How to Integrate Non-Acute Care Sites Starting with Your Organization's Supply Chain


Tue Mar 29 13:00:29 CDT 2016

Utilizing supply chain as a mechanism to integrate new non-acute care sites into a mainstream organizational culture can be an excellent introductory strategy. ACO formation and the national trend of hospital networks purchasing physician practices have created the need for integrating these previously independent care sites into the larger care and support network. These changes are also prompting traditional hospital supply chain programs to expand beyond the hospital campuses into non-acute care sites such as long term care, continuing care communities, rehabilitation centers, nursing homes, ambulatory surgery centers, home care, and physician’s offices. A team from the Strategic Marketplace Initiative (SMI), a healthcare supply chain executive coalition, has examined this market shift and has created a manual to assist industry professionals responsible for managing this change.


When embarking on an expanded supply program, it is important to recognize that the supply and service needs of the non-acute care sites differ greatly from acute care sites, as shown in the chart below. Many non-acute care sites - having historically operated independently – maintain long standing supplier relationships, consume fewer supplies, have facility challenges, require customized delivery programs, and have very informal supply management programs.


An organization’s decision to in-source or out-source their non-acute supply chain program to a distributor can depend on a number of key factors, including supply chain strategy, logistics, capacity issues, capital requirements, and existing supplier partnerships. Physician practices, which comprise the majority of non-acute sites, have traditionally been served by distributors rather than purchasing supplies direct from multiple manufacturers. Some distributors focus specifically on this market, while others have dedicated divisions. Often a distributor’s representative is a regular visitor to non-acute sites and functions as an outsourced inventory manager. Supply chain programs for home health programs are more challenging, often requiring integration of supply chain with direct care givers since most home care supply chain functions are often performed by home care nurses. While direct supply costs are relatively low in home care, related distribution costs can be high due to geographically distributed patients.


The services to be provided to non-acute customers depend on many factors, including technology platforms and resources available. The provision of procurement and contracting services is a common first choice, as savings on both product costs and service contracts is generally a welcomed benefit. These services are greatly enabled by electronic requisitioning capabilities, so technology becomes a critical success factor. Properly welcoming these nonacute customers to a formal supply chain program is a critical first step in the program’s longterm success. When adding new customer sites, it is critical to first understand the customer’s needs while insuring that the electronic connection for on-line requisitioning and communication be established. Education on proper cost accounting for supplies costs is also an important factor, as previously independent care sites often have very different accounting systems.


Any new supply program will need to measure its performance. While many organizations report that non-acute supply expense can be under 10% of the total supply chain spend, it typically can takes 20% of supply chain resources to service. The most common management metrics are fill rates, customer satisfaction, annual savings, and on-time deliveries.


The product needs of acute and non-acute care customers can vary greatly, with the most advanced technologically-driven products still used at the hospital setting. To minimize disruption, successful product standardization efforts can first focus on standardizing products among similar non-acute sites. Non-acute supply chain programs can often present the opportunity for supply chain professionals from both provider and supplier organizations to educate and train physicians about supply chain and its value to the non-acute provider.


Invitations to engage with supply chain can be a central theme when conducting on-boarding programs or when conducting initial assessments of new customer needs.


Providing supply chain services to care sites external to the hospital campus can be an excellent mechanism for integration when done correctly. Supply chain is well positioned to serve as the “connector” to a mainstream organizational culture, paving the way for the increased clinical integration that will be needed to address the population health and care quality requirements in the years ahead.


The Strategic Marketplace Initiative (SMI) is a non-profit, member-driven organization dedicated to improving the healthcare supply chain through direct information exchange and collaboration between senior healthcare supply chain executives and senior IDN supply chain executives. SMI members include healthcare providers, medical manufacturers, medical distributors, and other healthcare supply chain businesses. Created to influence, shape and advance the future of the healthcare marketplace, SMI provides an open forum for innovative idea-exchange and the development of collaborative process improvement initiatives. Visit