Under One Roof: Sidebars

Edition: May 2011 - Vol 19 Number 05
Article#: 3716
Author: Repertoire

Integrating docs no magic act

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, a 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.”

Discipline needed

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.”




Will IDNs DIY?

As hospital systems acquire physician practices, IDN supply chain executives should take the opportunity to step back and evaluate their distribution options, says Jamie Kowalski, a Milwaukee, Wis.-based supply chain consultant. And they have several. They can maintain a dual distribution system, with one primary acute-care supplier and one primary non-acute-care supplier. They can try to use one supplier for all sites. Or they can do it themselves. All options require work and thought.

For example, if the IDN decides to maintain two distributors, the supply chain executive, along with his or her distributor partners, need to rationalize the workload, says Kowalski. “The small hospital in the IDN might be consuming no more than a large clinic. Because of the volume and frequency of delivery, it might make sense for the hospital distributor to distribute to some of the clinics and ambulatory surgery centers.

“They need to ask, ‘Here’s what we have, now what makes the most sense? Who should be doing the delivery – given the distances, variety and frequency – that will get me, the customer, to lowest cost?’”

The lowest-cost option might be self-distribution, says Kowalski. “I defy anyone to convince me that the most cost-effective model” is to rely on a multiplicity of distributors, express companies, courier services, etc., to drop off products to multiple locations in the IDN. “You see there are hundreds of players, and you have to ask yourself, ‘Isn’t there a better way?’”

Self-distribution can work, says Kowalski, provided:

  • The supply chain leader has the skill to pull it off.


  • The organization isn’t afraid to take a risk.


  • The geography of all facilities lends itself to self-distribution.


  • Clinicians are willing to standardize on products across sites and hence, reduce SKUs in the central distribution center.


  • The organization is willing to invest in technology, such as a warehouse management system.
“IDNs are already going to physicians offices for lots of reasons,” says Kowalski, who has consulted independently and on behalf of distributors. They’re delivering specimens, mail, records and film. “Intersite transportation is huge. If they could add a toteful of supplies, they’re delivering it for nothing. That’s something a distributor can’t do.”


The ‘C’ word

Will vendor credentialing find its way into non-hospital sites?

Will vendor credentialing hit non-hospital sites? Alternate-site reps may be asking themselves that question, particularly if IDNs continue to acquire clinics and other non-hospital providers.

According to those with whom Repertoire spoke, if credentialing does sprout up in non-hospital facilities, chances are it will be in surgery centers first. In fact, the country’s largest surgery center chain, Surgical Care Affiliates, Birmingham, Ala., already has a system in place.

“It’s inevitable we’ll see it more and more,” says Bill Barr, vice president, healthcare services, Henry Schein Medical Group.

Intermountain Healthcare, the Salt Lake City, Utah-based IDN, requires credentialing for reps calling on physicians’ offices and surgery centers located in Intermountain hospitals or on hospital campuses, says Jo Ann Autenrieb, vendor access program manager, supply chain organization. Intermountain has seven surgery centers located on hospital campuses.

The IDN has 180 clinics, most of them removed from Intermountain hospital campuses. Reps calling on those clinics are not required to be credentialed, though Intermountain is in the process of reviewing its credentialing policies in an attempt to standardize procedures across all its facilities.

The Accreditation Association for Ambulatory Health Care, which accredits approximately 4,600 ambulatory care facilities, does not call for vendor credentialing per se. But its Accreditation Handbook for Ambulatory Health Care 2011 says, “The organization must have a written policy that addresses all other persons allowed in patient care areas that are not authorized staff (students, interested physicians, health care industry representatives, surveyors, etc.), including evidence of patient consent.”

“We do see our solution being implemented today, particularly in surgery centers,” says Bill Hayes, president and COO, Vendormate, Atlanta, Ga. In fact, credentialing among surgery centers “seems to be moving at a pace similar to what we saw two years ago in acute care facilities,” he says. Surgical Care Affiliates is one of the company’s clients. But Vendormate has yet to see much, if any, activity in physicians’ offices or long-term-care facilities.