In the constantly evolving healthcare industry, it’s imperative to prioritize a standardized, efficient supply chain to adapt quickly to industry changes.
Ken Rasbid, National Sales Director for the physician office platform at Cardinal Health, weighed in on these changes, “Market influences like inflation and supply chain disruptions have further escalated the importance of reviewing every savings opportunity available. While there has always been a desire to reduce costs, I have seen a heightened interest by health systems to gain visibility and develop a better understanding of their non-acute spend.” With the recent shift in the sites of care to the non-acute space, all health systems can learn from non-acute supply chain best practices and apply these lessons to their own facilities.
Cardinal Health recently collaborated with McLaren Health Care, a fully integrated, nonprofit health care system including 15 hospitals in Michigan and Ohio, ambulatory surgery centers, imaging centers, a 490-member employed primary and specialty care physician network, commercial and Medicaid Health Maintenance Organizations (HMOs) covering approximately 640,000 lives in Michigan and Indiana, home health, infusion and hospice providers, pharmacy services, a clinical laboratory network and a wholly owned medical malpractice insurance company. In 2016, McLaren’s supply chain launched an initiative to standardize their non-acute space for increased visibility and efficiency with Cardinal Health. While McLaren’s clinics were functioning well, they were not taking full advantage of their purchasing power as an Integrated Delivery Network (IDN). “Most customers want to take steps toward better integrating their non-acute purchases into their supply chain, but also recognize the challenges and complexity associated with the necessary work. This isn’t easy to do alone as most customers are faced with more workload across less support resources. As a result, we’ve come to believe that it is Cardinal Health’s responsibility as a distribution partner to lead our customers to the next step in that process of continuous improvement,” Rasbid shared.
McLaren chose to expand their relationship with Cardinal Health to build a more efficient supply chain protocol that increased support for providers and aligned with the greater McLaren strategic goals. Until this point in time, McLaren Medical Group (MMG) was not participating in supply chain initiatives and most purchases were happening off-contract. Supply chain management leaders had minimal visibility into clinic additions and changes, purchase orders were rarely created in their existing system and there was no established process for communicating with clinics. MMG was not using the system’s Enterprise Resource Planning (ERP) software and each clinic was functioning as its own, standalone facility — ordering from a mix of local and internet suppliers like Amazon, in addition to procuring supplies from an office distributor partner. Each clinic had a process unique and of its own that had evolved to effectively support their individual office’s practice but left few consistencies across sites. These all became part of the strategy in their collaboration with Cardinal Health.
McLaren and Cardinal Health worked to create an ideal solution that would provide them with specific capabilities to achieve established goals. This included the ability to follow an order from placement to receiving and leveraging the purchasing power of their 200 clinics and 15 hospitals via the Cardinal Health distribution network. Throughout the project, McLaren also wanted to ensure they were optimizing contracts. This was a win for the providers as well, as it ultimately enabled them to move between facilities with a consistent product experience.
Today, McLaren has completely transformed its clinic supply chain with a standardized, efficient process. Staff now places and sends orders through a series of internal approvals supported by Cardinal Health and the McLaren corporate team. If they do find a discrepancy, McLaren staff works directly with Cardinal Health for resolution. In terms of brand consistency, McLaren has achieved high levels of compliance with the brands they use and are meeting compliance promised to vendors and the GPO across all their locations. Organizational leadership now has access to data and insights that were previously out of reach. This data is used to perform comparisons across the organization. McLaren is also moving into streamlining supplies of nuanced and higher-impact products. Rasbid stated, “Once armed with relevant information, better standardization decisions can be made to leverage the right product and right price to the right place. This model has created a virtuous cycle for each participant. The Medical Group, the IDN Supply Chain team, and the Distributor all feel the benefits of standardization as it produces simplification. This not only reduces costs but also increases predictability to provide a stable foundation in support of continued anticipated growth.” McLaren Supply Chain Management has strengthened its position to work with the McLaren Medical Group and Cardinal Health Non-Acute/Physician Office team as they build their non-acute footprint. In overhauling their supply chain strategy, McLaren has established best practices that now inform their purchasing processes across the organization:
- Stick to a routine communication cadence — ongoing supply touchpoint meetings and communications are a must
- Be prepared to teach your clinicians and staff about the ordering system
- Establish policies that require POs, e.g., institute “No PO, no pay” policy
- Capture as much current usage as possible for your entities
- Introduce staff to standardized documentation tools
- Use distributor reps to assess your clinic’s programs at the ground level
- Develop a standard process to capture clinic additions/closures/changes
- Tap into your distribution partner to create a supply handbook that supports staff in the change
- Encourage clinics to reach out and share insight as your procurement process evolves
- Leverage the fact that staff working at more than one location or overseeing multiple locations are especially receptive to formulary alignment
- Look for a distributor partner whose reps will help drive optimal system processes, not enable clinics to adhere to historical norms
- Start early — this process took two years of pre-work
Read the full case study to view all lessons learned and apply these key takeaways to streamline your own supply chain system. Collaborate with Cardinal Health to improve patient outcomes, drive efficiencies and reduce costs. Learn more at cardinalhealth.com/medicaldistribution.