Imagine the following scenario. Your health system announced its intention to acquire and partner with local practitioners as part of its strategy to decrease the cost of care while delivering additional access points. The system exploded from 20 non-acute locations with 100 physicians to 150 non-acute locations with 400 physicians over a two-year period. Only now, new challenges exist.

Each location has its own criteria and mechanisms for purchasing critical supplies. An indefinite number of distributors serve your non-acute locations and purchasing standards may be all but nonexistent. Many locations purchase the supplies they need on credit cards. You realize the significant growth in the number of non-acute facilities affects cost and procurement efficiencies, so what’s the next step to ensure optimal effectiveness of your non-acute program?

According to the leaders of the Vizient non-acute team, that next step is efficient service and execution.

“The other components of a best-in-class non-acute program are supply chain expertise, analytics and data, and technology and transparency, which are cogs in a wheel, but powering the wheel is an organization’s ability to execute the fundamental tasks that position the non-acute program for success,” said Richard Peters, associate vice president, non-acute services at Vizient. This encompasses elements such as rostering, distributor partnerships, formulary management, item master creation and contract connection.

“You may have supply chain expertise but if you don’t take care of building the foundation, that expertise becomes irrelevant,” Peters said. “You could also have data and analytics in some form, but if you can’t act on the insights they provide, that becomes irrelevant as well. Service and execution have to be accounted for, period. There are other elements that are optional. This one is not.”

Laying the foundation for success

“In the non-acute world, you have to consider the cost of not acting today,” Peters said. “Let’s say a health system could save $100,000 in one year by implementing purchasing standards and processes for their non-acute facilities. If you don’t save that $100,000 this year, you’re not going to get it next year and in the following years because you still don’t have an optimized, streamlined process in place. Fast forward five years down the road and it becomes several hundred thousand in savings you’ve missed. Isn’t it worth it now to set the stage for sustainable cost savings from all your non-acute locations?”

Sometimes, just getting started on integrating non-acute facilities seems overwhelming. In the acute environment, the GPO connects the hospital to its contracts. Supply chain leaders often assume that their non-acute facilities are also connected but that is not the case. Vizient non-acute teams can offer guidance and expertise to make those connections and get the ball rolling.

“The first thing we do is establish a roster of their all non-acute locations,” Peters said. This also involves setting up a process to onboard new locations as they are added so they are appropriately added to the roster.

The next step is establishing a distributor relationship. “When it comes to choosing a distributor, select one instead of several and make sure that one understands what level of service you want them to provide and what you expect them to do,” Peters said.

Then, all non-acute sites must be credentialed. Next follows completion of credit applications and getting pricing to start pulling through. The final step is to request a connection to a contract. It’s a multistep process, and no one step can be ignored.

“Every single individual location has to be specifically connected to a contract in order to get the contract price. Most supply chain leaders don’t realize that step is a must,” Peters said. Last year Vizient non-acute processed approximately 150,000 contract connections on behalf of members. This resulted in $25 million in estimated savings.

“You can have time, resources and a wealth of expertise, but if you don’t handle the service and execution to get your non-acute providers set up and connected, realizing savings simply won’t happen,” Peters said.

Likewise, the scenario described in the introduction of this article was a real-life example of how substantial savings and operational efficiency can result from effective service and execution. 

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Published: July 20, 2017