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Growth of Non-Acute: Supply Chain Challenges

Brent Johnson | Monday, April 26, 2021

In October 2020, I had my right knee replaced. Six years prior, I had my left knee replaced. Both procedures went extremely well, and I am walking with no limp and no pain. I’m a new man…in my mind. However, in the six years between the procedures, I noticed a change. Six years ago, I spent two nights in the hospital. During this most recent experience, I spent no nights in the hospital.

Procedures and significant care are “leaving the hospital.” Pressures on cost-saving and improved patient care have driven the push for increased volumes done at alternative sites. Nonacute facilities can deliver services more efficiently and less expensively.

Consumers, who increasingly care about lower costs, improved access, and a better experience, are choosing out-of-hospital medical care. The cost of a knee replacement in an ambulatory site is 40 percent lower than in a hospital.

Non-acute or outpatient facilities are forecast to grow by eight to ten percent over the next five years while inpatient care is projected to decline by three percent over the same period.

Services that are destined to stay out of the hospitals include endoscopies, minor surgeries, childbirth, plastic surgery, and eye care. Other services that could join this group are joint replacements (like mine), spinal surgeries, and bariatric surgery. All of these services were enhanced because of recent advances in minimally invasive surgery developments and pain management.

This transition means that we need to put a new focus on supporting supply chain services on non-acute operations. In the past, supply chain services for non-acute have been on the “backburner,” but it cannot be going forward. It requires the same level of rigor as acute supply chains in hospitals. It needs more attention from provider supply chain executives as well as suppliers of non-acute products and services.

However, this is easier said than done because support needed for non-acute facilities is very different. Differences include:

 

1. Have a smaller spend

2. Frequently use different products (non-standard products are common)

3. Lack of dedicated supply chain resources (non-acute staff are burdened with the extra functions, which often leads to mismanagement)

4. Have their own supply chain requirements

5. Often use separate, specific technology

6. Distribution of non-acute products is distinct from hospitals–and more expensive

7. Suppliers charge increased prices for the same products if used by non-acute

 

It becomes difficult for traditional supply chain operations to manage a fragmented and complex non-acute supply chain.

When I was at Intermountain Healthcare, we supported 25 hospitals and 225 clinics. Because products and processes were unique, we could not support them from the same distribution center/warehouse. We built a separate warehouse that contained the products needed by the clinics. Through that warehouse, we supported their distinct needs in ordering and keeping track of the products.

Despite the challenges, it’s important to take control of your fragmented and complicated nonacute supply chain. To start, use the following steps:

 

1. Know what your non-acute spend is

2. Know who is making the decisions

3. Have a passion for improving

4. Manage your biggest suppliers

5. Simplify your processes

6. Measure your progress

 

The transition of care to non-acute facilities requires leaders to rethink the entire supply chain. The results are reduced costs and improved patient care. If you cannot allocate the resources to do it yourself, then utilize GPOs and distributors that specialize in the non-acute. But if you do nothing, you leave it up to chance and hope is not a strategy.