SKU Standardization

Armed with real-time product intelligence, today’s supply chain professionals are becoming sophisticated cost engineers capable of transforming the hospital supply chain into a strategic business asset.

For Kelli McRory, no clinical product – from table paper to electrodes – is too small to warrant meticulous cost and utilization analysis when it comes to spend management.

Ms. McRory oversees roughly $250 million in clinical supply spend at Thomas Jefferson University Hospitals in Philadelphia, where she plays an integral role in Jefferson’s clinical value analysis program at its acute care facilities. She is responsible for nearly $40 million in cost savings at Jefferson during her 10-year tenure.

Two years ago, Jefferson Health appointed Ms. McRory associate director for clinical strategic sourcing, where she took up the mantle of process reformation and spend reduction in Jefferson’s non-acute care settings. Specifically, Ms. McRory was tasked with translating Jefferson’s robust value-analysis program for its acute care facilities to its non-acute clinical supply chain.

“We always knew we had to do it. The problem was how do we do it?” she says.

Managing and standardizing non-acute clinical care spend is a uniquely difficult challenge because non-acute practices tend to be more prolific and decentralized than hospital facilities. Disparate materials management systems, geographic distance and varying clinical specialties can further obscure purchasing trends, utilization habits and process inefficiencies. This can decrease care quality and drive up operating expenses.

Due to consistent growth in the community-based healthcare market, the health system faced the additional challenge of aligning newly acquired and geographically diverse practices with Jefferson’s purchasing strategy.

Before Ms. McRory could address process inefficiencies, she needed visibility into non-acute clinical purchasing data.

Using Analytics to Drive Sourcing Strategy

In the past 10 years, data analytics has emerged as a powerful tool for hospital systems to drive process improvement in clinical and financial realms. But many healthcare organizations have yet to use analytics to inform their purchasing strategy.

Applying analytics to supply chain processes involves collecting, aggregating and storing vast amounts of purchasing data in a central warehouse. Using tools that identify, categorize and classify items, aggregated purchasing data affords supply chain administrators detailed visibility into spend and utilization habits to improve decision-making process around clinical acceptability and quality.

But collecting and making sense of spend information is no simple task. Even national health systems with sophisticated IT infrastructure often lack the human and financial capital required to develop an effective analytics program in-house. Moreover, hospitals that simply purchase and implement analytics software may not achieve the desired results without input from subject matter experts. Experienced analytics firms can provide valuable guidance, recommend clinically appropriate products and best practices and discover creative cost-savings opportunities.

“McKesson Medical-Surgical is that vendor for us,” says Ms. McRory. “They sat down and said, ‘This is how we can be different.’ They accepted our challenge to look at the data in a different way.”

“Large health systems come to us and want to know, understand and control their spend across non-acute care sites to drive efficiency and eliminate waste,” says Anne McCann, Vice President of Sales Administration at McKesson Medical-Surgical.