If you’re like most health systems, your organizational chart is getting much more complex. So is your supply chain as you add more non-acute sites like ambulatory surgery centers (ASCs), physician offices, skilled-nursing facilities, home-care agencies and more.

In this edition of Ask a Supply Chain Expert, Jacob Hookom, vice president of B2B customer experience at McKesson, says your health system should use data to track supply chain performance at your non-acute sites. He also explains how you can use that data to lower costs and improve patient care.

What are you responsible for in your role at McKesson?

Hookom: My team and I are responsible for our customer-facing analytics, online procurement and ecommerce solutions. We work with the key decision makers and the users of our solutions at health systems across the country. We’re also responsible for adjacent services like inventory management.

What are some of the common non-acute supply chain challenges that health systems face?

Hookom: The two big ones are cost and quality. On cost, it’s about cost control in two areas. The first is how to leverage your contracts to buy the right volume for the lowest possible price. The second is how to take costs out of your procurement process. On quality, it’s about clinical effectiveness and product safety. How do you ensure both when so many different people are ordering so many different things from so many different sites?

What are some of the things that drive up procurement costs at health system non-acute settings?

Hookom: We understand that patient care is the number one priority and that keeping shelves stocked is second. You should be spending most of your time on patient care, but it can mean less time for inventory control. This can result in things like variations in order size and order frequency, missed orders and wrong inventory levels. Those things add to your procurement costs. Let’s say you’re making small orders every day instead of one big order once a week. That will increase your shipping costs. Or, if you realize you’re out of something and need to overnight it, that adds to your costs. The other problem we see is health systems that make their non-acute sites order supplies in the exact same way. How your ASCs order is different than how your home health agencies or physician offices order. When you require all your non-acute sites to order in the same way, you may be making procurement less efficient and more costly at one type of care setting versus another.

How can health systems make their non-acute supply chain more efficient?

Hookom: Your health system needs visibility into your supply chain, and that visibility comes from data. You need analytics tools to collect data from each point in your supply chain and benchmark each of your non-acute sites. You’re collecting data on what you’re ordering, how much you’re ordering, how often you’re ordering, how much you’re paying, who you’re buying it from, how much you’re using and when, and how much is sitting on the shelves. You need to be able to crunch those numbers and report them on a dashboard that gives you a singular view into your supply chain operations.

What are some examples of how a health system would use that data?

Hookom: Going back to those two cost areas I mentioned earlier, the first thing you’d look at is contract compliance. Are your non-acute sites buying under your contracts? Or, are they buying outside of your contracts and paying more for the same things? If you let them buy outside of your contracts, are they selecting the best value? With that information, you can take the necessary steps to fix any problems. The second thing you’d look at is how they’re ordering. You would compare their ordering behaviors with the best practices for their type of setting. Are they ordering the right amount of supplies at the right time to provide the best level of care to patients without any waste? If not, you can act to reduce the variations and outliers that are driving up your costs.

How can health systems use that visibility to improve clinical effectiveness and product safety?

Hookom: When you see your non-acute supply chain data, what you’ll likely see is non-standard product formularies. No two of your sites are using the same supplies. That’s becoming a big issue for a couple of reasons. Health systems are growing rapidly, and each time your health system adds a setting, you can introduce product variability. Also, on average, about 30 percent of what you use now will change over the course of a year. Suppliers discontinue products. Suppliers improve products. New products enter the market. When you have a diverse set of products across your care settings that come in different packages, are made of different materials and are used slightly differently, it can create inconsistencies in quality of care and clinical training. Just as you standardize clinical protocols and reduce variability, you need to do the same with the products your professionals use to be truly effective. Use your data to standardize your product formulary and reduce variability. You’re also going to spend less time training people how to use different things.

What non-acute supply chain trends should health systems stay on top of?

Hookom: I think it’s critically important to see what your peers are doing. What products are they using in their non-acute sites? Like I said, about 30 percent of products in a formulary turn over in a year, and new and innovative products are entering the market all the time. What should you be using to improve care and lower your costs? I also think it’s important to stay on top of all the new care delivery models. They all come with their own unique supply chain needs, and you need to be ready to customize your supply chain as they come into your system. One size does not fit all.

What do you like most about working with health systems on their non-acute supply chain issues?

Hookom: Every health system has a different mix of non-acute care settings or facilities that creates a unique supply chain challenge for them. We love to see customers overcome challenges with customized processes and analytics that pay off for them in more ways than one. And the data proves it!

Editor’s note: Have a question for one of our supply chain experts? Please leave a comment below and let us know what you’d like to see covered in a future edition of Ask a Supply Chain Expert.

Related: Learn more about McKesson’s medical supplies for health system non-acute settings

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McKesson editorial staff is committed to sharing innovative approaches and insights so our customers can get the most out of their business solutions and identify areas for operational improvement and revenue growth.