3 Major Supply Chain Management Challenges Driving Physician Offices to Evolve
By Medline Newsroom Staff | July 10, 2019
Dynamic shifts in the healthcare environment are complicating supply chain management even further for physician offices nationwide. More facilities are consolidating, reimbursements are declining, and models for delivery and payment are shifting.
These types of forces create new challenges for both physician offices associated with group purchasing organizations (GPOs) and health systems. Here is a look at three major emerging challenges.
Managing Classes of Trade:
Operating units, like physician offices and hospitals that belong to the same health system, often pay different prices for the same products because they belong to different classes of trade. A class of trade refers to customer categories for market participants and designates access to certain products at specific prices for contract purchases.
While this approach worked in the past, before practices became a part of large systems or groups with diverse service offerings, new approaches to finding savings and delivering value are available. The Medline Newsroom sat down with Scott Wakser, vice president of national sales for physician office about what he is hearing out in the field and how Medline is helping customers navigate through changes. He says health systems and GPOs are struggling to convince manufacturers to recognize that one organization may have multiple facilities operating in different classes of trade.
“The relationship between manufacturers and their health system or GPO partner is evolving as the need to find savings begins to play a larger role in the decision-making process,” says Wakser. “Providers are looking for price parity on their purchases so they pay one price for the same box of gloves rather than multiple prices because they are used by various classes of trade.”
Rostering is the process GPOs and health systems use to identify non-acute facilities to allow them to leverage the value of their organization’s GPO relationship or to manage their purchasing through their health system’s internal procurement unit. This process requires all non-acute facilities of an organization to have their delivery address, phone numbers and member IDs in their GPO’s system or its health system’s procurement system so that their location’s purchases can be tracked and analyzed.
“For physician offices working with a GPO partner, the challenge is particularly thorny due to the lack of a dedicated procurement and purchasing infrastructure that is common among health systems,” says Wakser. “If I own 500 practices, making sure they’re all rostered and tied to the GPO is like herding cats. It’s a challenge, but important to do so the manufacturer can recognize what pricing options are available to the customer.”
Health systems seek to operate more efficiently, but without transparency into their product usage, they may misallocate resources, duplicate purchases, or minimize their buying power. Rostering allows distributors to monitor the GPO’s eligibility for pricing tiers while allowing health systems to monitor their facilities product usage in order to identify their needs and find savings. If a health system treats its non-acute facilities the same as its acute facilities, it will miss the opportunity to optimize their supply chain.
With so many classes of trade and evolving patient needs, Wakser says customers and GPOs are hungry to collaborate with vendors that can serve both to unlock greater supply chain savings and transparency.
“If you’re a specific care setting or system, Medline teams are experts at identifying potential gaps and co-designing customized solutions,” Wakser says. “This holistic approach helps customers achieve sustainable change through the ultimate goal of driving down cost and improving care delivery.”
Learn more about Medline as a partner for physician offices, collaborating to drive sustainable change and improving care delivery here.