What to do when your supply chain strategy is failing: 9 warning signs & changes to make

Ambulatory surgery centers cannot succeed financially without keeping a tight reign on supply costs in addition to providing high-quality care.Jean Skora use

"There is a lot of attention being paid to supply chain in today's healthcare market and the impact it has on the success of an ASC," says Jean Skora, materials manager at The Surgery Center of Pinehurst (N.C.). "Supply chain strategy should be well-researched and planned carefully from the start. It's very hard to go back and fix something that isn't working."

But sometimes even carefully planned strategies fail in practice. It is important that ASC administrators take heed of the warning signs and change tactics when it becomes clear that a strategy is not working.

Why do supply chain strategies fail?
Lori PillaAccording to Lori Pilla, vice president of the clinical advantage program and supply chain optimization at Amerinet, one of the reasons for supply chain management failure is not planning purchases in accordance with the owners/surgeons of the facility. Administrators start purchasing at hospital inventory levels because that is what they are used to. "And then it fails because they are purchasing too much inventory at higher prices and the ASC doesn't have the volume to use it all," she says.  

Another reason supply chain strategies fail is when too many people in an ASC are involved in managing it. Since ASCs are small businesses, there tends to be several cross-functional duties. Staff members are often expected to wear multiple hats. "But when it comes to supply chain management having too many people be involved is not a good idea," said Ms. Pilla. "When too many people have a say, the strategy is lost, and managing your costs can be challenging."

It's time for a change
ASCs should stick with a given strategy for at least six months or so, and then reevaluate it, notes Ms. Pilla. And if the strategy isn't working for the center, it may be time to incorporate changes. "I don't recommend starting from scratch and implementing a whole new strategy," says Ms. Pilla. "Examine what went wrong and then tweak the strategy."

Here are four signs that a supply chain strategy is failing:

1. When the numbers reflect a loss of money. Finding a drop in the numbers is a sure sign that a supply strategy is failing. "If your inventory on hand sits longer than 45 days and your supply cost per case is double your budget, you have a problem," says Ms. Skora. It is important that ASC administrators are aware of the budget and keep a close watch on the supply chain.

2. When supply chain strategy doesn't relate to services. According to Ms. Pilla, you know a supply strategy is failing when you recognize the volume and type of services you are intending to perform and the supply strategy do not match. "That is when you know you need to make changes to your strategy," she says.

Block-time is a great way to standardize supply strategy and services offered. On any given day in an ASC, having to go back and forth between procedures in different specialties results in a lot of wasted time. Organize each day according to a different specialty, suggests Ms. Pilla. For example, do all eye procedures on one day and then all orthopedic arthroscopies the next. This way, administrators will be able to design supply chain strategy more easily around the procedure schedule, and inefficiencies and wastefulness can be nipped in the bud, she says.

3. When overhead/express charges become the norm. When an ASC administrator starts seeing increases in overhead or overnight delivery charges regularly that means supply chain is not being managed properly, says Ms. Pilla. "This means that the ASC is scrambling to get the supplies that it needs," she says. "Which means that the person in charge of supply chain is not checking the schedule closely and is not anticipating needs."

4. When cases get cancelled due to lack of supplies. An ASC cannot function without supplies, and a failing supply chain affects every part of a facility, notes Ms. Skora. Every member of the clinical staff depends on supplies being there.

"If the supplies aren't there to perform a surgery there is nothing else to blame but poor supply chain management. There is no bigger failure within the supply chain than a cancelled case due to lack of supplies," says Ms. Skora.

The failure of supply chain strategies at different ASCs is likely the result of different problems. Each facility needs to assess their strategy, identify weaknesses and make changes. "Do your research before you change your strategy," says Ms. Skora. "Jumping the gun and changing things drastically can cause scrutiny."

However, there are some general steps ASCs can take to fix a failing strategy:

1. Consider partnering with a GPO. Use all the tools available in the industry, including group purchasing organizations, says Ms. Pilla. These organizations can help ASCs get lower pricing and standardize supplies. They can also provide ASCs with delivery schedules that suit the functioning of a surgery center.

2. Consider hiring a management company or outside consultant. According to Ms. Skora, management companies can offer training and guidelines that can help turn around a failing supply chain strategy. If it is not possible for an ASC to hire a management company, consider hiring an outside consultant to evaluate your strategy. "They can provide your supply chain staff with a new point of view. A fresh perspective can re-energize an overwhelmed staff," she says.

3. Don't forget that standardization is key. "Simplicity is really the foundation for the success of an ASC," says Ms. Pilla. Most stakeholders that want to be a part of an ASC come into it knowing that the way to deliver quality care at a lower cost is to be consistent.

It is important to have the conversation regarding standardization of supplies with physicians early on. Ensure that physicians understand how standardization can help reduce costs. "Not everyone will get all the products they want, and certain numbers and types of supplies will be used, but it will result in huge cost savings for the facility," she adds.

4. Monitor your supply spend consistently. Know what your par levels are, says Ms. Pilla, and if you find yourself adding products last minute then know that something is wrong. Also, there needs to be a value analysis process for product costs when selecting supplies for your center.

5. Don't bury your head in the sand. A good ASC manager is one who is invested in the success of the business and who confronts problems head on, according to Ms. Pilla. ASC administrators need to take action when a supply chain strategy isn't working. "They have to be willing to change as well as be flexible in order to successfully move forward from a failed strategy and ensure surgery center growth," says Ms. Pilla.

More articles on ASCs:

Reshaping adversarial relationships into partnerships: How payers are heading to the ASC team
5 key changes in CMS guidance for ASC surveyors
Baptist Health proposes surgery center, urgent care center in Florida

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