Tag Archives: Healthcare Supply Chain

Four Key Capabilities for Supply Chain Excellence

Brent-Johnson-Amerinet-President-and-CEOBy Brent Johnson, President and CEO, Intalere

Healthcare entities have long been behind the curve when it comes to supply chain success. But in recent years, I have noticed we are beginning to “turn the corner,” and focusing on equipping our organizations and people with the resources and knowledge to elevate the supply chain as a strategic driver of change. At the forefront of this movement, the Association for Healthcare Resource and Materials Management (AHRMM), the premier membership group for healthcare supply chain professionals, began an initiative several years ago built around CQO – Cost, Quality and Outcomes.

Supply chain is now at the intersection of CQO and is best positioned to be a champion of it within their organizations. As such, supply chain professionals should understand and teach the importance of CQO to physicians, stakeholders and other supply chain employees. In a fee-for-value world, progress towards true CQO is absolutely critical. It’s never been a better time to be a supply chain professional. With that in mind, what are some of the foundational capabilities that will best position your healthcare supply chain organization for success?

      1. Analytical Excellence – Understanding links between cost and clinical outcome is impossible without advanced data, analytical and reporting capabilities. Appropriate, applicable data forms are the foundation for financial clarity and also provides the evidence to tie together clinical and operational functions so that all those involved can see the true picture from both aspects. Investing in and utilizing high quality data and spend analysis tools is imperative to reducing costs and maintaining clinical outcomes.
      2. Infrastructure for Physician Collaboration – Effective physician collaboration depends on specialized technological, political and administrative capabilities. Physicians must have a “seat at the table,” from the outset so that they can understand the tools, processes and challenges that affect all decisions. Physicians and others will be better able to support any initiatives because they have collaborated from the outset through collection and analysis of data, identifying opportunities, vendor selection (if necessary) and strategy development. Success depends on their full confidence in the integrity of the process and their voice in determining acceptable solutions. Above cost, their primary concerns include maintaining quality of care, quality outcomes and product/process choice to suit patient needs.
      3. Value-Oriented Culture & Processes – Understanding cost implications of clinical decisions across the care continuum is an indispensable capability in new markets. The ultimate focus should be on patient and clinical benefits, with savings as a secondary consideration. What you will find in most cases is that if you also keep an eye towards minimizing variation in product, service and process, significant savings will be achieved as well. A value-oriented culture which involves stakeholders throughout the organization allows supply chain to be an equal partner in important decisions. Goals must be closely aligned throughout the organization, which allows for leveraging shared strengths and encourages growth and expansion across the continuum of care.
      4. Collaborative Supplier Relationships – “Beating up” suppliers on price is a profoundly limiting strategy. Success depends increasingly on creative, collaborative partnerships. Suppliers reward commitment, so focus on a contracting strategy and portfolio where volume will drive pricing, especially in the case of commodities. Develop appropriate relationships with suppliers that support your mission, vision and values and endeavor to use suppliers as extensions of your teams and capabilities.

Visit Intalere’s website to learn more about our supply chain solutions.

Why Standardization and Commitment in the Supply Chain Makes Sense

Brent-Johnson-Intalere-President-and-CEOby Brent Johnson, Intalere President and CEO

Today’s healthcare supply chain professionals are eager for frameworks that can assist them in analyzing and improving their supply chain for maximum effectiveness. One of the most direct and effective ways to streamline processes and reduce costs is through standardization and volume commitment.

Identifying and eliminating duplication, in some cases helping or guiding providers to use less of something or eliminating its usage entirely, is very important. By eliminating redundancies in supplies, facilities are better able to commit to, and contract with, suppliers to negotiate improved rates. Supply chain data analysis can also provide opportunities for the use of comparable products that can drive costs down dramatically. In many situations, similar products from different manufacturers can be reviewed and declared comparable. The best price then becomes a leading differentiator. Also, in some cases, the same product by different distributors can be found at different costs.

As you begin to work through a standardization strategy, early on, it is generally smart to stay focused primarily on med-surg categories where price is the primary differentiator, and aggregation is the correct strategy. Further, leveraging a standardization strategy for these types of categories can help your organization deploy internal resources to other value-added areas.

In addition to direct cost reduction through better pricing, standardization will also bring down the number of SKUs present within your system. Each SKU stocked within a system adds inventory and maintenance costs. Reduction in SKUs helps reduce the overall expense of inventory management activities, and helps increase supply chain effectiveness.

Finally, product standardization is a platform upon which practice standardization can be built. Less product variation can aid clinicians in improving clinical efficacy through increased familiarity with a single product. It also decreases the need for cross training across different product lines at different system facilities.

Personal preference on certain items does not assist in reducing costs or necessarily ensure a better patient experience or better outcomes. While some exceptions are valid in individual cases, the reasons why individuals or departments deviate from standardized purchasing practices are usually subjective and not grounded in evidence. According to Intermountain Healthcare’s Dr. Brent James and several other nationally-recognized experts on variation, inappropriate variation is a known cause of poor quality and outcomes.

For an in-depth look at how a standardization and commitment program can bring cost reduction and better clinical results, read this success story on how Intalere collaborated with owner Intermountain Healthcare to bring nearly $3 million in savings, process improvement and enhanced clinical outcomes.

Transforming the Perception on the Importance of the Healthcare Supply Chain


By Brent Johnson, President and CEO, Intalere

The healthcare supply chain is complex and very costly. And cost pressures on healthcare coming in the future create a “burning platform” or big need for supply chain to demonstrate their value. The low hanging fruit, or value, of supply chain is still easier to obtain than laying nurses off at bedsides or cutting clinical care. We have a great opportunity to help the industry navigate the future with success.

But the healthcare supply chain faces perception problems that are not inherent in other industries.

For example:

  • The most expensive and high risk items often have the least control.
  • Personal preference drives many product decisions.
  • Healthcare outsources less than most other industries.
  • Purchasing and Accounts Payable are often disconnected.
  • The healthcare industry has the lowest level of trust between buyers and suppliers (of any industry surveyed).
  • Supply chain is still in the basement of many hospitals (literally) – even though non-labor expenses are approaching 50% of total cost structure.
  • Logistics costs in healthcare are more than 10X the costs of the retail industry.

Changing the perception and understanding the strategic importance of the supply chain is incredibly vital to the continued sustainability of healthcare providers. A contract portfolio is only part of a full supply chain solution. Most facilities and their group purchasing organizations (GPOs) leverage volume aggregation in an attempt to primarily solve for one business line, in one vertical, in one expense category. Volume aggregation in the current GPO industry tends to focus on those areas of mid to high category spend and low complexity.

But it’s not sufficient for healthcare to focus solely on cost reduction strategies. Supply chain services include procurement, logistics and effectively helping clinicians to manage standardization and utilization. Providers need infrastructure – people, processes, technology and governance. The scope of the supply chain extends across every healthcare vertical, across every business line and through all expense categories.

Providers need end-to-end supply chain solutions that give them the ability to optimize the people, processes and technology within their systems to deliver the greatest value. Their strategy must include aspects of:

  • Inform and teach me (assessment and education).
  • Do it for me (managed services).
  • Show me (transformation services).

The focus must be on helping to develop transformational solutions and providing information recognizing the importance of the healthcare supply chain in improving efficiency, maximizing financial value and enhancing providers’ ability to offer the highest quality of patient care. Providers must join the revolution to make supply chain excellence a core competency within their organizations and achieve their high-level strategic goals through supply chain initiatives.

New Intalere Member Best Practice Compendium Shares “How the Best is Done”

Brent Johnson Intalere President-CEO
By Brent Johnson, Intalere President and CEO

In today’s challenging healthcare environment, providers, both big and small, must continuously find creative ways to improve operations, maintaining high levels of quality care, while simultaneously keeping an eye on the bottom line. Our members continually strive to implement outstanding and innovative solutions in reducing healthcare costs and improving healthcare quality, providing great benefit to their patients, community and business partners.

We are proud to have recently released the second edition of the Intalere Healthcare Achievement Awards Best Practice Compendium to our membership. The publication is a compilation of completed projects submitted by Intalere members for the company’s annual awards program. We began this compendium project last year as an extension of the awards program because of our belief that it is important to not only recognize the efforts of our members, but also to share these accomplishments with other facilities which are possibly facing similar challenges and may be able to use the experiences of other facilities in assisting them in achieving similar successes.

This project highlights Intalere’s philosophy of a main benefit of engagement and membership in a group purchasing organization – the opportunity to collaborate, share best practices and participate in setting priorities. Much of Intalere’s success results from its philosophy of providing its members a voice in the way we serve them. Intalere actively seeks member input for program development, contracting strategies and supplier selections. By participating in committees, forums and meetings, members gain a voice in developing new programs and enhancing the delivery of healthcare services and their suggestions can be incorporated into every aspect of the organization, with the ultimate goal of maximizing benefits for all members. Likewise these forums also provide the opportunity to gain knowledge from similar organizations that are facing related issues and learning how they are innovating to succeed.

The compendium, under the theme “How the Best is Done,” offers overviews of more than 50 successful projects accomplished by Intalere members. Each project includes the issue or challenge faced, the solution put in place to resolve the issue and the results of the initiative. The hope is that these successes will inspire, educate and provide best practices that other members will be able to implement within their own facilities.

Each year, members submit their completed projects for consideration in four categories – Community Impact and Innovation, Financial and Operational Improvement, Quality/Patient Care Delivery and Patient Satisfaction, Supply Chain/Data Management and Supply Cost Efficiencies. Twelve winners were chosen to receive awards this year, but all of the projects submitted offer useful and worthwhile information that is compiled in the compendium document for the benefit of all members.

Our hope is that the information provided in this publication is helpful to all our members in some way in enhancing their operations, quality of care and patient satisfaction. Over the coming weeks and months, we invite you to follow our blog to read about the successful projects our members have implemented. Together, through collaboration, engagement and access, we can positively impact healthcare delivery for the future.

Join Intalere now to access the entire compendium.

Cost Reduction – Deeper Value Beyond a Portfolio

Wright Dale edited 9922 cropped

By Dale Wright, Senior Vice President of Contracting, Intalere and President, Intalere Choice

A healthy and sustainable operating margin is vital for every healthcare provider. In maintaining that margin, optimizing the supply chain is of critical importance, not simply through cost of products, but through identifying new revenue streams and identifying all opportunities to improve efficiency and achieve savings by prioritizing opportunities and matching initiatives to the organization’s strategic plan.

What are some of the keys to cost reduction in the healthcare supply chain to consider?

Access to a comprehensive, competitive portfolio of product and service contracts – Whether you work with a group purchasing organization (GPO) or not, the depth and breadth of contract portfolio you have access to can offer a clear advantage. Without a contract for coverage, you may be forced to:

  • Negotiate directly with suppliers – given the limitations of resources in many materials management departments, this can be a huge drain on efficiency and resources.
  • Use a different product/manufacturer, if clinically acceptable this would require time-consuming evaluations and assumes a different product/manufacturer is readily available.
  • Pay a higher price

 Not just on the clinical side, with things like:

  • Diagnostic Imaging ​
  • Laboratory
  • Medical/Surgical
  • Physician Preference
  • Pharmacy

 But also on the non-clinical side:

  • Office  
  • Environmental Services
  • Executive
  • Facility Management  
  • Financial Management
  • Foodservice
  • Information Technology (IT)
  • Telecommunications Services and Equipment

Standardization, Utilization and Volume Commitment – Identifying and eliminating duplication, in some cases helping or guiding members to use less of something or eliminating its usage entirely, is very important. Supply chain data analysis can also provide opportunities for the use of comparable products that can drive costs down dramatically. In many situations, similar products from different manufacturers can be reviewed and declared comparable. The best price then becomes a leading differentiator. Also, in some cases, the same product by different distributors can be found at different costs.

To take it a step further, if providers are willing to standardize and also commit a high volume to a supplier or distributor, they can drive further savings.

  • Custom Contracting – Health systems, integrated delivery networks (IDNs) and regional health alliances can also take advantage of custom contracting to maximize savings in high-impact areas. You can engage your GPO to handle the RFP, office and back-office activities, assist with identifying target projects, help evaluate suppliers and monitor contract compliance. Each custom contract represents a unique savings agreement that gives your organization a competitive advantage.
  • Physician Preference Items – Even more significant to the overall success of the supply chain is the effective management of clinical preference items, with their significant cost and impact to the quality of services delivered to the patient. Efficient value analysis processes will ensure that all bases are covered with regard to high tech and high touch healthcare products, including reimbursement, safety, education and clinical credentialing, product standardization, appropriate utilization, and finally, and most importantly to the organization’s cost structure, compliance with negotiated contracts and agreements. 
  • Data and Business Intelligence – Any successful supply chain initiative must be based on good data and tools that can help you  analyze daily spend and provide workable and actionable information to effectively manage costs. This can encompass every supply chain function, including the basics such as contracting and price integrity, e-procurement, inventory control and distribution efficiency that will ensure high quality and cost effective product availability and delivery.

For more insight on the importance of reaching beyond the portfolio to enhance cost reduction, view this video.

The Future of Healthcare Supply Chain – Focus on the Four “P’s”

McCullough, Michael

By Michael McCullough
Vice President, Medical Surgical Contracting

As we observe National Supply Chain Week, October 6-12, and recognize healthcare supply chain professionals for their outstanding contributions to healthcare and the overall success of the supply chain, I thought it would be an opportune time to share my thoughts on the future of the healthcare supply chain and what I refer to as the Four P’s: People, Process, Product and Partnership.

The most important of the P’s is people.

  • The successful supply chain professional of the future will be the professional who views the supply chain as a tightly integrated suite of entities – loosely coupled, yet highly cohesive and working in concert to achieve a common goal or set of objectives.
  • Greater specialization will exist in the business climate of the future, and the supply chain professional who can coordinate the activities and value of these supply chain factors to achieve the organization’s objectives will bring success to their organization. 

Establishing core processes for sourcing, procurement, supplier relationship management and product distribution will be critical for the successful supply chain function of the future.

  • Processes should be lean, they should be rigid, yet allow for the proper management of exceptions. For example, most successful supply chain organizations have a strict process for order entry that ensures only items in the item master can be entered onto a purchase order.
  • However, exceptions arise and a process to manage such occurrences should exist. This ensures that only approved products are purchased by the organization and helps to improve quality and ensure proper pricing is applied.

The successful supply chain organization sees itself as an entity or function that offers a product or service to the overall organization, it views the organization as a customer – and recognizes that the customer has choices and can choose to find a new service provider should the current one not meet its needs. 

  • It is critical that the supply chain organization constantly seek the voice of the customer (VOC) as an input to its product or service development. 
  • This VOC input should be combined with other inputs, generally of an external nature, such as consultants or peer groups, in order to continually sharpen and improve its product or service offering.

Successful partnerships are critical to the ongoing development and improvement of the supply chain organization. 

  • These partnerships come in many forms but generally are categorized as tactical or strategic in nature. Tactical partnerships are critical for the organization’s day-to-day success. 
  • These could be sub-contractors providing a key outsourced service, staff augmentation or the fulfilling of a temporary need. 
  • Strategic partnerships generally take on a longer term form, or are targeting an organizational need that is strategic in nature. 
  • No supply chain organization can successfully stand on its own, or deliver a comprehensive, high-valued service without good partners.

 To learn more about Intalere’s Supply Chain Optimization Solutions, contact Intalere Customer Service at 877-711-5600.