Amid the daily challenges of a hospital supply chain, managers rely on established processes and familiar strategies to keep appropriate levels of necessary products flowing into facilities. However, when the acute-care supply chain becomes responsible for managing supplies for the health system’s non-acute facilities, supply chain leaders often find gaps in their expertise.

“The statement ‘You don’t know what you don’t know’ applies perfectly to the situation many hospital supply chain leaders are experiencing as they try to integrate their non-acute facilities into the organization’s supply chain,” said Richard Peters, associate vice president, non-acute services, Vizient. “The non-acute supply chain is a very different animal, and supply chain managers must invest the time to understand its unique challenges in order to gain the expertise necessary to begin to manage it in a cost effective manner.”

In the previous issue of Supply Chain Management News, we outlined the four tenets of a “best-in-class” non-acute supply chain management program: non-acute supply chain expertise, technology, analytics and service. Developing supply chain expertise for your non-acute facilities begins with being intentional about your approach. Being intentional means assigning responsibility and then taking a systematic approach to develop uniform processes, resolve complex challenges and identify unique savings opportunities related to non-acute facilities.

“The hospitals that have been most successful with integrating their non-acute facility supply chains have a designated resource within the hospital’s supply chain with responsibility for managing the needs of the non-acute facilities,” said Peters. “Assigning responsibility is key because of the wide variety of purchasing processes and inventory management needs found in non-acute facilities.”

According to Peters, a systematic approach is often an afterthought.

“It is not uncommon to see office administrators ordering common supplies for non-acute care locations using credit cards. This would be entirely unheard of within acute care supply chain management,” Peters said.

Applying a systematic approach puts the same kind of rigor and intensity into the non-acute program that goes into acute. Below are three components of a systematic approach that supply chain leaders should work to implement in their non-acute supply chains:

1. Uniform processes. Uniform processes define how an organization manages its program. This starts with discovering which processes are in play (and which are missing), implementing methods to capture data and ensuring appropriate vendors are being utilized by the non-acute facilities.

Two examples of uniform processes include:

a. Rostering – This includes keeping up with the addition, removal or change in non-acute locations, which ensures that new non-acute facilities get pulled in under the umbrella of the organization and that they obtain value from the hospital’s GPO relationship. It also includes tasks such as managing delivery addresses, phone numbers and member IDs in the GPO’s system. Distributors, in turn, refer to the GPO’s roster for eligibility and pricing tiers.

b. Contract connections – Once rostered, the supply chain leader must identify the contracts that apply to their non-acute locations and not simply try to implement what they have in place for their acute-care location. Non-acute providers usually have very different supply needs based on the type of patient services being offered. It is important to understand these needs and look for savings opportunities either through the GPO or by negotiating a local contract. In addition, it is important for supply chain leaders to notify suppliers that there is a contract in place with the hospital that should be utilized. This requires a substantial amount of coordination between the supply chain leader, supplier and distributor.

2. Resolution of complex challenges. An example of a complex challenge is a non-acute facility not having access to a pharmacy portfolio that includes controlled substances. These drugs have specific requirements, one of which requires a DEA certificate with a correct delivery address. This address must match the one that the GPO has in their system. If they do not match, the non-acute location is not pharmacy eligible.

Another example is that suppliers sometimes deny contracts. To resolve this, the non-acute facility must work with both the distributor and the GPO account executive—which means a strong relationship with both is essential for success.

3. Process to help identify non-acute specific savings opportunities. “Data collection and analysis is essential,” said Peters. “Until a health system knows the purchasing habits and overall spend for their non-acute facilities, it’s hard for them to see the savings and efficiencies that are available.”

Often, health care systems lack clarity into what their non-acute locations are buying or how they purchase supplies. That’s why it is paramount to establish a process for data collection. Then, the use of a tool such as the Vizient Savings Actualyzer helps a system identify opportunities for cost reduction.

It is also essential that organizations understand the process of gaining expertise is a gradual one. Like the adage says, practice makes perfect. After onboarding one or two non-acute facilities, an organization is primed to identify where processes are efficient as well as identify gaps that must be addressed.

For more information on how Vizient can help organizations better understand the unique aspects of the non-acute supply chain and develop new skills to manage these facilities, please visit, connect with the non-acute expert in your region by clicking here or email us at


Published: March 28, 2017