Issue link: https://beckershealthcare.uberflip.com/i/842028
51 2. Difficulty standardizing products Product variation hinders both operational and clinical efficiency by driving up inventory costs and complicating workflows for clinicians. Since quality and utilization processes differ by product, greater vari- ation creates more opportunity for human and clinical error, which threatens patient safety. Product standardization poses a challenge for supply chain leaders in the non-acute environment since physician offices and other non-acute providers are oen accustomed to specific products, or physician pref- erence items. Ninety-eight percent of C-suite leaders cite standardizing physician preference items as a major concern they expect to address in the near future, according to a Premier's Fall 2016 C-Suite Survey. "It's a struggle to get physicians who've been independently owned for 17 years to change how they think and what they do," said the COO of a small physician-owned primary care medical practice. She says the medical practice recently partnered with a health system working to reduce physician preference items. "ey've always done it their own way and don't see any reason why they should change," she says. Physician preferences are not the only impediment to standardization. Sometimes, the pure scope and scale of a health system's supply chain makes it difficult to regulate the types of products used from site to site, says the vice president of quality management at a 245-bed hospital affiliated with a 21-hospital system managing more than 550 outpatient clinics. "You're standardizing everything from time and attendance to the sup- ply chain, so it's going to take time," she says. 3. A lack of inventory visibility e healthcare industry wastes billions of dollars each year on unused or expired medical products due to lack of visibility or having too much inventory on hand, according to a 2011 PNC Healthcare, GHX study. To better illustrate how this billion-dollar figure trickles down to individual health systems, consider the numbers out of University of California, San Francisco Medical Center. ere, researchers recent- ly estimated that the academic medical center discarded $2.9 million worth of unused neurosurgical supplies in one year. at figure rep- resents the cost of wasted supplies in one department. With dozens to hundreds of sites to manage, health systems oen struggle to track the products and devices used across the entire care continuum. Poor product visibility not only makes it more difficult for clinicians to find necessary supplies, but also poses a risk to patient safety if the right product is not available at the right time. e senior vice president of hospital-based specialties at a nonprofit integrated health system says poor visibility fuels misunderstandings among the clinical care team. For instance, there is oen a disconnect between what's on the shelves and what clinicians believe is on the shelves. "I've witnessed frontline staff members who think we're ordering a product and it's stocked in their facilities, but then I talk to logistics and we don't even order it," she says. "I told the clinicians to take a picture and show it to me, if they think it really exists." The building blocks for success Most leaders agree: It's a challenge to standardize and track products across care sites. Fortunately, workshop attendees highlighted three fundamental elements for creating efficient non-acute supply chains. 1. Purchasing structure A health system's purchasing structure is not a one size fits all mech- anism. e best designed purchasing structures complement the sys- tem's operational and organizational framework. ese structures dif- fer based on the geography and needs of a health system's non-acute network. During the discussion in Chicago, leaders described the var- ious purchasing structures in place at their respective organizations. For instance, at a nonprofit integrated health system, the logistics de- partment handles purchasing for its hospitals and several hundred owned medical groups. is centralized purchasing allows the system to compare its own statistics to national benchmarks, said the health system's senior vice president of hospital-based specialties. "When looking at data for a recent item, we discovered we were able to purchase it for lower than benchmark cost," she says. "As a result, we were also able to leverage another item to get additional benefits." In contrast, a large academic health system organizes contracting based on site license. If a newly acquired facility or physician group is licensed as a provider-based site — whether outpatient or inpatient — its drugs and supplies are standardized with those of the hospital, according to the system's vice president of pharmacy. "When we license a site as a clinic office, urgent care or standalone ASC, their products are not fully standardized with our hospitals," she says. Instead, the non-acute sites leverage desired services from the health system, such as purchasing, billing or EMR capabilities. 2. SKU management e average hospital has roughly 6,000 to 8,000 stock keeping units on-site, and can carry up to 35,000 SKUs at any given time, according to an April 2010 article published in Materials Management in Health Care. ese figures are hospital-specific. When you factor in the com- plexity and number of specialties in the non-acute care network, the number of SKUs expands significantly. For every 100 physicians with- in a health system's non-acute network, there are likely 425 product stocking locations, from storage closets and patient exam rooms to the lab, with most locations oen managed by clinical resources, based on McKesson's experience. With so many stocking locations to manage, it is apparent why health systems' SKU reduction and product standard- ization work is so critically important. SKU reduction simplifies product application and accelerates workflow efficiency, which allows clinicians to spend more time with patients instead of tasks related to the supply chain. Clinicians today cannot afford to spend time looking for supplies. Poor product visibility not only makes it more difficult for clinicians to find necessary supplies, but also poses a risk to patient safety if the right product is not available at the right time.