Acute care hospital-based supply chain leaders and managers may be well aware of the burgeoning number of nonacute care facilities and opportunities because many have been providing product services to them for years, as reader demographic responses to annual surveys conducted by Healthcare Purchasing News have shown.
The global pandemic during the last few years seems to have accelerated the expansion, growth and trajectory of influence and interest beyond the traditional sites, including freestanding ambulatory surgery centers (ASCs), clinics, hospital-based outpatient surgery centers, diagnostic imaging and laboratory centers, physician practices and urgent care centers. Now comes a stronger and deeper push into communities, complete with retail clinics, advanced home health services and the newest shiny retro-offering, Hospital-at-Home (HaH) programs – retro being an apt modifier because the concept and term technically debuted back as the late 1990s. [Editor’s Note: For additional highlights, see “Future care: There’s no place like home,” March 2021, https://www.hpnonline.com/surgical-critical-care/article/21210677/future-care-theres-no-place-like-home, and “Supply chain delivers hospital-level care at home,” July 2022, https://www.hpnonline.com/sourcing-logistics/article/21271718/supply-chain-delivers-hospitallevel-care-at-home.]
Supply Chain – concept, function and hospital department – strives to unite distribution, inventory and logistics throughout all these myriad service areas. Because acute care hospitals may represent the majority of supply chain costs and expenses, supply chain leaders and managers work to control the process through centralization and standardization. But this budgetary strategy and tactic can be challenging when applied to enterprises outside of the hospital’s four walls.
Distribution and logistics company executives who spoke with HPN acknowledge the uncertainty and variability that supply chain leaders and managers face today and will continue to face tomorrow.
Juggling wiffle balls (Q1)
Providing supply chain services to ASCs and more acute-oriented HaH programs requires a bit of flexibility in both mind and practice. [Editor’s Note: For explanations of the differences between home health and HaH, read the sidebar, “Home health vs. hospital-at-home: They’re not the same?” on p. ]
“Strategic sourcing remains one of the main challenges in the industry,” he posits. “For example, as the ASC market continues to see accelerated growth, an increase in higher acuity procedures and expanded revenue lines, they need to continuously evaluate if they are getting the best quality products, at a competitive price, with high service levels to ensure they have the ability to provide high quality patient care and outcomes.
“Contracting models continue to evolve and be in flux, with today’s healthcare environment of perpetual mergers, acquisitions and consolidation across independent and the owned, managed and leased ASCs,” Hoffman continued. “Changes in ownership or management companies may present operational and technological challenges, but these shifts can also create opportunities for ASCs to partner and benefit from alternative contracting models, strategic sourcing partnerships and to find more value from both new or existing distribution relationships.”
Hoffman acknowledges that the relative “newness” of HaH creates one of its challenges, along with the economics.
“There is still a lot of discussion and opinions around what the space will ultimately look like,” he observed. “And, while COVID really accelerated opportunities for hospitals to focus on their HaH programs, the situation also forced the implementation of special waivers and HaH reimbursement models that are still being sorted out in the post-pandemic environment.”
From a supply chain perspective, however, the fundamentals remain, regardless of site.
“Getting the right supplies to a patient’s home is just one small part of making the HaH model work,” Hoffman indicated. “There are staffing needs — nurses, physicians or medical experts – along with HAH equipment, testing and supply transportation, and in some cases dietary considerations. The logistics involved with delivering HaH will always be a challenge – particularly when you consider the diverse locations that will need HaH, such as rural, urban and high-density locations.”
Based on customer conversations, HaH certainly seems here to stay, according to Hoffman.
“We hear from our providers that taking care of patients in home settings is achieving better outcomes, so we see the demand for HaH rising – and, in some cases, HaH makes financial sense for providers as well. But how providers deal with HaH reimbursements and logistics present some serious challenges,” he said. “At Medline, we are seeing some healthcare systems that are all in on HaH. These systems are investing the time and resources – some even setting up separate corporations within their own organizations -- to really tackle and grow in the HaH space. Bottom line, as an industry, we still have a lot of learning to do.”
“The primary distribution challenge for a hospital-at-home program is rapidly outfitting many sites of care for patients with complex and dynamic health conditions,” he noted. “Hospital-at-home programs tend to rely on fragmented networks of third-party vendors to deliver products directly to the home. Each of these vendors creates a link in an overall clinical supply chain. However, the more links in the chain, the greater likelihood one of them could break and disrupt the patient’s care plan.”
Home health, however, may not experience the same issues.
“The traditional home-based care vendor may also not be familiar with – or oriented to – the high-acuity nature of hospital-at-home in which a patient’s needs change throughout the day,” Hoopes indicated. “One- to two-hour service is critical to the success of hospital-at-home programs – not next-day. For hospital-at-home to scale, the supply chain needs to be as reliable and durable as it would be for the brick-and-mortar facilities.”
Size matters, too, Hoopes emphasizes.
“Additionally, ASCs and hospital-at-home programs manage smaller patient volumes than traditional hospitals,” he said. “So, creating economies of scale can be challenging for both. ASCs still deliver facility-based care and can get better utilization of their materials. Something as simple as a blood pressure cuff can easily move from room to room within an ASC, which is less feasible for hospital-at-home programs.”
Stretching for systemness
“This expanding physical footprint of care delivery presents numerous challenges, but the most prevalent challenge is getting supplies to all of the locations where they are needed, while also harnessing the power of ‘systemness,’” he noted.
“A strong logistics backbone that connects points of care gives organizations the ability to share inventory to reduce the cost of goods and eliminate waste,” Crampton continued. “To realize these potential gains, the operational network must be thoughtfully designed for proactive agility, as opposed to a reactive disconnected series of movements. An optimized logistics network allows organizations to capture the benefits of scale and integration. Connecting the physical points of care can also help uncover additional savings opportunities.”
Crampton encourages organizations to optimize every element of the supply chain to adapt to future challenges and needs, which translates into vendors, suppliers, distributors and the supply chain working together in support of care, wherever it is taking place.
“The difference between the needs of ASCs and hospital-at-home programs is primarily one of urgency,” he said. “ASCs typically operate in a predictable manner, with surgeries scheduled in advance. From a supply, equipment and logistics perspective, that predictability helps support teams to provide efficient support services. Conversely, hospital-at-home programs often have a sense of urgency that matches their acute care counterparts. This leads to rapid turnaround times for hospital equipment, pharmaceuticals, supplies and more to be delivered to the home.”
“To support this growth, the non-acute supply chain should be automated,” he urged. “ASCs will need a thorough understanding of supply chain utilization, including detailed data streams to identify operational and cost efficiencies. Another challenge will be helping to ensure the proper usage of products across various care settings, especially when other entities like physician groups or third-party home health delivery agencies own those locations. Coordinating the delivery of supplies to the point of care in a timely and efficient manner will be crucial.”
But Luoma points to federal and payer activities to affect the future of HaH development and growth.
“Hospital-at-Home’s growth will largely depend on whether reimbursement waivers are extended past Dec. 31, 2024,” he said. “However, many HaH programs indicated they would keep their programs in place regardless of whether the waivers continue. In addition to facing the same utilization, cost and logistical issues as ASCs, HaH programs may also need to coordinate additional resources, such as aides and prepared meals.
“Both ASCs and HaHs will require solutions that help manage the entire supply chain from inventory management through the procure-to-pay lifecycle and do so without the dedicated supply chain staff found in an acute care setting,” Luoma added.
HaH should be considered a component of the continuum of care, according to Kelly Williby, vice president, ASC and CHC sales, McKesson Medical-Surgical.
For the HaH market segment, supply chain must focus on the fundamentals, insists Julia Crist, COO, Inbound Health.
“ASCs face certain supply chain challenges that can present opportunities for improvement and optimization,” he said. “For example, medical supplies have the potential to consume a large portion of an ASC’s annual budget. This creates the need to have processes and systems in place that allow ASCs to effectively manage their supply spend, which, depending on the people, processes, and systems in place, can create a financial burden on the center. Having team members that understand contracting, pricing and effective inventory management is important. Additionally, employing inventory management systems that are specifically built for an ASC is critical.
Making a difference (Q2)
If centralizing supply chain represented an uphill slog for standalone hospitals and integrated delivery networks, achieving that model for ASCs and HaH programs likely will not be any easier.
“Creating a decentralized hospital-at-home supply chain that balances scalability, reliability and cost-effectiveness requires a different way of thinking,” said Cardinal Health’s Hoopes. “No matter how a hospital-at-home program is implemented, the strategy needs to consider getting the right product to the home as quickly as possible. For example, if a hospital chooses a hub-and-spoke model, using the physical hospital as the central nucleus, it needs to track the fully burdened transportation, inventory carrying cost and labor spend of the program. Notably, the costs of stat courier runs can quickly surpass the cost of the materials it is delivering.
“The other major consideration is ensuring the courier is qualified to enter the home,” he warns. “If this is not a service that can be provided, it requires many additional players to be involved in the administration of care. In this same sense, consider the regulations applicable to your state. The transportation solution, for example, should be appropriately licensed to transport pharmaceuticals or medical waste, as both are common needs for hospital-at-home programs. Are the drivers appropriately credentialed, trained, vaccinated and capable of entering the patient’s homes? If not, you will need a different solution to deinstall technology and collect unused materials.”
Inbound Health’s Crist outlines three strategies to consider.
- Collaboration and Partnerships: “Foster collaboration among supply chain stakeholders, including hospitals, healthcare providers, technology companies and logistics partners. Forming partnerships and sharing resources can help address staffing shortages and enhance overall operational efficiency.”
- Technology Integration: “Embrace innovative technologies like real-time tracking systems, Internet of Things (IoT) devices and data analytics to optimize supply chain operations. Implementing these technologies can provide visibility into product and service delivery, enabling better coordination and timely response to patient needs and hospital-at-home provider service level agreements.”
- Last-Mile Delivery Optimization: “Focus on improving last-mile delivery capabilities, as this is critical for timely supply chain operations in hospital-at-home services. A supplier may explore options such as local fulfillment centers, dedicated delivery networks or partnerships with courier services to ensure prompt and efficient delivery to patients’ homes.”
GHX’s Luoma ponders how the availability of supply chain staff on hand will affect decisions, opening the door to automation.
“Given the likely lack of dedicated supply chain staff in these settings, supply chain teams should think about how to operate the supply chain ‘remotely,’” he advised. “Simple to use, consumer-like end user tools to facilitate ordering and inventory management are one step. However, creative solutions combining video capture, robotic process automation (RPA) and AI may allow the supply chain to be fully automated therefore not requiring staffing or supply chain expertise to be onsite. These tools can not only help automate standard procure-to-pay and inventory management processes, but they can also serve as data capture tools feeding analytics that help further improve operations and patient outcomes.”
Henry Schein’s Jackson highly recommends in-house supply chain expertise at the ASC.
“Having a dedicated ASC employee who manages the center’s supply chain is critically important, especially for mid to large volume ASCs,” he said. “Since medical supplies are a large expense, there is a need to have someone who manages the center’s purchasing, inventory PAR levels, pricing and GPO contracts. Preferably someone who has some supply chain experience is also helpful. This need will become even more important as device intensive procedures, such as cardiac, orthopedics and spine continue to expand into ASCs. These types of procedures are much more expensive to perform, from a supply perspective, than some of the traditional ASC procedures.”
Luoma paints a mental picture of what’s possible with immersive automation.
“Imagine if you will an ASC operating room equipped with video equipment that tracks all supplies used, AI that interprets usage, waste and returns and then RPA ‘bots’ that consume that information to facilitate reordering, invoicing, and payment cycles. This would be a highly efficient supply chain operation all without human involvement,” he added.
Much depends on an organization’s choice of supplier partner, according to McKesson’s Williby.
“Helping our customers get the supplies they need to care for patients is a responsibility we take seriously,” she noted. “McKesson takes a proactive approach to managing healthcare supply chain across a diverse portfolio of suppliers to minimize any impact on the facilities we serve, which I think is key to ensuring we create a healthy supply chain that doesn’t foresee any long-term problems. We’ve been successful in reducing supply chain challenges by proactively monitoring global situations, securing quality products at fair prices and working closely with the Health Industry Distributors Association (HIDA) and government agencies on strategies and best practices to prioritize medical supplies.”
McKesson constantly works on supply chain best practices to support its customers through collaboration, advocacy and investments, Williby emphasizes. “We work hard to help our customers understand trends and risks for the healthcare supply chain with resources from the Health Industry Distributors Association.”
Williby recommends specifically:
- “Where possible consolidate orders,
- Order well ahead of anticipated need, especially for complex items like equipment,
- Be open to ordering different brands, colors or package quantities of usual items,
- Check out ways to order more efficiently using an online ordering platform (such as McKesson SupplyManager), for ordering lists, email notifications, business analytics and financial tools.”
Seek out guidance, help
Medline’s Hoffman cautions against the solo routine.
“There’s no need to go it alone when it comes to staying ahead of supply chain challenges,” he noted. “Providers need to find ways to be creative and optimize their partnerships with other area providers and with their vendor-supplier communities. There’s no shortage of expertise here. Working together, we can find ways to solve problems, anticipate challenges and force multiply – identifying resources and capabilities that trusted partners have and delivering mutual benefit. For example, perhaps a partner provides a capability that frees up staff or headcount. Putting the right partnerships together will allow providers to continue to get better at managing supply chains.”
In today’s healthcare environment, a patient’s experience plays a paramount role.
“Every patient touchpoint and interaction along the care journey contributes to a patient’s overall experience,” asserted MedSpeed’s Crampton. “Even something as seemingly simple as the delivery of a pharmaceutical to the home represents an extension of the care team. Careful coordination and a well-designed delivery network are fundamental to making each of these interactions high-quality. Patients have never had more choices for home health care. Supplies, medicine and other patient-critical items that are lost or damaged can result in patient harm, clinical downtime, and a significant decrease in patient trust and satisfaction.”
Attitude makes all the difference, according to Henry Schein’s Jackson.
“Effective inventory management typically comes down to having the right people, processes, and technologies in place to ensure long-term success,” he said. “People that understand the importance of inventory management, and who are passionate about the topic, are necessary. From there, invest in technologies and inventory management systems that are uniquely built to meet the patient and supply chain workflow needs of an ASC. Ensure these technologies are built with the ASC’s needs in mind, versus the needs of a hospital.
“For example, ASCs have regulations and requirements that differ from hospitals. ASCs must adhere to guidelines set by the Centers for Medicare and Medicaid Services (CMS) and are subject to state regulations. ASCs also usually have a smaller, specialized staff consisting of surgeons, anesthesiologists, nurses, and personnel who are experienced in outpatient procedures. This differs from hospitals which have a more extensive range of equipment, departments, and staff. Lastly, workflows in an ASC and hospital – from patient admission to follow-up care – are not the same. These items should be kept in mind when determining inventory management technologies for the ASC,” Jackson added.
