As the emphasis on post-acute care increases, how does the supply chain keep pace?
If you work for a hospital or healthcare system, you’ve likely witnessed the addition of a physician practice or group of practices at some point over the past few years. These types of acquisitions and alignments boomed in the early and mid-teens, much in response to changes in the market after the Affordable Care Act was signed into law in 2010. In fact, the law was designed to favor integration, with the belief that consolidation in healthcare would lead to decreased spending. According to U.S. News & World Report, only one in three doctors was projected to remain independent by the end of 20161, and the Healthcare Financial Management Association (HFMA) reported that the number of physicians vertically consolidated with hospitals increased from 95,612 in 2007 to 181,787 in 20132.
How does the supply chain change and adjust to these changes? Acquisitions of physician practices and other types of outpatient treatment centers can be tricky to integrate into an existing supply chain & distribution system for several reasons.
The first challenge: Expanded service area
Adding new facilities to an existing system often increases your geographical footprint. The more dispersed your facilities are, the more challenging it may be to get equipment and supplies where they need be and when they are needed. When you increase your service area through acquisitions, how do you extend discounted pricing, achieved through bulk purchases, to these new facilities? There are several options to consider:
- Do you use your own warehouse(s)? Does your current facility have the capability to service additional providers?
- A centralized supply center will allow all facilities to benefit from high volume bulk discounts, lower transportation and inventory management costs, organized transactions, and improved vendor relationships.
- Does self-distribution make sense? Most medium-sized systems do not opt to self-distribute because it does not make sense financially due to warehouse lease costs, fuel costs, and additional costs along with geographical challenges.
- Finally, do you outsource distribution? If so, your choice of medical distributor is vital – distributors have to respond to changing ownership patterns, meet the new needs of their customers, and expand their own reach to service post-acute markets.
Healthcare organizations also face pressure and financial penalties in relation to hospital readmissions. As a result, post-acute care providers are often viewed as a valuable new asset for many reasons, including patient experience, regulatory goals and requirements, and reimbursement. Readmission penalties have increased the need for appropriate care and patient compliance after discharge.
Beyond the hospital doors
For some supply chain executives, the addition of post-acute care facilities means an extension of their responsibilities. For example, when a hospital acquires three physician practices, the supply chain managers duties are no longer restricted to the hospital walls. The supply chain has grown and they are now responsible for stocking and tracking products at multiple points of use.
To meet the needs of all facilities, accurate data is a must. Luckily, technology is on your side. To ease medical inventory management challenges, cloud-based computing integrates inpatient and outpatient purchasing data and makes it available anytime, anywhere. And if you don’t already support a mobile environment, you’re overlooking an indispensable resource for both providers of care and supply chain management. The combination of cloud-based computing and tablets, phones, or lightweight laptops will allow you to know, in real time, which of your facilities is low on suture supplies.
Consistency & collaboration
When hospitals and health systems grow, the supply chain must grow and mature along with it. Ask the tough questions before growth surpasses your capabilities. Consistency across the continuum of care is vital to meet provider needs, patient needs, and your bottom line. Finally, include post-acute care providers along with acute care providers in a collaborative process that keeps communication open.