02/23/21

"There is no 'one-size-fits all' approach to preparing for these ambulatory shifts. Understanding your organization’s strategy and what steps you should take now will position your supply chain for success." — Micah Parker, Vizient principal, advisory solutions

Today, nearly 85 percent of procedures are performed on an outpatient basis, according to a report by Sg2, a Vizient subsidiary, but they have largely remained inside the four walls of the hospital. During the next decade, Sg2 expects outpatient procedures to grow by 19 percent, and for many of the procedures to transition outside hospital walls to lower-cost, lower-acuity ambulatory care sites. These shifts can provide opportunities for supply chain leaders who are poised to take advantage of them. Here are the procedures predicted to shift along with four ways supply chain leaders should begin to prepare.

Procedures on the move

The Sg2 report, Procedure Sites of the Future, identifies the following service lines and procedures, which are key to hospital margins, that may experience notable shifts to outpatient and/or ambulatory settings during the next 10 years:

  • Orthopedics and Spine—Elective knee replacement, hip replacement, cervical fusions, lumbar/thoracic fusions and spinal decompression/laminectomy
  • Cardiovascular—Elective diagnostic catheterization, percutaneous coronary intervention, pacemakers and implantable cardioverter-defibrillators
  • Gynecology: Benign hysterectomy and pelvic floor repair
  • Medicine and Surgery: Appendectomy, abdominal wall hernia repair, cholecystectomy, thyroidectomy, open and transrectal procedures of rectum and benign prostatectomy

How supply chains should prepare now

According to Micah Parker, Vizient principal, advisory solutions, and Michael Costante, Vizient vice president and general manager, supply chain operations, many variables can impact the level of supply chain complexity of these procedural shifts to outpatient settings. Those variables include the legal structure of the new entity, the site’s proximity to acute care operations, whether the shift involves physician preference item-driven procedures, the level of data and technology system integration, vendor management processes and more. Managing ambulatory shifts requires supply chain leaders to focus on four key areas for success: physician alignment, governance to manage the shift, data and technology for better decision-making, and partnerships.

Physician alignment—Strong physician alignment is a foundational element, especially for physician preference item-driven procedures, such as total joint replacements. From a procurement, contracting and value analysis standpoint, having physicians at the table is essential.

“Alignment with the clinical team is especially important in outpatient settings where the vendor management process may not be as strong and product decisions may not be as tightly aligned with the acute care hospital,” says Costante. “Alignment drives compliance with a formulary that might already be in place or the ability to deliver on a contract commitment the organization may have made to the vendor.”

Governance to manage the shift—The shift to ambulatory settings will likely involve arrangements with sites that the hospital does not own. As a result, the supply chain becomes much more complex with these joint venture arrangements. Effective governance, including aligning physician, executive and supply chain, lays a foundation for strong supply performance across care settings.

“Managing multiple item masters, enterprise resource systems and clinical systems becomes extremely inefficient and inaccurate. As hospitals begin to expand to additional sites of care, having strong governance and tying back to a core supply chain is key to realizing the value in your GPO relationship,” says Costante.

Data and technology to support decision-making—It is not uncommon for data blind spots to occur with disparate data and technology systems across acute and ambulatory settings. An outpatient wound care clinic could potentially have different advanced dressings available than what the wound care team on the inpatient side had developed as a formulary. Clean and accurate data have a significant impact on supply chain operations, ensuring supply chain leaders have the full picture when making purchasing and contracting decisions. Invest in an integrated system that is scalable to work with multiple sites of care and provides complete and actionable data that supports effective decision-making across procedural sites of care. “Integration between the item master and the clinical system provides a full view of spend, utilization and outcomes information that you just can’t do in a financial system alone,” says Parker.

For physician preference item-driven procedures, having actionable data to educate clinicians about how preference items impact cost and outcomes is valuable. “When you show clinicians the true cost of a procedure, it can be eye-opening when they see the difference in vendor prices for similar products,” notes Costante.

Strong partnerships—Externally, strong vendor partnerships that extend beyond product pricing negotiations are also important. Evaluate how to partner with vendors to solve their problems as well as leverage their expertise to help you achieve your supply chain goals. “Think about how to partner with your suppliers in nontraditional ways. For example, for tighter inventory control, partner with your intraocular lens vendor to provide visibility into the patient schedule for a just-in-time delivery approach rather than consignment,” adds Costante.

Maximizing supply chain performance across care settings

Non-acute care settings may lack internal supply chain expertise, relying on clinical teams to manage the purchasing process. This provides a unique opportunity for the hospital supply chain leader to become a strategic partner for clinical teams in outpatient settings, supporting them with supply chain best practices, tools and resources. This supply chain expertise, data insights and technology can improve supply chain performance at the various facility locations and allow the clinical teams to solely focus on patient care.

A great example of this is the supply chain’s response during COVID-19. The pandemic accelerated the procedure shift to outpatient settings and exposed some of the supply chain vulnerabilities of these sites. “When field hospitals were set up during the first COVID surge, clinicians were stretched thin. Many hospital supply chain teams stepped in to help lead and implement agile strategies to unprecedented procurement, logistics and fulfillment needs,” says Costante.

The past several months has demonstrated the opportunity and the agile planning needed in 2021 to prepare your supply chain for the rapid growth of outpatient care settings. Those supply chain leaders that prepare now for these shifts will be positioned to maximize their supply chain and financial performance.