Why consistency is crucial for your health system's supply chain
How would you characterize your health system’s supply chain performance? Is it consistent? Is it reliable? Your caregivers and your patients are depending on you to meet those two requirements.
Jon Pildis, vice president of materials management for McKesson Medical-Surgical, explains how to keep your supply chain consistent despite the challenges of new market entrants and medical innovations.
What are some operational challenges that health systems are having with their supply chain?
Pildis: The big one is product standardization. Your health system is in a growth mode. You’re adding hospitals, ambulatory surgery centers, physician practices, urgent-care centers, retail clinics and home care. When you do that, you’re adding sites of care that probably aren’t using the same medical supplies and equipment as you. And you’re probably not ordering all of your medical supplies and equipment the same way. With the right supply chain partner, you can start tracking all that and identify opportunities to standardize products and product ordering across all your care delivery sites.
What other operational challenges do health systems face in supply chain management?
Pildis: Well, related to that growth is the care sites themselves. There are so many care environments now that use medical supplies and equipment but don’t have supply chain personnel at those sites. The non-acute continuum of care just keeps getting bigger, and not just geographically. Your challenge as a health system is how to get the right products to the right places in the right quantity at the right time. That’s why your health system needs a customized supply chain that extends into each and every corner of your operation that provides care to patients.
How have new market entrants influenced how health systems think about their supply chain?
Pildis: It’s definitely something I hear about when I talk to a lot of health system supply chain leaders. It’s exciting to think that you could order a box of surgical gloves over a voice assistant and have it delivered in two hours. But the excitement doesn’t always match the reality of what you need. And what you need is consistency. You want consistency of price, right? You don’t want the price changing all the time, and you don’t have the time to comparison shop for the best price every time you need something. You also want consistent availability. You never want the things that your patients need to be unavailable or out of stock.
What about delivery time from new market entrants? What do health systems say about that?
Pildis: A lot of people that we talk to think that if you can get books the same or next day, you can get medical supplies the same or next day. There certainly are items that you can get the same or next day. But, those are general items for general use. When you dig deeper, you realize that your health system uses a lot of obscure items. One-time items. And our industry has a lot of obscure products that patients need. Getting that item from a new market entrant may take a week, two weeks or even three weeks. That just doesn’t work in healthcare. You need what you need in two days or less. Those are just table stakes for the healthcare supply chain.
What about the security of the supply chain? Should health systems be concerned about safety?
Pildis: That’s always a challenge no matter who you buy from. You should know where your items are coming from. If you buy from a legacy distributor, you’re buying the original products from the original manufacturers who sell directly to the distributor. If you buy from a new market entrant, that line may not be so straight. The sellers may not be authorized distributors for the product. You don’t know where they got the product from. You don’t know who shipped and stored that product. If we’re talking about cold storage of drugs, that can be a real issue from a patient safety standpoint. You need to ask those questions of any of your supply chain partners.
Security is a hallmark of effective supply chain management. So is standardization. Yet new products come into the market all the time. How can a health system access those items with its supply chain?
Pildis: There is a lot of innovation happening right now. A lot of those vendors and suppliers are trying to sell into your health system. That’s a good problem to have, and your supply chain needs to be flexible enough to accommodate new things that can help you deliver the best care to patients. But, at the same time, you can’t be flexible in the quality and cost criteria that you use to determine whether you should buy an item or not. At most of the health systems we work with, a new product needs to run through quite a gauntlet to get on to the menu of things you can buy. Supply chain leaders are under a lot of pressure. But they are the gatekeepers who can look at these innovations objectively and decide in consultation with clinicians whether to adopt them or not.
Beyond the innovations, what other supply chain trends should health systems stay on top of?
Pildis: One of the big things we’re seeing is the spillover effects of the Drug Supply Chain Security Act. The DSCSA created all kinds of track and trace requirements for prescription drugs. The DSCSA requires every unit dose of a drug to have a unique identifier that regulators can track and trace at any point along the drug supply chain from manufacturer to distributor to prescriber to pharmacy to patient. Eventually I think the same expectation is coming to medical supplies, equipment and devices. The supply chain leaders at your health system will need the technology and the information systems to know where every medical supply, piece of equipment or device came from, how your staff used it, who used it and where it went.
What do you like most working with health systems on their supply chain management issues?
Pildis: I like working with challenges. Some of the biggest challenges are natural disasters like hurricanes or floods. They seem to be getting more frequent, and they always seem to happen over a weekend. We do whatever it takes to get you and your patients the supplies you need no matter the situation. We’ve chartered planes. We’ve had helicopters land at our distribution centers. We have people driving trucks to your sites whose own homes are at risk. We’ve developed a competency around disaster preparedness. My job satisfaction comes from knowing that we came through for your patients.