How ASCs could use Amazon for supply chain: 3 insights from Drinker Biddle & Reath's Neil Olderman

Neil Olderman, partner at law firm Drinker Biddle & Reath, and president of Drinker Biddle & Reath's consulting firm Innovative Health Strategies, counsels hospital and health system clients on group purchasing arrangements, capital equipment acquisitions, as well as clinical and purchased services agreements.

Mr. Olderman shared his insights with Becker's ASC Review.

Note: Responses have been lightly edited for style and clarity.

Question: How can ASCs improve their supply chain operations?

Neil Olderman: We have seen a focus in the past on price and standardization initiatives. In the normal progression, we would expect to see more cost-saving initiatives around utilization, reduction of waste in connection with custom procedure trays, and improvement of inventory management systems and ordering systems. We expect and have seen tremendous opportunity in addressing utilization through use of data, comparing outcomes and trends with blood product, drugs and even supplies. The data is powerful, enlightening and can deliver meaningful results if cleansed properly, shared openly and used to counsel surgeons and staff appropriately. Even cleaning up physician preference card inconsistencies, old information and duplicate information will bear fruit immediately in terms of supply chain operation.

ASCs should also evaluate whether Amazon has better pricing and delivery opportunities than typical distribution channels. While Amazon is not yet at the point where an ASC can fulfill all of its supply needs through it, there may be current opportunities for commodity purchases through Amazon and other product-purchasing opportunities in the future that will permit ASCs to obtain better pricing or to reduce inventories through just-in-time purchasing.

Q: What do ASCs and other healthcare organizations get wrong about supply chain?

NO: Here, we often see a battle between what is right for the individual surgeon in the ASC along with his or her view of the patient's needs, and what makes sense for the business. This is a constant struggle that breeds waste and imperfection. We know that this is a battle resolved with accurate information and that resolving disputes over standardization, utilization and waste is often done through education, numbers and outcomes. But this is an exercise, it is time-consuming and it involves change, conflict and proper communication. All of these things are hard to come by in the busy daily workflow of an ASC. How can they mitigate challenges? Agreeing on good, clean data and relying on a strong, clinically oriented management team, or using independent clinicians or consultants with a clinical background, is an excellent way to approach improving standardization of products, clinical utilization of supplies and blood during procedures, and [waste reduction] in the supply chain. Sometimes, a neutral source with proper experience is the fresh set of eyes needed to cut through the confusion and find a pathway that works.

In addition, supply chain is about value, which is not always the same as the lowest price. More vendors are looking for opportunities to build relationships beyond the mere sale of a product because they realize their ability to retain a customer increases when they add value by leveraging their experience in training, technology or service offerings. ASCs looking to improve supply chain technology may want to talk to their GPO or other supply chain partners to see what information technology resources those partners may offer for free or reduced cost in exchange for a longer-term contract or other consideration.

Q: What do you foresee Amazon's role being in the supply chain landscape?

NO: Amazon has the potential to become a supply chain solution of choice for the ASC market. Clearly, there will be some products and pharmaceuticals which will need to come through the traditional healthcare supply distribution channels, but Amazon is working with clinics and small hospitals today and can be a resource for the commodity item needs of many ASCs. We think that over the next three years, Amazon will emerge with better technology to link to the ASC’s supply chain management systems to automate better the use of a formulary or restrictive item master index. There will also be better and more frequent delivery capabilities over time. Amazon has one credo within its DNA, and that is, 'How can we improve the experience for the customer and make it less costly?' This approach, put to proper use in the ASC space, will be attractive to ASCs. However, as we have written about in the past, there are [unique] needs within the healthcare space [best] addressed through the traditional healthcare supply chain distribution channels. But Amazon has the capital and the problem-solving spirit to create value for ASCs in the future and may likely become a key player in the ASC supply market.

To participate in future Becker's Q&As, contact Rachel Popa at rpopa@beckershealthcare.com.

For a deeper dive into ASC industry trends, attend the Becker's 17th Annual Future of Spine + Spine, Orthopedic & Pain Management-Driven ASC in Chicago, June 13-15, 2019. Click here to learn more and register.

More articles on supply chain:
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