IDNs may be acquiring physician practices and/or employing doctors, but they’re not always integrating them from a supply chain point of view.
“I’ve probably asked 20 or 24 supply chain executives, ‘How has [the acquisition of physician practices] changed your ability to execute value analysis and standardize on products?’” says Jamie Kowalski, Milwaukee, Wis.-based supply chain consultant. In many cases, the answer is, “Not at all.”
That’s puzzling, says Kowalski. “Heretofore, we’ve said it’s difficult to work with physicians because they’re free agents; they can take their practice and go elsewhere” if they’re displeased with hospital policies. But if they are employed by the IDN, shouldn’t the supply chain executive have some kind of leverage?
“My sense is, it should make a difference,” he says. “As employees, doctors and surgeons should be held accountable for their financial performance. If [the clinician] insists on using a product in a procedure for which the hospital loses money because of the price of the item, [he or she] should have a financial interest in that,” says Kowalski.
If the doctor or surgeon is convinced an item is clinically superior and that his or her patients need it, that’s one thing. “But non-clinicians ought to be demanding an answer to the question,” he says. “In many cases, they don’t ask, because they’re frightened.”
True integration can occur in IDNs if supply chain executives, working with their distributors, apply disciplines learned on the acute-care side to their newly acquired non-acute-care entities, says Marshall Simpson, senior vice president, sales and operations, Owens & Minor. “That’s part of the value of acquiring physician practices or employing physicians,” he says.
Among those disciplines are what Simpson calls a “formularic” approach to product ordering, pricing integrity, and retrospective review of procurement practices and price levels. “Just as important, if not more important, is the process by which orders are placed and products are delivered, and making sure expectations are understood and are consistent throughout the system.
“The key is having senior level support in the IDN,” he says. “If they have that, it will get done. But if the IDN is only half-hearted about it, their time and resources would be better spent dealing with physician preference on the acute care side.”
For more, see JHC June’s cover story, “The Distribution Dilemma.”