1. Limited staff. ASCs often do not have adequate personnel or space to properly manage their supply chain. Mr. Peters says, “Efficiencies of surgery centers sometimes don’t allow for a specific position to manage total supply chain.” He says the employee who manages the supply chain usually has additional responsibilities and cannot devote the time needed to constantly track the price of goods, maximize group purchasing or manage contract compliance.
To avoid unnecessary costs due to limited supply chain staff, Mr. Peters suggests working to increase efficiency. “Given a lack of resources, I would recommend that surgery center administrators really focus in on materials and establish processes for ordering, receiving and tracking supplies,” he says.
One way to help ASC leaders improve material processes is to use a group purchasing organization that can reduce the initial cost of goods, according to Mr. Peters. Simply joining a GPO will not lead to savings, however. “It’s not just signing up with an organization; it’s really getting to know what resources it might have for the surgery center,” he says. Researching an organization’s contracts and pricing is just the beginning. Making the GPO decision by examining their tools, business partners and capabilities, for instance, may help in improving supply chain efficiency.
For example, GPOs have distribution partners and some of them offer services to ease the challenges and limitations of a surgery center. Negotiating with distributors on issues such as delivery schedules, online ordering and barcoding inventory may help drive efficiency.
Improving supply acquisition and monitoring will also help ASCs manage a lack of storage space. Mr. Peters says this challenge forces ASCs to be more efficient in the way they order supplies. Many centers are shifting to a “just-in-time” model or are stocking on consignment, according to Mr. Peters. Ultimately, this reduces the cost of inventory and the amount of product stored at the surgery center.
2. Physician preference. One challenge to successful supply chain management is physician preference. ASCs can experience significant financial challenges when physicians prefer an instrument, implant or other supply regardless of its cost or its effect on the bottom line.
Mr. Peters cites the example of high-cost implants, which are increasingly seeing reduced reimbursement or being denied reimbursement entirely for some procedures. Physicians who do not consider less costly substitutes with similar clinical results are “minimizing the margin [ASCs] could make and are adding to the rapidly increasing cost of healthcare,” according to Mr. Peters.
However, Mr. Peters says now more physicians are beginning to switch to equivalent products at a lower price, leading to savings in supply chain.
3. Consolidation. Many surgery centers have begun consolidating, which has important effects on supply chain because it influences supply volume and pricing models. Consolidating centers requires leaders to “partner and coordinate care more effectively,” according to Mr. Peters. He says leaders will “start leveraging total supply, not as an individual site, but as a group to achieve better pricing.”
As ASCs and other healthcare providers shift to integrated systems like accountable care organizations, value-based purchasing or bundled payment models, Mr. Peters says supply chain may also be influenced by patient outcomes. “[CMS is] pushing towards a link between the cost of care, which ultimately includes supplies, and quality of care,” he says. Thus, efficiencies that improve quality in the surgery center as a whole may produce savings in supply chain.
4. Technology. Mr. Peters says ASC administrators should explore using technology to drive efficiencies in the areas of ordering supplies, inventory tracking, price validation and priced benchmarking. For instance, some systems have barcodes for shelves or for individual items that allow for automated inventory controls and monitoring.
ASCs are also implementing electronic medical records, which may affect supply chain in the future. As ASCs adopt new technology, leaders should monitor and remain aware of technology’s effect on supply chain and potential improvements it may offer.
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Read more coverage on supply chain:
– Healthcare Packing Market Value Predicted to Reach $87.3B by 2011
– 17 Healthcare Organizations in Mississippi and Louisiana Form GPO
