Supply chain executives who attended the recent Distributor Insights conference, sponsored by MDSI, publisher of the Journal of Healthcare Contracting, agreed on a couple of things:
- First, unlike the mating ritual between hospitals and doctors of 15 or 20 years ago, this time, it’ll stick.
- Second, hospitals and doctors – whether they are in IDNs, accountable care organizations or something else – will become more tightly integrated than they are today.
Together, these two things spell changes – and challenges – for IDN contracting professionals, distributors and manufacturers.
“Consolidation is here to stay; I don’t think it’s a fad; I don’t think it is going to stop,” said Bill Barr, vice president, healthcare systems, Henry Schein. “Hospitals have too vested an interest in trying to gain market share among the patient population in their marketplace, so they’ll develop a continuum of care that will include nursing homes, surgery centers, home health, retail health, [and more].” Data indicates that as many as 50 percent of physician practices today are owned, leased or managed by an IDN or hospital group. “That’s a big number. It means our customers are getting bigger, [and] we have to compete for that volume.” To succeed, distributors and manufacturers will have to work more closely than ever. “It means we have to mesh together.”
“This doesn’t have the same feel as the 1990s [when hospitals went on a binge acquiring physician practices],” added Ted Thornton, vice president, national accounts, McKesson Medical-Surgical. “It will stay.”
“I’ve talked to more vice presidents of supply chain in the last two years than in my previous 10 years,” he added.
“Things are changing, and changing fast,” said Eddie Dienes, president of PSS. “Whether that change will accelerate or not, I have no idea. But we’re directing our time, talent and resources in this IDN space. We used to say, ‘We serve the physicians in the frontline of healthcare.’ Now we say, ‘We serve the frontline of healthcare, including physicians.’”
Read “Great expectations” for more.