Skip to main content

Centralized purchasing & ordering flu: Creating efficiencies

If you have supply chain responsibility for physicians’ practices, you need to start thinking flu, right now. Flu season is here, and the Centers for Disease Control and Prevention’s early reports indicate that in the 2016-2017 season, the doctor’s office was the most common place of vaccination among children (65 percent) and adults (37 percent). Expect more of the same this year.

Stephanie Hunt, director of materials management for Lake Health, located about 25 miles east of Cleveland, Ohio, knows all about the supply needs – including flu vaccine – of non-acute-care sites. The IDN services two acute-care medical centers, 35 non-acute-care physician offices, and several rehabilitation facilities, as well as urgent care facilities and walk-in centers.

About a year and a half ago, Hunt met with a small internal group to discuss centralizing purchasing of medical-surgical supplies and pharmaceuticals for Lake Health’s non-acute sites. “The [outlying clinic] offices had been purchasing independently, and their purchase history and volume was an unknown,” she says.

“Materials Management had been testing the option of using our e-requisitioning platform with the capability to ‘punch out’ to a vendor’s website, order items and pull them back onto our internal requisition. In this instance, McKesson Medical-Surgical had that capability with our supply chain software platform, and would be able to deliver on the criteria needed to make this successful.”

“That partnership would include other efficiencies, with desktop delivery and automation of receipts and invoices,” she continues. “This would create real-time expenses in our financial system and produce timely monthly budget expense reports.”

Lake Health was already familiar with McKesson, as the acute care hospitals were purchasing from McKesson Pharmaceutical, and many of the physician offices had been buying independently from McKesson Medical-Surgical prior to their acquisition by the health system.

“The decision was made to trial centralized purchasing for our pediatric group in May 2016,” explains Hunt. There was initial training on the ordering system and building of order templates, and the ‘punch-out’ feature was utilized. During the trial period, frequently ordered items were added to the supply chain’s software item master and subsequently, the offices’ order templates. “This made it easy to load and manage contract pricing.”

“It was a change for them,” she explains, referring to the physician offices’ staffs. For example, orders now had to travel an approval path through Lake Health’s purchasing department. “We didn’t want delivery to the group delayed by a day or two.”

But the trial went well. So well, in fact, Hunt received phone calls from other practices asking supply chain to include them in the new McKesson Medical-Surgical ordering system.

“We didn’t take away any of the offices’ functionality for ordering items, nor did we worry about trying to standardize,” she says. “We just wanted to centralize their orders so we could get a handle on what they were spending.” Furthermore, the centralized purchasing system relieved the offices of the hassle of paying invoices with their credit card, then submitting expenses to the IDN.

“What started out with four offices has now turned into 35 offices – a 673 percent increase in volume,” says Hunt. “Our next phase is to bring in our urgent care and walk-in centers.”

Focusing on flu

“The more they ordered, the more we added items and connected their purchases to our group purchasing organization’s agreements or our local contracts,” says Hunt. What she found is that more than 90 percent of the offices’ purchasing volume is for vaccines and drugs. “We knew it would be a lot,” she says. “But we didn’t think it would be that high.”

The Rx world is different than med-surg, she explains. Unlike med/surg supplies and equipment, pricing for pharmaceuticals changes rapidly – quarterly and sometimes even monthly. “It’s a lot to stay ahead of, and to make sure we have accurate prices in our system,” she says.

Then there’s the need to pre-book flu vaccine from suppliers, which means estimating – and committing to buy – a certain amount of vaccine prior to the start of flu season. That’s where leveraging a distributor’s pharmaceutical expertise can be valuable.

“We carry pharmaceuticals in our medical-surgical distribution centers, and all those products ride along to the customer with our med-surg products,” says Darrell Rawlings, vice president, pharmaceuticals, McKesson Medical-Surgical. What’s more, McKesson Medical-Surgical can leverage the spend of the entire company to bring the best products and prices to the alternate site, he adds.

Says Hunt, “The result has been tremendous. We have been able to achieve a 9 percent supply savings by connecting [vaccine and drug] purchases to contracts and contract pricing. This helped justify the addition of a buyer for the non-acute-care business and continue the growth of the non-acute-care centralized purchasing model.”

Does your non-acute Rx distributor have what you need?

Make sure the distributor for your non-acute facilities does the following:

  • Sources, inventories and distributes all flu vaccine brands and presentations
  • Offers customized delivery options, including next-day delivery
  • Has an "Order Now Ship Now" program for on-demand ordering
  • Complies with requirements for pharmaceutical chain of custody and cold chain storage
  • Maintains necessary DSCSA (Drug Supply Chain Security Act) regulatory data
  • Offers time-saving services such as a DEA-compliant controlled-substance ordering program or a pharmaceutical sample program 

As published in the Journal of Healthcare Contracting. Article written by Mark Thill

This content is sponsored by McKesson Medical-Surgical based on content collected and compiled by JHC. The statements quoted in this article are separate and apart from any conclusions herein and such conclusions should not be attributed to the speakers themselves.