05/23/17

Do you know how much your non-acute facilities spend on supplies and services?

If you don’t know the answer, you’re not alone. Unlike the supply chain in acute facilities, non-acute supply spend data is much more difficult to capture and manage because purchasing information is scattered across multiple distributors, suppliers and locations. These locations also likely have different supply ordering processes and many are not leveraging a common technology for purchases.

“In my experience, what shocks a lot of hospital supply chain leaders is that, depending on size and the number of non-acute facilities, anywhere between 20 and 30 percent of a health system’s total supply spend typically takes place outside of the traditional hospital environment,” said Richard Peters, associate vice president, Vizient non-acute.

While it is not a quick or simple process to capture the necessary data, the “juice” from savings opportunities is worth the squeeze and it starts with data.

Getting the data streams flowing

For supply chain leaders on the acute side, simply acquiring and compiling supply data for non-acute spend presents a challenge. Often, the non-acute facilities are not ordering items through the same distributors or the same process as the hospital. This means reaching out to each non-acute distributor and asking for the following data points.

“This first step is often the most painful for supply chain leaders, but it is definitely worth the effort,” said Peters. “We’ve seen non-acute facilities generate as much 27 percent in annual cost savings by following this process to gain visibility and control for supply spend.”

“Once you get the data from your distributor, you need to perform some basic analytics to examine the information in a like-for-like comparison across all non-acute sites,” said Drew Goolsby, procurement solutions manager at Vizient non-acute. The analysis will generally reveal one or more of the following issues, which are often savings opportunities:

  • Pricing is not consistent among the various vendors
  • Sites are not leveraging the same suppliers to take advantage of the total health system volume
  • Every different type of provider has slight variations of the products needed to treat patients, and some are not used at the hospital and/or are not in the item master

All of these items can be fixed by working with vendors, but to really make a meaningful and sustainable impact, the data must be cleaned and consolidated, i.e. you must remove inaccurate, irrelevant and incomplete information, and load the data into the hospital’s supply chain technology or non-acute materials management information system.

“A technological solution allows the supply chain manager to see on a real-time basis what distributors are being used, what products are being purchased and what kind of consolidation or supplier optimization can be achieved,” Goolsby explained.

This degree of visibility is essential to engaging with a non-acute facility to see their spend, but it also opens the door to contract connectivity with the health system’s GPO and connecting to the contracts, tiers and pricing transparency they offer.

“Our Vizient non-acute team works with supply chain leaders to provide the technology solution required to identify where the non-acute facility should connect for contract opportunities. We also identify opportunities for new contracts, conversions and consolidation of vendors,” Goolsby said.

The type of data that needs to be cleansed and set as a non-acute item master comes primarily from the medical/surgical and pharmaceutical distributors and suppliers. After cleaning and consolidating this data, Goolsby and his team funnel the data into the technology solution.

“Once you have a supply spend technology solution added to your materials management information system, that’s when the more sophisticated analytics and monitoring of results can begin,” he added.

Making non-acute spend data actionable

“The first three steps of our process involve acquiring, cleaning and matching your data,” said Danny Mask, comparative analysis director at Vizient non-acute. “Step four is where we take that data and present actionable items to the organization.”

The team drives custom analytics in three key areas: new opportunities, spend monitoring and price protection. Armed with analytics, a non-acute supply chain manager can make data-driven decisions based on visibility into each of those areas. In addition, the organization gains an element of control.

“An important aspect non-acute organizations often miss out on is control,” Mask said. “There are very few control points on the non-acute side, and the only way you can start to have control is to monitor the purchasing and pricing data.”

By taking advantage of a comprehensive strategy like the Vizient non-acute team provides, supply chain managers can employ their newly acquired visibility and control to tackle the universally important deliverable: cost reduction.

“Non-acute organizations can use technology and analytics to highlight and capture savings opportunities,” said Mask. “Without those pieces, they won’t know about the savings they’re missing.”

Leveraging the analytics and technology also arms a non-acute organization with the ability to manage custom pricing, identify the lowest contract price and ensure that new contract prices are reflected, as well as make purchasing decisions or conduct price discrepancy resolution.

“At the end of the day, best-in-class non-acute programs have visibility and control, and then leverage the analytics to pinpoint opportunities and pursue them,” said Peters. “These efforts may sound simplistic, but it is difficult to execute in light of all of the other health system priorities. However, in our experience and as the market changes, harnessing the benefits of analytics and technology is worth the time, expense and effort to gain control.”

For more information on how the Vizient non-acute team can help your organization optimize its program, click here.