Servicing the Wild West of supply chain beyond the hospital confines
Acute care hospital-based supply chain leaders and managers may be well aware of the burgeoning number of nonacute care facilities and opportunities because many have been providing product services to them for years, as reader demographic responses to annual surveys conducted by Healthcare Purchasing News have shown.
The global pandemic during the last few years seems to have accelerated the expansion, growth and trajectory of influence and interest beyond the traditional sites, including freestanding ambulatory surgery centers (ASCs), clinics, hospital-based outpatient surgery centers, diagnostic imaging and laboratory centers, physician practices and urgent care centers. Now comes a stronger and deeper push into communities, complete with retail clinics, advanced home health services and the newest shiny retro-offering, Hospital-at-Home (HaH) programs – retro being an apt modifier because the concept and term technically debuted back as the late 1990s. [Editor’s Note: For additional highlights, see “Future care: There’s no place like home,” March 2021, https://www.hpnonline.com/surgical-critical-care/article/21210677/future-care-theres-no-place-like-home, and “Supply chain delivers hospital-level care at home,” July 2022, https://www.hpnonline.com/sourcing-logistics/article/21271718/supply-chain-delivers-hospitallevel-care-at-home.]
Supply Chain – concept, function and hospital department – strives to unite distribution, inventory and logistics throughout all these myriad service areas. Because acute care hospitals may represent the majority of supply chain costs and expenses, supply chain leaders and managers work to control the process through centralization and standardization. But this budgetary strategy and tactic can be challenging when applied to enterprises outside of the hospital’s four walls.
Distribution and logistics company executives who spoke with HPN acknowledge the uncertainty and variability that supply chain leaders and managers face today and will continue to face tomorrow.
Juggling wiffle balls (Q1)
Providing supply chain services to ASCs and more acute-oriented HaH programs requires a bit of flexibility in both mind and practice. [Editor’s Note: For explanations of the differences between home health and HaH, read the sidebar, “Home health vs. hospital-at-home: They’re not the same?” on p. ]
At least two topics resonate with either ASC or HaH supply chains, according to Kyle Hoffman, senior vice president, Sales, National Accounts, Medline Industries.
“Strategic sourcing remains one of the main challenges in the industry,” he posits. “For example, as the ASC market continues to see accelerated growth, an increase in higher acuity procedures and expanded revenue lines, they need to continuously evaluate if they are getting the best quality products, at a competitive price, with high service levels to ensure they have the ability to provide high quality patient care and outcomes.
“Contracting models continue to evolve and be in flux, with today’s healthcare environment of perpetual mergers, acquisitions and consolidation across independent and the owned, managed and leased ASCs,” Hoffman continued. “Changes in ownership or management companies may present operational and technological challenges, but these shifts can also create opportunities for ASCs to partner and benefit from alternative contracting models, strategic sourcing partnerships and to find more value from both new or existing distribution relationships.”
Hoffman acknowledges that the relative “newness” of HaH creates one of its challenges, along with the economics.
“There is still a lot of discussion and opinions around what the space will ultimately look like,” he observed. “And, while COVID really accelerated opportunities for hospitals to focus on their HaH programs, the situation also forced the implementation of special waivers and HaH reimbursement models that are still being sorted out in the post-pandemic environment.”
From a supply chain perspective, however, the fundamentals remain, regardless of site.
“Getting the right supplies to a patient’s home is just one small part of making the HaH model work,” Hoffman indicated. “There are staffing needs — nurses, physicians or medical experts – along with HAH equipment, testing and supply transportation, and in some cases dietary considerations. The logistics involved with delivering HaH will always be a challenge – particularly when you consider the diverse locations that will need HaH, such as rural, urban and high-density locations.”
Based on customer conversations, HaH certainly seems here to stay, according to Hoffman.
“We hear from our providers that taking care of patients in home settings is achieving better outcomes, so we see the demand for HaH rising – and, in some cases, HaH makes financial sense for providers as well. But how providers deal with HaH reimbursements and logistics present some serious challenges,” he said. “At Medline, we are seeing some healthcare systems that are all in on HaH. These systems are investing the time and resources – some even setting up separate corporations within their own organizations -- to really tackle and grow in the HaH space. Bottom line, as an industry, we still have a lot of learning to do.”
“The primary distribution challenge for a hospital-at-home program is rapidly outfitting many sites of care for patients with complex and dynamic health conditions,” he noted. “Hospital-at-home programs tend to rely on fragmented networks of third-party vendors to deliver products directly to the home. Each of these vendors creates a link in an overall clinical supply chain. However, the more links in the chain, the greater likelihood one of them could break and disrupt the patient’s care plan.”
Home health, however, may not experience the same issues.
“The traditional home-based care vendor may also not be familiar with – or oriented to – the high-acuity nature of hospital-at-home in which a patient’s needs change throughout the day,” Hoopes indicated. “One- to two-hour service is critical to the success of hospital-at-home programs – not next-day. For hospital-at-home to scale, the supply chain needs to be as reliable and durable as it would be for the brick-and-mortar facilities.”
Size matters, too, Hoopes emphasizes.
“Additionally, ASCs and hospital-at-home programs manage smaller patient volumes than traditional hospitals,” he said. “So, creating economies of scale can be challenging for both. ASCs still deliver facility-based care and can get better utilization of their materials. Something as simple as a blood pressure cuff can easily move from room to room within an ASC, which is less feasible for hospital-at-home programs.”
Stretching for systemness
Jake Crampton, CEO, MedSpeed, recognizes that the migration of care to more convenient locations for the patient represents the broader transformation the industry has been undergoing during the last several years.
“This expanding physical footprint of care delivery presents numerous challenges, but the most prevalent challenge is getting supplies to all of the locations where they are needed, while also harnessing the power of ‘systemness,’” he noted.
“A strong logistics backbone that connects points of care gives organizations the ability to share inventory to reduce the cost of goods and eliminate waste,” Crampton continued. “To realize these potential gains, the operational network must be thoughtfully designed for proactive agility, as opposed to a reactive disconnected series of movements. An optimized logistics network allows organizations to capture the benefits of scale and integration. Connecting the physical points of care can also help uncover additional savings opportunities.”
Crampton encourages organizations to optimize every element of the supply chain to adapt to future challenges and needs, which translates into vendors, suppliers, distributors and the supply chain working together in support of care, wherever it is taking place.
“The difference between the needs of ASCs and hospital-at-home programs is primarily one of urgency,” he said. “ASCs typically operate in a predictable manner, with surgeries scheduled in advance. From a supply, equipment and logistics perspective, that predictability helps support teams to provide efficient support services. Conversely, hospital-at-home programs often have a sense of urgency that matches their acute care counterparts. This leads to rapid turnaround times for hospital equipment, pharmaceuticals, supplies and more to be delivered to the home.”
Because ASC procedure volumes are expected to grow steadily for the next decade, Chris Luoma, senior vice president, Global Product Management, GHX, recommends one key strategy to implement.
“To support this growth, the non-acute supply chain should be automated,” he urged. “ASCs will need a thorough understanding of supply chain utilization, including detailed data streams to identify operational and cost efficiencies. Another challenge will be helping to ensure the proper usage of products across various care settings, especially when other entities like physician groups or third-party home health delivery agencies own those locations. Coordinating the delivery of supplies to the point of care in a timely and efficient manner will be crucial.”
But Luoma points to federal and payer activities to affect the future of HaH development and growth.
“Hospital-at-Home’s growth will largely depend on whether reimbursement waivers are extended past Dec. 31, 2024,” he said. “However, many HaH programs indicated they would keep their programs in place regardless of whether the waivers continue. In addition to facing the same utilization, cost and logistical issues as ASCs, HaH programs may also need to coordinate additional resources, such as aides and prepared meals.
“Both ASCs and HaHs will require solutions that help manage the entire supply chain from inventory management through the procure-to-pay lifecycle and do so without the dedicated supply chain staff found in an acute care setting,” Luoma added.
HaH should be considered a component of the continuum of care, according to Kelly Williby, vice president, ASC and CHC sales, McKesson Medical-Surgical.
For the HaH market segment, supply chain must focus on the fundamentals, insists Julia Crist, COO, Inbound Health.
“Supply chain operations for hospital-at-home services face a key challenge – ensuring timely delivery of products and services,” she said. “Hospital-at-home patients require urgent attention, such as in-home imaging or infusion, and delays can lead to readmission or adverse events. Shorter service levels and broad geographic coverage require agile staffing. However, staffing shortages and cost constraints hinder the supply chain industry's ability to adapt to real-time operations.”
Scott Jackson, vice president, Surgical Solutions, Henry Schein, sees promise for ASCs in the areas of systems and teams.
“ASCs face certain supply chain challenges that can present opportunities for improvement and optimization,” he said. “For example, medical supplies have the potential to consume a large portion of an ASC’s annual budget. This creates the need to have processes and systems in place that allow ASCs to effectively manage their supply spend, which, depending on the people, processes, and systems in place, can create a financial burden on the center. Having team members that understand contracting, pricing and effective inventory management is important. Additionally, employing inventory management systems that are specifically built for an ASC is critical.
Making a difference (Q2)
If centralizing supply chain represented an uphill slog for standalone hospitals and integrated delivery networks, achieving that model for ASCs and HaH programs likely will not be any easier.
“Creating a decentralized hospital-at-home supply chain that balances scalability, reliability and cost-effectiveness requires a different way of thinking,” said Cardinal Health’s Hoopes. “No matter how a hospital-at-home program is implemented, the strategy needs to consider getting the right product to the home as quickly as possible. For example, if a hospital chooses a hub-and-spoke model, using the physical hospital as the central nucleus, it needs to track the fully burdened transportation, inventory carrying cost and labor spend of the program. Notably, the costs of stat courier runs can quickly surpass the cost of the materials it is delivering.
“The other major consideration is ensuring the courier is qualified to enter the home,” he warns. “If this is not a service that can be provided, it requires many additional players to be involved in the administration of care. In this same sense, consider the regulations applicable to your state. The transportation solution, for example, should be appropriately licensed to transport pharmaceuticals or medical waste, as both are common needs for hospital-at-home programs. Are the drivers appropriately credentialed, trained, vaccinated and capable of entering the patient’s homes? If not, you will need a different solution to deinstall technology and collect unused materials.”
Inbound Health’s Crist outlines three strategies to consider.
- Collaboration and Partnerships: “Foster collaboration among supply chain stakeholders, including hospitals, healthcare providers, technology companies and logistics partners. Forming partnerships and sharing resources can help address staffing shortages and enhance overall operational efficiency.”
- Technology Integration: “Embrace innovative technologies like real-time tracking systems, Internet of Things (IoT) devices and data analytics to optimize supply chain operations. Implementing these technologies can provide visibility into product and service delivery, enabling better coordination and timely response to patient needs and hospital-at-home provider service level agreements.”
- Last-Mile Delivery Optimization: “Focus on improving last-mile delivery capabilities, as this is critical for timely supply chain operations in hospital-at-home services. A supplier may explore options such as local fulfillment centers, dedicated delivery networks or partnerships with courier services to ensure prompt and efficient delivery to patients’ homes.”
GHX’s Luoma ponders how the availability of supply chain staff on hand will affect decisions, opening the door to automation.
“Given the likely lack of dedicated supply chain staff in these settings, supply chain teams should think about how to operate the supply chain ‘remotely,’” he advised. “Simple to use, consumer-like end user tools to facilitate ordering and inventory management are one step. However, creative solutions combining video capture, robotic process automation (RPA) and AI may allow the supply chain to be fully automated therefore not requiring staffing or supply chain expertise to be onsite. These tools can not only help automate standard procure-to-pay and inventory management processes, but they can also serve as data capture tools feeding analytics that help further improve operations and patient outcomes.”
Henry Schein’s Jackson highly recommends in-house supply chain expertise at the ASC.
“Having a dedicated ASC employee who manages the center’s supply chain is critically important, especially for mid to large volume ASCs,” he said. “Since medical supplies are a large expense, there is a need to have someone who manages the center’s purchasing, inventory PAR levels, pricing and GPO contracts. Preferably someone who has some supply chain experience is also helpful. This need will become even more important as device intensive procedures, such as cardiac, orthopedics and spine continue to expand into ASCs. These types of procedures are much more expensive to perform, from a supply perspective, than some of the traditional ASC procedures.”
Luoma paints a mental picture of what’s possible with immersive automation.
“Imagine if you will an ASC operating room equipped with video equipment that tracks all supplies used, AI that interprets usage, waste and returns and then RPA ‘bots’ that consume that information to facilitate reordering, invoicing, and payment cycles. This would be a highly efficient supply chain operation all without human involvement,” he added.
Much depends on an organization’s choice of supplier partner, according to McKesson’s Williby.
“Helping our customers get the supplies they need to care for patients is a responsibility we take seriously,” she noted. “McKesson takes a proactive approach to managing healthcare supply chain across a diverse portfolio of suppliers to minimize any impact on the facilities we serve, which I think is key to ensuring we create a healthy supply chain that doesn’t foresee any long-term problems. We’ve been successful in reducing supply chain challenges by proactively monitoring global situations, securing quality products at fair prices and working closely with the Health Industry Distributors Association (HIDA) and government agencies on strategies and best practices to prioritize medical supplies.”
McKesson constantly works on supply chain best practices to support its customers through collaboration, advocacy and investments, Williby emphasizes. “We work hard to help our customers understand trends and risks for the healthcare supply chain with resources from the Health Industry Distributors Association.”
Williby recommends specifically:
- “Where possible consolidate orders,
- Order well ahead of anticipated need, especially for complex items like equipment,
- Be open to ordering different brands, colors or package quantities of usual items,
- Check out ways to order more efficiently using an online ordering platform (such as McKesson SupplyManager), for ordering lists, email notifications, business analytics and financial tools.”
Seek out guidance, help
Medline’s Hoffman cautions against the solo routine.
“There’s no need to go it alone when it comes to staying ahead of supply chain challenges,” he noted. “Providers need to find ways to be creative and optimize their partnerships with other area providers and with their vendor-supplier communities. There’s no shortage of expertise here. Working together, we can find ways to solve problems, anticipate challenges and force multiply – identifying resources and capabilities that trusted partners have and delivering mutual benefit. For example, perhaps a partner provides a capability that frees up staff or headcount. Putting the right partnerships together will allow providers to continue to get better at managing supply chains.”
In today’s healthcare environment, a patient’s experience plays a paramount role.
“Every patient touchpoint and interaction along the care journey contributes to a patient’s overall experience,” asserted MedSpeed’s Crampton. “Even something as seemingly simple as the delivery of a pharmaceutical to the home represents an extension of the care team. Careful coordination and a well-designed delivery network are fundamental to making each of these interactions high-quality. Patients have never had more choices for home health care. Supplies, medicine and other patient-critical items that are lost or damaged can result in patient harm, clinical downtime, and a significant decrease in patient trust and satisfaction.”
Attitude makes all the difference, according to Henry Schein’s Jackson.
“Effective inventory management typically comes down to having the right people, processes, and technologies in place to ensure long-term success,” he said. “People that understand the importance of inventory management, and who are passionate about the topic, are necessary. From there, invest in technologies and inventory management systems that are uniquely built to meet the patient and supply chain workflow needs of an ASC. Ensure these technologies are built with the ASC’s needs in mind, versus the needs of a hospital.
“For example, ASCs have regulations and requirements that differ from hospitals. ASCs must adhere to guidelines set by the Centers for Medicare and Medicaid Services (CMS) and are subject to state regulations. ASCs also usually have a smaller, specialized staff consisting of surgeons, anesthesiologists, nurses, and personnel who are experienced in outpatient procedures. This differs from hospitals which have a more extensive range of equipment, departments, and staff. Lastly, workflows in an ASC and hospital – from patient admission to follow-up care – are not the same. These items should be kept in mind when determining inventory management technologies for the ASC,” Jackson added.
Countering the supply chain challenges ASCs, Hospital-at-Home programs experience
Many supply chain leaders and managers bear some degree of accountability and responsibility for servicing healthcare facilities beyond the acute care hospital. They can include ambulatory surgery centers, clinics, diagnostic imaging centers, physician offices, urgent care facilities and even home health, along with the newest emergent service of “Hospital-at-Home.”
Healthcare Purchasing News asked distribution and logistics company executives how they help healthcare provider organizations with products and services for ASCs and Hospital-at-Home programs.
“Cardinal Health at-Home Solutions took a fresh look at high-acuity care in the home and determined this exciting new care model required a different distribution approach. We launched Velocare in 2022, a supply chain network and last-mile fulfillment solution capable of reaching patients in one to two hours with critical products and services required for hospital-level care at home. Since our launch, we have since grown the offering to support hospital-at-home programs around the country. We deliver scalability, reliability and cost savings by carrying the most-needed products on our rolling ‘warehouses.’ Velocare technicians not only deliver a wide breadth of products including medical supplies, home technology and meals, but also go into the home to perform services such as technology installation and collecting and disposing medical waste. Over 70 percent of our orders are fulfilled in less than two hours.
“Here's a simple explanation of how Velocare works: A patient has a need to be admitted to a participating health system; if eligible, the patient is given the option to receive care at the hospital (brick-and-mortar) setting or be admitted to the hospital ‘virtually,’ physically receiving care within their own home. Upon confirmation that the patient will be treated in-home, the Velocare ‘warehouses on wheels’ (small-format depots and short-haul delivery vehicles) travel to the patient’s home and set up everything needed for that patient to be ‘admitted’ and receive high-acuity care in their own home. This includes everything from technology (monitors, oxygen, etc.) to meals – and, when the patient is discharged, we return to their home and ‘unset’ everything up.
“We know that these programs have incredible potential to decrease overhead costs for hospitals, drive efficiency with clinician protocols and improve patient outcomes by decreasing exposure to hospital-acquired infections or medical errors. Above all, bottom line is that everyone is truly more comfortable in their own homes – we’re able to bring the highest quality care to patients, no matter where they are.”
Alex Hoopes, senior director, Strategy & Execution, Velocare Distributed Supply Chain, Cardinal Health at-Home Solutions
“One of the biggest pain points we see with our surgery center customers is the ability to store a large amount of product. As more procedures come into the outpatient setting, our customers need space to add additional ORs which increases their profitability. Our ability to bring products into stock, store in our distribution centers and deliver next day helps them overcome space constraints and frees up the opportunity for growth.
“In addition to storage challenges, we offer solutions to help support clinical care, financial performance, and operational efficiency. Examples include staff training, safety protocols, reimbursement challenges, equipment management, inventory solutions, freight management and more.”
Kelly Williby, vice president, ASC and CHC sales, McKesson Medical-Surgical
“As care continues to shift outside of the four walls of a hospital, Medline is dedicated to continually look for ways to support our customers across the entire continuum of care. We add value to hospitals, ASCs, and other provider partnerships by listening, analyzing, and customizing solutions to an organization’s specific needs. We are committed to investing in people, products, and programs so we can continue to help our providers deliver quality care regardless of care site.”
Kyle Hoffman, senior vice president, Sales, National Accounts, Medline Industries
“Inbound Health has had to develop a flexible and agile workforce that can adapt to changing demands. We’ve cross-trained employees to perform multiple roles and functions, allowing for better resource allocation during peak periods and addressing staff shortages more effectively. One of the most important roles on our teams is that of the community paramedic, who can deliver a wide array of care in real time. By training on things like biometric monitoring setup, phlebotomy, and starting IVs, we have been able to address urgent patient needs that may have ultimately resulted in the patient returning to the hospital.”
Julia Crist, COO, Inbound Health
“We know that patients expect best-in-class care, and MedSpeed addresses this expectation by becoming an extension of our customer’s team: A logistics partner that is professional and dependable. Our team of analytics experts creates an optimal and custom network that can integrate deliveries across functions and that can be expanded rapidly. Connecting the physical points of care enables MedSpeed customers to uncover additional savings opportunities and scale with agility. MedSpeed's employee team structure, custom technology, and unique quality program support our customers so that they can provide the best care for patients.
“We use proprietary technology to ensure that each item gets to the right place at the right time. Through our customer portal, customer team members can track items and easily order service online. Our 24/7 control center oversees each route in real time and our team of analytic experts creates custom reports with clear visuals of the transportation network and where they have discovered optimization opportunities.”
Jake Crampton, CEO, MedSpeed
“We understand the needs of ASCs, being that we work with them day in and day out. Our goal is to help ASCs enhance efficiencies while continuing to provide high-quality same-day care. To that end, we are always looking to provide solutions that can help harness all the exciting opportunities that ASCs have to offer. Currently, Henry Schein Medical’s order management system allows ASCs to manage all vendor transactions from one ordering portal to help simplify the ordering, receiving, and inventory management processes. It is a comprehensive materials management platform designed specifically for surgery centers.
“We also provide services to ASCs that may differ from that of a hospital. Examples would be low-unit-of-measure delivery, next-day delivery, low minimum order requirements and late in the day order cut-off times. ASCs have limited space for inventory, and these services allow them to manage a leaner inventory.”
Scott Jackson, vice president, Surgical Solutions, Henry Schein
Home health vs. hospital-at-home: They’re not the same?
Spot the services of home health and hospital-at-home in a single sentence and you might surmise they represent synonymous terms.
And you’d be wrong, of course.
The word – and location – of home may be the common denominator in the equation, but the numerator is different.
Healthcare Purchasing News asked distribution and logistics company executives to define the two terms to delineate, if not differentiate, between what either does. Some even share background history on the concepts and demonstrate the diversity in acronyms and terms.
“The fundamental differences are the patient’s complexity and acuity. Hospital-at-home patients are acutely ill and are, by Medicare’s standards, sick enough to be hospitalized, whereas home health patients’ needs are not as complex. Hospital-at-home patients will generally have greater healthcare needs and more dynamic care plans that could change day-by-day or even hour-by-hour. A hospital-at-home patient’s length of care is also usually shorter (4-6 days long) than a home health patient’s (typically 60-day episodes).
Alex Hoopes, senior director, Strategy & Execution, Velocare Distributed Supply Chain, Cardinal Health at-Home Solutions
“Hospital-at=home (HaH) generally refers to inpatient services performed in a patient’s home that are billed as inpatient services. Hospital At Home is usually considered when a patient can receive the same access to and level of care for their needs as they would in a hospital setting. Take for example an individual who would visit an ER with an injury. After triage and stabilization, this patient could be transferred to an inpatient unit for wound care. Healthcare organizations with HaH programs may instead transfer this patient into the HaH program and deliver the care in the patient’s home. We saw an acceleration of HaH during COVID when the Centers for Medicare & Medicaid Services launched the ‘Hospitals without Walls’ initiative allowing hospitals to transfer patients to other facilities, including their home.
“Home health care typically refers to outpatient services performed in a patient’s home. Typical examples are blood draws, weight checks or physical therapy associated with chronic disease management. These services may involve lower licensure requirements, minimal supplies and are as much about patient engagement and interaction as they are about care delivery.
“Home health tends to be a long-term engagement whereas HaH programs are designed for shorter, more acute care such as a care episode.”
Chris Luoma, senior vice president, Global Product Management, GHX
“The basic differentiator between home health care and Hospital-At-Home is the level of care provided to individuals living at home.
“Home health is primarily focused on non-acute and supportive care for patients recovering from surgery, suffering from a chronic disease, requiring extensive wound care or facing a debilitating disease The primary demographics receiving care under home health are over the age of 65, and the growth of home health has been closely linked to a rapidly aging population.
“While there will be some overlap in patient mix, HAH is focused on delivering acute-care level of care at home in order to forego hospital stays. HAH patients tend to have higher acuity, which require certified health providers like doctors, nurses and even para-medical personnel – making more regular, frequent visits with patients via telehealth or in person. HAH can also involve more technology for monitoring and testing. Decentralization of acute services from hospitals during the pandemic continues to drive the recent emergence of HAH models.”
Kyle Hoffman, senior vice president, Sales, National Accounts, Medline Industries
“Hospital at home replaces an inpatient hospitalization and is provided over a short duration of time. In hospital at home, a patient has daily physician or nurse practitioner assessment and management in addition to daily in person care from nurses, therapists, and community paramedics. In person visits are extensive, often lasting an hour or more.
“Home health is focused on rehabilitation, often after a hospitalization, and is delivered over the course of 30-60 days. In a typical home health episode, patients receive short visits periodically, typically 10, 30-minute visits.”
Julia Crist, COO, Inbound Health
Healthcare crossing streams with retail?
Retail clinics may represent the newest entrant in the delivery of healthcare beyond pharmacy but they’re generating waves of interest, spurred by pandemic-driven access and convenience.
None of these outlets offers surgery of any kind, so they do not compete directly with ambulatory surgery centers (ASCs). Nor do they brush elbows with hospital-at-home (HaH) programs or home health services because they don’t offer acute and post-acute care procedures. Instead, they concentrate on and specialize in primary care exams and shots, the kind of “gateway” procedures traditionally provided in a physician practice.
In recent years, retail outlets like CVS, Target (which offers CVS pharmacy services in its locations), Walgreens, and Walmart expanded their patient care services for customers beyond prescription drugs at the pharmacy to include healthcare visits with nurse practitioners and physician assistants. Amazon has also been migrating into the healthcare space, along with Best Buy with its “Current Health” brand that assists with digital technology integration inside customer-patient homes and also is working with several providers, some prominent names, at least one of which respectfully declined to participate in this story.
Yet distribution and logistics company executives with whom Healthcare Purchasing News spoke, remain mixed as to whether these retail clinics serve as competition, “co-opetition” or collaboration. Their viewpoints span the gamut.
Cementing valuable ties
“In-patient care is the U.S. healthcare system’s single biggest expense, so there is a compelling value proposition to deliver this kind of care better and more affordably,” acknowledged Alex Hoopes, senior director, Strategy & Execution, Velocare Distributed Supply Chain, Cardinal Health at-Home Solutions. “We have seen many types of healthcare organizations approach hospital-at-home from different angles and for different reasons. Traditional brick-and-mortar hospitals have the most experience with high-acuity care and face capacity challenges with an aging Baby Boomer generation, which makes space augmentation via hospital-at-home a compelling option.
“Home health providers are experienced with lower-acuity, home-based care delivery and want opportunities to broaden their impact,” Hoopes continued. “Then, there’s a whole segment of lower-infrastructure or digitally native organizations who have predominantly cut their teeth with urgent care or primary care for chronic conditions. These organizations could reasonably consider strengthening their patient relationships by caring for them across the entire spectrum of their healthcare needs, including hospitalization. Broadly, the hospital-at-home industry – and patients, specifically – will benefit from more organizations jumping in to solve some of this care delivery model’s unique challenges. Yes, these organizations could look at each other as competitors, but it would also be compelling for partnerships to form that combine complementary capabilities into a more robust care delivery ecosystem.”
Chris Luoma, senior vice president, Global Product Management, GHX, concurs that opportunities for cooperation in this space exist.
“The more points of care available to provide high-quality care, the better,” he noted. “One key will be aligning reimbursement incentives, so organizations are compelled to drive the patient to the best location regardless of who operates that location. For instance, a patient who doesn’t have complications after leaving an ASC could benefit from a follow-up at a retail store providing easy access to durable medical equipment, pharmaceuticals and comfort supplies. Or perhaps a HaH organization may leverage retail outlets as part of their own supply chain given the large number of supplies and in place distribution network. Ensuring reimbursement drives these possible behaviors is a key to cooperation.”
Retail clinics can serve as logical and natural service extensions to acute and nonacute healthcare organizations, according to Julia Crist, COO, Inbound Health.
“Retail healthcare ventures have an additive impact on hospital-at-home companies in several ways,” she indicated. “Firstly, they provide valuable collaboration opportunities. For instance, forming partnerships to utilize retail outlets for last-mile delivery of medications, medical supplies, and home healthcare equipment can significantly enhance the efficiency of hospital-at-home operations.
“Secondly, retail healthcare ventures, such as those offering digital technology integration, contribute to the advancement of digital health solutions,” Crist continued. “By integrating these technological innovations into their own operations, hospital-at-home services can improve patient monitoring, remote diagnostics and telehealth capabilities, ultimately enhancing the quality of care provided.
“Overall, the collaboration and technology integration offered by retail healthcare ventures present mutually beneficial opportunities for hospital-at-home companies, promoting efficiency, innovation and improved patient outcomes,” she added.
Nodding across the aisle
McKesson Medical-Surgical doesn’t see retail clinics as competitive, but “instead [as] innovative opportunities for collaboration within the ASC market,” according to Kelly Williby, vice president, ASC and CHC sales.
“No matter where you or your patients are, we can deliver products quickly and efficiently thanks to our strategic network of distribution centers coast to coast,” Williby said. “McKesson Medical Surgical is one of the largest medical distributors with more than 250,000 products available with same-day shipping to 95% of customers, [so] you can get the products you need, when you need them.”
Kyle Hoffman, senior vice president, Sales, National Accounts, Medline Industries, views the influx and influence of retail clinics with curiosity.
“Retail healthcare ventures will continue to try to increase patient populations and grow patient revenue,” he observed. “In the ASC space today, procedure mix and acuity vary greatly by location. The average ASC performs a combination of both low- and high-acuity procedures in an operating room or procedure room setting, which has little crossover to the retail ventures today. There could be a potential for collaboration in the future with either pre-or post-operative care, but currently, there’s not much risk or benefit of retail playing a role alongside an ASC today.
“The current competition between HaH and retailers is more interesting,” Hoffman continued. “The big retailers are very good at building name recognition. They have effective supply chains and they know how to get things to the home. The best retailers are strong marketers. They know how to connect with people, build brand loyalty and keep customers coming back. Patients are already accustomed to going to retail healthcare ventures for some aspects of their healthcare. However, patients typically trust their health to their doctors and nurses and technology inside healthcare systems. So, it will be interesting to see how HaH and retail start to work together – or compete.”
Scott Jackson, vice president, Surgical Solutions at Henry Schein, remains non-plussed about the fuss.
“The impact of retail health on the ASC market has been relatively limited, without a clear discernible effect in either direction,” he noted. “However, there could be a play from a referral perspective if retail physicians refer to local surgeons who perform surgeries at local ASCs.
“Additionally, expanding beyond our core base of office-based physicians and entering the home health market has been a long-standing strategic goal of Henry Schein’s medical business,” Jackson indicated. “The U.S. home health care market size was valued at $142.9 billion in 2022. In January 2021, Henry Schein acquired Prism [Medical Products], allowing us to expand Henry Schein Medical’s continuum-of-care delivery model and move closer and to interact directly with patients.” Jackson referenced a report from Grandview Research as his source of home health market data (https://www.grandviewresearch.com/industry-analysis/us-home-healthcare-market-report).
HaH: How complex are logistics for acute care at home?
Distribution and logistics company executives point out that supply chain services for hospital-at-home programs can be very complex and involved. Just how challenging might fortifying a program like this be?
“Hospital-at-home is complicated from a logistics standpoint because a lot of care is delivered in a short period of time for very acute patients, so services and supplies need to be delivered quickly in order to meet service levels,” said Julia Crist, COO, Inbound Health.
“Since these patients are sicker and have more complex healthcare needs, these needs also tend to be positively correlated to the amount of healthcare goods and services they require to return to health,” echoed Alex Hoopes, senior director, Strategy & Execution, Velocare Distributed Supply Chain, Cardinal Health at-Home Solutions. “Also, given the care plan can change frequently based on the patient’s progress, the clinical supply chain needs to respond in-kind. The patient may be on IV antibiotics early in their episode and then switch to oral medications, or they may need to start supplemental oxygen therapy after a few days. All these changing needs must be met in short order so the patient can safely remain in their home.”
Chris Luoma, senior vice president, Global Product Management, GHX, outlines six factors that make HaH programs logistically complex:
- Response time: “Given it is an ‘inpatient’ transfer event, response times are generally measured in hours. This means that a patient’s home may need to be transformed into an inpatient, acute care-like setting within just a couple of hours of the request.”
- Supply complexity: “This transformation may involve equipment (e.g., bed, monitoring devices), supplies (e.g., dressings, pharmaceuticals, waste disposal) and personnel (e.g., nurses, supply chain support).
- Visibility: “A healthcare organization may be unable to extend its [enterprise resource planning (ERP) system, inventory or warehousing tools beyond the inpatient acute care setting. And if it is possible, it still requires a more advanced technical skillset to set up and manage.”
- Coordination across organizations: “HaH programs are often run by or involve organizations that are not directly part of the hospital. This may include a HaH administrator or contracted clinical staff.”
- Duration: “Because HaH programs deliver care similar to inpatient settings, and the care is relatively short-term, both the setup and the breakdown of the HaH service must be considered.”
- Cost: “There are added costs involved with the logistics of delivering the last mile.”
Luoma visually depicts how a home will need to be transformed into a micro-hospital site.
“Ensuring everything and everyone arrives in the right place at the right time for this specific episode of care is logistically complex,” he indicated. “There are no storage closets to run to in the event something was forgotten, the supply is expired, or equipment breaks. Supplies without necessary equipment or equipment without proper staffing are fairly useless. And you don’t want to have one supply per box showing up on someone’s doorstep – think about how frustrating it is when Amazon sends your order in five different boxes. If the patient experience is not improved, the goal of the program may be completely missed.”
Luoma lists a number of best practices from healthcare organizations running successful HaH programs. They include the following:
- Having the technology and tools to communicate across organizations;
- Quickly identifying and assessing where care will be delivered in order to qualify for HaH; Understanding and packaging supplies necessary for the episode of care;
- Managing the delivery and pick up logistics for equipment, supplies and staffing; and
- Having kept the patient’s experience front and center.
“Further, these organizations understand that HaH is not like an ASC where you have some storage and a more predictable schedule and corresponding supply chain. Nor is it like home health where the care duration is longer, involves fewer supplies and likely no equipment,” Luoma added. “And the challenges and complexity differ across care settings. For example, it's highly unlikely that a clinic or an independent physician's office has dedicated supply chain experts on staff.”
Rick Dana Barlow | Senior Editor
Rick Dana Barlow is Senior Editor for Healthcare Purchasing News, an Endeavor Business Media publication. He can be reached at [email protected].
