In Sync with the Supply Chain

Successfully incorporating physician practices into the IDN is a win/win/win. It’s a win for the physician practice, which can save staff time and dollars spent, thanks to the supply chain expertise of the IDN staff. It’s a win for the IDN, which gets closer to providing the seamless patient experience providers, insurers and patients seek today. And it’s a win for the patient, who receives the appropriate care in the most effective setting.

“Our intent is to place the person into the right environment for care,” says Jim McManus, vice president of finance, St. Joseph Health System, Orange, Calif., a regional healthcare system with facilities in northern and southern California, west Texas and eastern New Mexico. “And that’s not always the acute care environment, which is the most costly and not always the most convenient.” It could be the physician’s office, home health setting, outpatient surgery or outpatient rehabilitation center, he says.

For the past three or four years, St. Joseph has been aggressively incorporating physicians and clinics into its system. Approximately 2,000 physicians from primary care and multispecialty groups are currently affiliated with the IDN.

Physician offices and clinics tend to use a smaller range of products, although there is still significant variety, than acute care hospitals, says McManus. In many cases, those products are different than equivalent ones used in the hospital. In fact, some estimate that 65 percent of products used in the physician class of trade are different than those used in the hospital. “As a patient transitions from acute care to non-acute care, we would prefer that the same products be used in both settings, but we find that the products are usually vastly different,” he says.

Physician clinics rarely have supply chain staff. Rather, someone in the office, such as one of the nurses or an office manager, is typically responsible for maintaining inventory or placing purchase orders in addition to several other roles. Needless to say, there’s no value analysis committee or dedicated supply chain personnel to speak of, and ordering is often done by paper, phone or fax – not strictly via an automated materials system. As such, many alternate-care sites can be heavily dependent on distribution representatives, he adds.

“Practices may depend on sales reps not just to bring in products, but to lend their expertise as to what they believe are the appropriate products the practice should use,” says McManus.

As the IDN incorporated physician practices, the supply chain team considered setting up a centralized warehouse, from which it could distribute products to its inpatient and outpatient sites, but they ruled that out. “We lacked the critical mass to do that,” says McManus. The IDN issued an alternate-care specific RFP. It considered contracting with an acute-care distributor to service both its hospital facilities and physician offices, but ultimately ruled out that approach as well. “They lacked a fully outfitted alternate care model to serve us,” he says, and would not meet the needs of the alternate care sites.

In the end, St. Joseph selected Henry Schein to service its physicians’ offices. The distributor offered good pricing as well as solid working relationships with MedAssets and its affiliate, GroupSource, among other organizations. In addition, St. Joseph valued the additional in-office services offered to support overall supply chain goals.

With Henry Schein’s help, the St. Joseph supply chain team continues to work on integrating its physician practices and clinics. For example, the team works with the clinics to anticipate their capital equipment needs and to align their purchases to the hospitals wherever possible. In addition, the team works with the clinics to standardize products across all settings of care. This process is heavily reliant on data that Henry Schein is able to provide, through monthly and quarterly reporting and accountability. McManus says the process requires that partners answer questions like “have we saved?” and “what do we need to do next?”

Significantly, St. Joseph continues to help its physician groups and practices move toward electronic ordering and away from rep-based transactions, says McManus. In coordination with Henry Schein, “we have invested time and effort in training their staff on how to use our website, when to place orders and how to use best-value products,” he says. Automated ordering helps the supply chain team track purchase volume and product usage, he adds. Reports from Henry Schein corroborate the activity.

Achieving success: Branding a program
The success of any non-hospital program depends on planning and development, says McManus. Supply chain executives have to consciously shift gears, from focusing almost exclusively on the needs of the inpatient setting, to incorporating offices and clinics into the overall program. And the IDN supply chain team has to devote resources to tend to the program, respond to inquiries, work with outside partners, educate and empower staff and physicians, etc.

It helps to create a little excitement around the program, he says. So, rather than simply dictate product usage, the St. Joseph team has developed a marketing program to help the physician groups understand the benefits that the supply chain program can offer them. By branding the program and incorporating its partners, such as Henry Schein, MedAssets as well as St. Joseph Health System, physicians are tied closer to the organization, says McManus.

The results speak for themselves. St. Joseph has helped its clinics save anywhere from 18 to 51 percent, thanks to improvement in materials processes and product standardization. “And we have better information now, to help us set up future strategies for contracts,” says McManus. In addition, St. Joseph’s administration reports a level of physician satisfaction. The program is working well according to the operating committee, which bodes well for growth and expansion.

“The program has also given us the opportunity to bring the physicians closer to our system by letting them know that they’re using a St. Joseph Health System product and process.”