the non-acute space. The supply chain leadership teams need to be ready for that opportunity." While there may be challenging times ahead as health systems, physicians and alternate care sites navigate these new wa- ters, supply chain leaders can get a step ahead of the curve by learning from newly- defined best practices, meaningful partner- ships and keys to success. 1. Recognize that alternate care and acute-care are different markets. "The physician office is nothing like the acute-care market, and that's the first thing to get through your head," Mr. Gaida says. Texas Health Resources launched a physi- cian-practice supply chain management pro- gram in 2011 after quickly acquiring a hand- ful of physician practices. The goal was to remove excess costs for physicians, provide valuable services and strengthen ties to the integrated delivery network. One of Mr. Gai- da's biggest pieces of advice is to approach alternate care and acute-care supplies mar- kets differently because, at the most simple level, the two are different markets. Jim McManus, vice president of finance at Irvine, Calif.-based St. Joseph Health Sys- tem, says the alternate care market typi- cally requires a narrower range of products (although there can often be a lot of varia- tion) compared to the acute care market. Some estimate that 65% of products used in the physician class of trade are different than those used in acute settings. Addition- ally, there typically is no dedicated supply chain staff in alternate care markets, while acute-care sees materials management roles as high up as in the executive suite. As such, an integrated physician practice supply chain program has its own set of op- erational requirements and considerations, including making sure products aren't "over engineered" for the physician office. For ex- ample, if all you need is a Camry, there's no need to buy a Mercedes-Benz just because others have done so. Beyond simply products, non-acute and acute markets differ in levels of clinical and practice efficiency technology, staffing support and ser- vices. Distributors that have focused on this market for years can provide great perspective into the nuances of non-acute settings. 2. Identify a point person to serve as a liaison between physicians and the supply chain. One can look to Norfolk, Va.-based Sentara Healthcare's materials management pro- gram to understand the role and responsibil- ities of an effective point person. The system developed a physician-focused, non-acute- care materials management purchasing program for community physicians called DOCxdirect. The program includes integrat- ing a non-acute program for Sentara-owned physician practices as part of its expansion strategy and to ensure physicians had tools to improve care for their patients. The DOCx- direct program not only provides physicians with leveraging power for acquiring product, but also offers them such a point person who specialized in the non-acute-care mar- ket and could really drive the strategy. Members of DOCxdirect can purchase sup- plies and services through the program, while specialty value-analysis committees address standardization and utilization issues to help further drive down supply costs across the health system. Cindy Saeger, program man- ager for DOCxdirect, works on behalf of the community physicians to integrate them and their product requirements into the overall strategy of the materials management team of the entire healthcare system. The pur- chasing program in the alternate care site becomes a fundamental element of success for the overall integrated delivery network, not just a piece of the system tacked on at the end of strategic discussions. In addition to serving as a voice for the physicians to the rest of the healthcare system, Ms. Saeger and the team of non- acute-care experts also work directly with the physicians to continue to evaluate their needs while also encouraging them to work toward product standardization. Ms. Saeger and other DOCxdirect representa- tives are always available for physicians to consult, and physicians can determine the frequency with which they interact with the representatives, whether it be weekly or monthly visits or only when a situation arises in which they need help. What's more, such involvement and dem- onstrated commitment can lead to im- proved relationships between the physi- cians and the healthcare systems. It all stems from ensuring physicians' voices are being heard and relaying those concerns to the broader system. The New Normal: 6 Keys to Optimizing Alternate Care Supply Chain

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