Your health system has dozens if not hundreds of non-acute care sites that order, store and use medical supplies and equipment. How you manage those supply chain processes can have a direct impact on the care your system provides to patients, according to Scott McDade, general manager of health systems for McKesson Medical-Surgical.
In this edition of Industry Insights, we asked McDade how your health system can improve its non-acute care supply chain management performance. This can result in lower costs, greater revenue and, most importantly, better patient care.
What are you responsible for in your role at McKesson?
McDade: I work with a group of highly skilled individuals focused on the non-acute care operations for hundreds of health systems. We work to build relationships with the executives of those health systems to improve their non-acute care supply chain management performance. That’s what we talk about at our quarterly business review meetings with our customers.
What health system supply chain challenges come up at those meetings?
McDade: There are a number of common things that come up. One is trying to get a handle on all the diverse non-acute care stocking locations within a large system that can affect the supply chain. When you add up all the non-acute care sites associated with a large system – such as closets, exam rooms, nurse trunks and patient homes – the number gets large pretty quickly. Another common topic is keeping clinicians, especially nurses, focused on clinical activities rather than supply chain activities. A third is using data and analytics to improve supply chain performance. And a fourth is looking for financial or operational efficiencies that can reduce the overall cost of care at health systems.
Why are some nurses spending too much of their time managing supplies?
McDade: In non-acute care settings, there isn’t a supply chain executive or even a supply chain person on site. So nurses end up filling that role. They do the ordering. They open the boxes. They put things on shelves and in drawers. Does your health system want nurses managing supplies instead of seeing patients? A better approach is having a supply chain person from the system perform those tasks, or outsourcing those tasks to a third party. What we’re trying to do is take the clinician out of the supply chain. That’s better for your system. That’s better for your nurses. More importantly, that’s better for your patients.
You mentioned supply chain analytics as a topic of conversation. Can you explain further?
McDade: What we’re talking about is predictive ordering. It’s using data to determine what common items your non-acute care site is ordering on a regular basis, let’s say 85 percent of the time. Then you can set up a formulary, standardize those products and order them automatically. As a result, you’re manually ordering just 15 percent of what you need, rather than 100 percent. That’s far more efficient. You’re also using technology to make the supply chain tasks more simple and efficient. You’re using technology to scan products, manage inventory and place orders.
What other insights can supply chain analytics offer a health system?
McDade: The data can tell you a lot of things. It can tell you the past, and it can tell you what you should do in the future. In terms of the past, the data can show your system patterns in the way your non-acute care sites are using medical supplies and equipment. It can spot patterns of non-compliance with your formulary or your purchasing contracts. Both can add to your supply chain costs. In terms of the future, the data can show your system how to improve its supply chain performance. That could be reducing product variability by increasing product standardization. That could be reducing the number of vendors that you buy all your products from. The data really provides a roadmap to supply chain success.
You also mentioned the number of non-acute care sites within a large health system as a challenge. How does that affect supply chain performance?
McDade: Most supply chain executives at health systems spend the majority of their time on acute care. They can tell you how many hospitals they have and how many beds each hospital has. But they can’t tell you how many non-acute care sites they have. Even the most sophisticated systems that we work with uncover new facilities that they own all the time. And it’s getting worse with all the health system consolidation taking place. That drives supply variability, and variability is what drives up supply chain costs. Everybody is ordering different supplies, and everyone is ordering them differently. That’s why it’s important for a health system to get everyone on a common ordering platform that’s designed to meet the needs of non-acute care settings. The platform captures the data you need to improve.
Better health system supply chains can reduce costs. Can they increase revenue?
McDade: Yes, they can. By improving patient care. When your health system standardizes products and how you order those products, you’re doing a couple of things. First, you’re reducing the variability that goes into how you deliver care. You’re spending less time training clinicians on different items, and your staff becomes more proficient at using the products in your formulary. Second, you’re reducing the amount of time your clinicians spend on administrative supply chain tasks. That gives them more time to spend on direct care. If you do that system-wide in all your non-acute care settings, your quality and safety performance measures improve. Your reimbursement under value-based care contracts also improves.
Is there a more direct way that supply chain management can drive health system revenue?
McDade: Yes, there’s a more direct line between supply chain and revenue in non-acute care settings. Many of these sites in a health system don’t have in-office lab testing. Others don’t offer vaccines. Your system can use its supply chain to expand point-of-care services at these sites and create new revenue opportunities. More importantly, it makes care more convenient for your patients which can improve patient satisfaction scores.
Are there supply chain trends that health systems should stay on top of?
McDade: I mentioned convenience, and that’s really part of an important trend that health systems should be on top of in terms of supply chain management. The trend is consumerism. Patients aren’t entering your health system just through the front doors of your hospitals. They’re coming in through your ambulatory surgery center. They’re coming in through your urgent care center. They’re coming in through your outpatient pharmacy. They’re picking the door they’ll go through when and where it’s most convenient for them. That means your supply chain needs to be where your patients are, not just at the loading dock of your hospital.