Aggregating generic drug spend purchasing is often an overlooked category within many practices. Yet pharmaceutical supply chain management grows more complex with each additional distributor you use — until the extra energy you need to purchase generics no longer justifies the savings your physicians' practice receives.
Buying pharmaceuticals from multiple sources adds complexity to your supply chain. The effort it takes to purchase generics from multiple sources often surpasses the savings you receive. Consolidating purchasing makes life easier, allowing your practice to reduce operating expenses and improve your financial performance, while focusing on patient care.1
Practices nationwide are already improving outcomes and saving money by adopting new technologies and data-driven strategies as the healthcare supply chain of the future evolves.2
Your practice could benefit from taking advantage of the analytics and supply chain expertise a non-acute pharmaceutical distributor provides to physician practices through accessing their data-aggregation platform and utilizing a controlled substance ordering system (CSOS). Additionally, your practice could be more competitive if you work with a distributor that uses technology, data and market knowledge to uncover savings opportunities for generics.
Reasons to streamline your medical supply chain
Streamlining your medical supply chain eliminates problems with using multiple distributors. For example, picking one drug at a time makes your practice more vulnerable to backorders.
You might be able to get an injectable from a supplier one time but not another time, which would force you to pursue alternatives from other companies. In addition to the extra time your staff spends searching for a replacement drug, the backorder could also delay care for patients.
Easing the administrative burden
Relying on multiple distributors creates administrative challenges as well.
"Every time you add a different shipping source, it impacts the administration of your practice and takes away from the time you can see patients. You now have multiple ordering platforms, multiple invoices to pay and multiple products to put away and manage," says Ann Gapper, vice president of Rx category management at McKesson Medical-Surgical.
When you streamline your purchasing, on the other hand, you gain more efficiencies, Gapper explains. You also have fewer suppliers, shipments and invoices to manage.
Consolidating leads to greater efficiencies
Selecting a distributor that also offers medical and lab supplies can help improve efficiencies even further, according to Gapper.
Some distributors may provide a delivery driver that could help you stock medical-surgical, pharmaceutical and lab supplies without involving a physician or nurse, thereby allowing the clinician to spend more time with patients instead of taking them away from care to handle purchasing and delivery issues.
Improving financial performance
A dedicated account manager can help you save money by learning more about your practice's needs and providing you with information on readily available drugs as well as medical and lab supplies, Gapper explains. This may include the equipment you need to administer your pharmaceuticals, such as gloves, needles or syringes.
A distributor that offers small units of measure, like a box instead of a pallet, can prove particularly helpful in saving you stocking space in your office as well as reducing carrying costs of inventory.
Best practices in medical supply chain management
Creating operational efficiencies around procurement and inventory begins with establishing effective ordering habits, according to Trevor Keeler, director of pharmaceutical field sales at McKesson Medical-Surgical. Such habits include having the same person place orders every week and ordering based on historical patient volumes as well as projected care for the weeks ahead.
Here are a few specific things to keep in mind.
Understand return policies
Because terms vary by company and product, Keeler emphasizes that you should understand your distributor's return policies. Their return policy for vaccines may differ from those for specialty pharmaceuticals or branded items, for example.
Factors like expiration dates and policies for opened boxes versus unopened may also affect your ability to return a product. "Don't assume that one size fits all for return policies," Keeler says.
Technologies such as online ordering systems that recommend replacement products help as well.
"It's important not to dismiss those suggestions because there can be significant cost savings opportunities, particularly when it comes to generic pharmaceuticals," Keeler says.
Your ordering system may be able to show product availability in real time, which could help you avoid backorders. It could also alert you to backorders and suggest available substitutes.
You may also save money by leveraging data, such as supply levels associated with your patient volume, as well as product usage and any variations by practice location.
Track changes in the products you use to see the effects. "This can boost financial performance," Keeler says. "As you continue to make those changes throughout the year, you can see savings accumulate — and they could be larger than you think at the end of the year."
Building a resilient supply chain
Keeler also suggests asking your distributor for a generic conversion opportunity report that shows you the savings you have realized — as well as what you could have saved if you had purchased alternative products.
Communicate early and often
Keep in mind how seasonal fluctuations in patient activity can impact your stocking levels. If you need more of a particular medication because you have an above-average number of treatments that require it coming up, you should work with your distributor to stock enough in advance.
Similarly, if there's an outbreak of an illness that has unexpectedly depleted your supply of the appropriate medication for treating it, then you want to let your distributor know that you would need to order more than usual in your next shipment.
"Communicating with your distributor early and often is extremely important because we want to be working hand in hand with you," he says.
Stick to your formulary
Keeler recommends sticking to your formulary as closely as possible. Establish a system to review and approve formulary changes for consistency.
"It's important to be nimble and be able to make adjustments to your formulary and to have a process in place to implement those changes," Keeler recommends. "Sticking to the formulary drives a more financially healthy organization."
Formularies support contract compliance and can help reduce rogue ordering, which is often responsible for more expenses, overstock products and drug expiration.
If your distributor doesn't know what items to stock or at what levels, it could affect the product availability and pricing. This can impair your practice's financial performance and affect patient care.
"Being proactive will help prevent undesirable outcomes in the future and support better patient outcomes," Keeler says.
Though going with the lowest price on each order of generic drugs from multiple distributors may sound like the best way to save money, consolidating could prove more beneficial over time.
© 2021 McKesson Medical-Surgical Inc.