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An important step on the road to non-acute success is through standardization. Standardizing medical-surgical products, pharmaceuticals, lab supplies, and equipment helps health systems gain operational efficiencies, reduce costs and link product spend and usage to better clinical outcomes. Health systems need to extend the same rigor used in acute-care product standardization initiatives into the non-acute space.
A health system’s non-acute continuum can be complicated and fragmented. The larger the health system and the more specialties involved, the more overwhelming it may seem to tackle the process of standardization. Many health systems have hundreds of small micro-supply chains to manage, and enforcing compliance presents an overwhelming challenge, especially without set processes in place. McKesson can help set the supply chain standard, every step of the way.
A one-size fits all approach to standardization doesn’t cut it. Each health system has its unique business objectives and a specific way to conduct value analysis. Health systems need a partner that specializes in non-acute which can be a strategic asset in assisting with standardization.
“At McKesson, we start by looking at the customer’s historical spend at each facility to identify those key, optimal target items that are ordered most regularly,” states Bethann Maynard, Director of Customer Management at McKesson. “We consider each customer’s preferences and performance objectives to help them to develop a customized formulary, which is the foundation of standardization. This will drive efficiencies and save money across the organization over time.”
McKesson follows these steps for success:
A McKesson specialist conducts a detailed intake process with each health system client to understand the system’s objectives, communication modes, key initiatives, and best practices. Once this is determined, “we can offer a suggested formulary, customized to that health system, based on their ability to manage one-offs, changes, or periodic specialty orders, and help them manage exceptions as needed,” Maynard explains. “We don’t want to lock any [important supply orders] out, so we provide approval rules, an auto-sub option, and reporting on behaviors to develop a menu of options to help the customer manage formulary in their unique system, based on their own particular requirements, idiosyncrasies, and special needs.” The specialist also assists the health system in project management. Reports are provided regularly to ensure continued project alignment and that business goals are still being met.
Health systems should create and enforce rules management for formulary adherence across all non-acute settings. This ensures that all supply orders are fulfilled, as needed and in compliance within the framework of the formulary. For new products clinicians want to add to the formulary, McKesson offers approval rules that routes the request via email for order approval to the central procurement authority.
Health systems should create and enforce rules management for formulary adherence across all non-acute settings. This ensures that all supply orders are fulfilled, as needed and in compliance within the framework of the formulary.
Maynard adds that her team examines each customer’s inventory locations and storeroom capacity to identify deadstock and expired products. Specialists can also work with manufacturers to obtain longer dating. The Specialists review opportunities to maximize space requirements, such as looking for products that can be delivered in lower units of measure and providing sequestration opportunities for lot sensitive products.
Maynard and her team have helped various specialties within health systems: urgent care facilities see improved inventory management. Post-acute care experience an increase in formulary compliance. Large physician groups get a handle on managing physician preference items. Ambulatory surgery centers see reduction in surgical waste.
In addition to operational efficiencies, supply chain standardization optimizes the clinical infrastructure of the entire health system.
“When you have the same consistent product always being used across all care settings, the product is more likely to be used appropriately. This leads to better outcomes, healthier patients, and decreased readmissions,” says Maynard.
McKesson has a unique way of tackling the challenge of standardization as it relates to clinical outcomes, she adds. “We utilize our technology to provide the visibility across the entire network of non-acute care settings to obtain accurate and timely purchasing data. We then analyze that data to give suggestions back to the health system. We work collectively and collaboratively with the health system to identify the right products based on the specific objectives, needs of that care setting, and preferences of the system,” Maynard adds. Health systems can also examine their product usage to eliminate unjustified variations in product.
Standardization impacts a system’s financial performance directly and indirectly, in several ways. Standardizing supply chain operations facilitates GPO contract compliance, and optimizes manufacturers’ agreements and contracts, allowing better penetration and maximization of contract tiers with the GPO.
McKesson acts as an advocate for a health system by leveraging all relationships to the client’s financial advantage. As a distributor, McKesson can consult with all parties, and work collectively with the manufacturers and suppliers, and the customer’s GPO. “We are somewhat in the middle of all the relationships and can act as a touch point for all parties involved in the healthcare supply chain,” Maynard says. “McKesson serves as an advocate for our client, working with all parties to optimize relationships and leverage the ‘sweet spot’ target items to get consistent, uniform costs for the client on all items.” Leveraging the high-volume items helps manage one-offs. Additionally, standardization helps to reduce SKUs so that facility managers don’t have to spend time dealing with so many different items.
As the health system continues to acquire new locations, it’s important to immediately integrate these new locations into the standardize efforts. “When a new practice or facility is added to a health system’s supply chain, we first provide visibility into the facility’s spend,” Maynard says. She adds that McKesson will review what items the facility already has in their portfolio and help evaluate its spend against standardization effort and established formularies. McKesson then utilizes the facility’s historical usage data to maximize GPO compliance, maximize all contracts and tiers, eliminate products that are not aligned, and achieve uniform costs across all specialties and settings.
In the next chapter of Building Your Roadmap, learn how improving clinical infrastructure in post-acute care impacts your health systems financial performance.
1: Savings estimate based upon average results from McKesson standardization efforts of healthcare facilities.