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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.
A global pioneer in medical breakthroughs, Cook Medical is committed to creating effective solutions that benefit millions of patients worldwide. Today, we serve 40 medical specialties with 16,000 products. Cook is a family-owned company founded in 1963 by a visionary who put patient needs and ethical business practices first.
Premier Inc. (NASDAQ: PINC) is a leading healthcare improvement company, uniting an alliance of more than 4,400 U.S. hospitals and health systems and approximately 225,000 other providers and organizations to transform healthcare. With integrated data and analytics, collaboratives, supply chain solutions, and consulting and other services, Premier enables better care and outcomes at a lower cost.
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Henry Schein Medical is a high-touch global health solutions network, powered by people and technology. Health care practitioners rely on Henry Schein’s network of trusted advisors for the clinical, supply chain, technology, and business solutions needed to operate efficiently so that they can focus on patient care.
Cintas helps thousands of healthcare workers get Ready™ to provide care with confidence every day by offering a wide range of products and services that enhance our customer's image and help keep their facilities and employees clean, safe and looking their best. Be ready™ with the only company that helps you provide a total clean solution for your staff, patients and visitors with a cleaner and safer environment.
HealthTrust (Healthtrust Purchasing Group, L.P.) is committed to strengthening provider performance and clinical excellence through an aligned membership model and the delivery of total spend management advisory solutions that leverage our operator experience, scale and innovation. Headquartered in Nashville, Tennessee, HealthTrust serves approximately 1,500 hospitals and healthcare systems and members in more than 32,500 non-acute locations, including ambulatory surgery centers, physician practices, long-term care and alternate care sites. On Twitter @healthtrustpg
Valify is a healthcare cost management company exclusively dedicated to controlling purchased services expense. Valify’s technology platform allows healthcare organizations to quickly identify, benchmark, and manage savings in 1,200+ categories.
i-Health, Inc., makers of Culturelle® & AZO, is a global health and wellness company leveraging strong science and quality ingredients to promote microbiome health, healthy aging and women’s health.