McKesson Case Study

Leading Change: working together to improve the supply chain at Lehigh Valley Physician Group


October 2021 – The Journal of Healthcare Contracting


There are many players in the healthcare supply chain, and they all have a role in building a more resilient, standardized and cost-effective healthcare system. Employees who work in supply chain roles are critically important – but so are the distributors who help facilitate the flow of supplies and the clinicians who use them to deliver care. When it comes to making changes in an organization, all three are important.

The importance of supply chain, clinicians and distributors working together has grown as care continues to shift outside of the hospital. Health system supply chain leaders are increasingly tasked with procurement and inventory management in non-acute settings. During a July 2021 event sponsored by McKesson Medical-Surgical, 75% of attendees said their organization has a dedicated non-acute supply chain leader, and 25% had added this role within the last year.

Luckily, supply chain leaders don’t need to do this work all on their own. A case study of the Lehigh Valley Physician Group (LVPG) in Allentown, PA provides a template for how diverse stakeholders can work together to improve supply chain performance.

LVPG, part of the Lehigh Valley Health Network, recognizes the need for supply chain, clinicians and distribution partners working together to support quality care and reducing costs. With 2,000 physicians, 800 advanced practice locations, 20 express care locations and 13 community clinics, collaboration is critical for sustainable change.

LVPG’s strategy for achieving quality metrics

Like many healthcare organizations, LVPG is engaged in value/risk-based contracts where it must work toward achieving quality metrics within its patient populations. Examples include driving down hemoglobin levels among diabetic patients and increasing adherence to statins among the hypertensive population.

According to LVPG’s Vice President, Clinical Services Kim Korner, standardizing processes, practices and products has been key to improving these metrics:

“In the grand scheme of things, we want to do the right thing for our communities and patients. As a very large network trying to drive change, standardization is a big focus. And collaboration with supply chain, clinicians and our distribution partner are extremely important to achieving our standardization and quality goals.”

Working together with a physician-led, supply chain supported approach

As healthcare organizations encourage supply chain, clinicians and others to work together on product standardization, many have adopted a clinically integrated supply chain model. In a system like this, supply chain professionals are not the decision makers when it comes to product selection. Instead, they share their expertise with clinicians, who then make educated decisions on products that offer the best clinical outcomes at the lowest cost. This is commonly referred to as a “physician-led, supply chain supported” approach.

At LVPG, the Biomed Value Analysis Team and Medication Safety Council evaluate products considered for use. The team includes representatives from clinical services, clinical education, supply chain management, biomed, medication safety, infection control and nursing. They perform what Korner describes as a “full value analysis,” “We run the entire gamut of looking at various factors through this overall committee: Whether the product is right for the patient, its expense, its supplier, the reimbursement, etc.”

Simplify non-acute procurement by standardizing to a single distributor

As LVPG worked to standardize products, they explored the benefits of working with a non-acute distributor. Their non-acute facilities had unique product needs, and required operational models and solutions designed for the way they worked.

While LVPG relied on McKesson for distribution of medical-surgical supplies, the organization had been using a different distributor for pharmaceuticals. Purchasing pharmaceuticals from McKesson provided LVPG a “one stop shop” for products across their non-acute sites of care. This boosted efficiency, as all practice locations could use the same technology for formulary management and ordering.

“In the past we had a decentralized process where the practices had accounts set up with different distributors. Supplies came from one company but medications from another,” Korner explains. “When we started thinking about standardization and ease of ordering for practices, then it really made sense to start looking at everything McKesson offered.”

Easy ordering from a standardized formulary of products

LVPG’s supply chain, clinical services and project management teams collaborated with McKesson to inventory products used in a select group of practices and set a baseline for a standardized formulary. From there, they set par levels to avoid overordering, overstocking or stockouts.

To place supply orders quickly, LVPG uses McKesson ScanManagerSM, a bar code scanning system. A practice staff member scans the product shelf label or bar code and enters the quantity needed. They send their order by placing the scanner in its cradle, logging into the practice’s McKesson SupplyManagerSM account and importing the list.

Korner says using ScanManager has helped practices stick to to their formularies, driving standardization and supporting quality initiatives. The automated system also improved ordering efficiency and accuracy.

“ScanManager helps clinicians be as productive as they can be, which supports our overall Lean principles,” she said. “They can access our approved formulary, whether through ScanManager or McKesson’s website, and get everything they need as opposed to having to log into multiple systems and go in multiple directions. They can do what they need to do from a supply perspective, quickly and efficiently, which is ultimately better for our patients.”

Moving to molecular lab testing for a point-of-care approach

LVPG’s collaborative approach includes laboratory testing processes and products. The organization’s lab department is part of its clinical services group, where lab coordinators track point-of-care (POC) testing performed in clinical practices, submit required reports to the state and maintain licensing requirements.

LVPG’s clinical sites had been using rapid influenza antigen detection tests (RIDTs) at the point of care to test for the flu. Rather than switching to another antigen testing platform, the lab coordinators explored molecular testing as an alternative.

Molecular tests are generally more accurate than antigen, but clinical sites typically send these test samples to an off-site lab for processing, which means results can take longer to receive. LVPG reached out to McKesson to see if they could perform molecular testing at the point of care, and if so, what equipment and supplies they would need.

“We wanted the ability to perform accurate testing to get flu, strep and RSV results right there in the office so that providers could immediately begin treating patients who tested positive,” said Korner.

LVPG’s exploratory committee for lab testing included people from across the organization, including lab, supply chain, medical officers, biomeds and clinicians. They came together and shared their knowledge, making an informed decision to move forward with molecular testing.

As Korner explains, the team partnered with McKesson on the strategy and roll-out plan for the move to molecular testing. Based on McKesson’s work with similar customers, the company was able to offer best practices in project management, staff training, policies and procedures. 

“As their distributor we supported LVPG in establishing a clinical, operational and financial value proposition so they could be as successful as possible with the transition,” said McKesson Director of Laboratory Patrick Bowman. “Because of their drive to standardize across the board they were able to get this initiative off the ground very efficiently.”

The Biomed Value Analysis team evaluated the equipment and supplies, and upon their approval, McKesson worked with LVPG to place molecular analyzers at care sites and add testing consumables to the formulary.

“It was a huge undertaking, but everything went well because we walked the path together the entire time,” said Korner. “We are now at the point where over 150 of our offices have a molecular testing platform for flu, strep and RSV.”

Korner adds how the move to molecular positioned LVPG for point-of-care SARS-CoV-2 testing when the COVID-19 pandemic hit the U.S. in early 2020, stating:

“As soon as allocations of PPE and test kits became available, we began performing POC testing for COVID in targeted practices where patients could get their results in 20 minutes versus days.”

The move to molecular has been steadily gaining momentum in U.S. non-acute care practices, with 80% of those surveyed during the Becker’s webinar saying they currently offer molecular tests in their non-acute settings.

Delivering the right care during respiratory illness season

The COVID-19 pandemic has shattered what we think of as a “typical respiratory season.” During the 2020-2021 season, cases of flu were practically non-existent while COVID-19 dominated the respiratory scene. RSV, which is typically seen during the winter and spring months, began spiking in late summer/early fall 2021.

While its hard to predict how future respiratory seasons will go, Korner and her colleagues at LVPG are preparing for whatever might come their way.

“We all wish we had a crystal ball because we don’t know what this coming season will hand down to us,” said Korner. “As a network, we are preparing like we would any other year, deciding on vaccine compliments, pre-booking vaccines and ordering supplies and tests.”

“This is truly unchartered territory,” said Bowman. “What is different from past seasons is the need for companion testing where clinicians can test for flu, RSV and COVID simultaneously. My advice is to establish a plan, stock products, train staff members and create policies and procedures to keep your organization on track. Your distributor can serve as a valuable resource in all of these efforts.”

McKesson’s commitment to excellence starts with our mission of improving healthcare in every setting – one product, one partner, one patient at a time. Take the next step in building a high-performing non-acute supply chain.