Becker's Hospital Review

50 3 Obstacles to Managing the Non-Acute Supply Chain and 3 Ways to Overcome Them By Mackenzie Bean This content is sponsored by McKesson Medical-Surgical based on content collected and compiled by Becker's. The statements quoted in this article are separate and apart from any conclusions herein and such conclusions should not be attributed to the speakers themselves S tandalone hospitals are increasingly rare in today's healthcare landscape. Health systems must manage a much broader portfo- lio of non-acute sites than ever before, with care settings ranging from physician offices and ambulatory service centers to urgent and long-term care. While 80 to 90 percent of healthcare spend occurs in the hospital, 85 percent of patient visits happen in the non-acute space, based on 2015 data from the CDC's National Center for Health Statistics. With such a large portion of patients seeking care in non-acute settings, it's crucial for health systems to implement efficient supply chains at these sites to rein in costs and support optimal patient care. Compared to the acute space, the non-acute supply chain can be com- plicated, says Greg Colizzi, vice president of health systems market- ing with Richmond, Va.-based McKesson Medical-Surgical. While hospital settings have mature supply chains where standardization is managed through one technology platform and cost containment is well documented, this is not usually the case outside the hospital's four walls. Several factors contribute to this — the diversity of various spe- cialties, recent acquisitions, disparate operating systems and small fa- cilities spread over a broad geography all complicate non-acute supply chain management. is April, during the Becker's Hospital Review 8th Annual Meeting, more than 25 supply chain, financial, IT and clinical leaders from healthcare organizations across the country gathered in Chicago to dis- cuss the unique set of challenges associated with the non-acute supply chain and shared management strategies that have proven successful at their own organizations. Here is a recap of the leaders' discussion from the workshop session, which McKesson Medical-Surgical hosted. Challenges of the growing non-acute supply chain Leaders cited several major issues when discussing the difficulty of in- corporating non-acute care sites into their supply chains. 1. e struggle to keep up with acquisitions and consolidation Health systems continue grow more diverse. e healthcare industry saw 112 health system transactions in 2015, including mergers, acqui- sitions, joint operating companies and other models. is marked an 18 percent increase from 2014, according to a Kaufman, Hall & Asso- ciates analysis. What's worth noting is that hospital-hospital acquisitions are projected to slow in the next few years, while vertical consolidation is expected to ramp up as health systems continue to diversify by integrating phy- sician groups, urgent care centers, home health service, rehabilitation centers and other non-acute or post-acute care settings. According to consulting firm Accenture, the share of non-acute acquisitions as a portion of total provider acquisition volume increased from 64 percent in 2006-2010 to 74 percent in 2011-2014, while horizontal acquisitions decreased from 32 percent to 21 percent in the same timeframes. Accenture predicts that acquisitions of non-acute providers will reach 84 percent of the total provider acquisition volume by 2018. Several ex- ecutives noted how their own organizations have expanded non-acute services in the past few years. "We continue to purchase physician practices on a routine basis," said the senior vice president and chief public relations officer for a 21-hospital system with 450 outpatient fa- cilities. "We plan to add 1,000 physicians next year. We have about six ASCs right now and our goal is to open 30 within the next two and a half years." For health systems, expanding the non-acute network across a larger geographic footprint means a more complicated supply chain. Sever- al executives are experiencing the challenges of multi-site inventory management firsthand. "It's like wrestling an octopus," said the COO of a large academic hospital. "You think you have one tentacle down, but then something else comes up." As health systems continue to include more care settings, more physi- cians and more locations, supply chain leaders oen struggle to stan- dardize newly integrated facilities' materials management and pur- chasing systems to those of the overall health system's. "It's very difficult — sometimes my own folks don't even know who's affiliated and who's not," said the vice president of pharmacy for a large nonprofit health system. Her health system recently purchased 16 urgent care groups, and she says managing supply contracts for new affiliates is confusing for both the health systems and suppliers. In an attempt to simplify matters, the urgent care groups went to the health system's provider-based group — which manages all of its clinics — to discuss ordering, but the provider-based group isn't even in charge of supplying to them, she says. "It's like wrestling an octopus. You think you have one tentacle down, but then something else comes up." - The COO of a large academic hospital

• Cover