At ASP Global, our team of experts has the privilege of learning from the best in the business. We work hand-in-hand with innovative supply chain executives from leading health systems to better understand the health system supply chain landscape.
It’s changing, fast.
As recently as a few years ago, health system supply chain leaders could find their peers or identify learning opportunities by looking at a few key descriptors: GPO affiliation, health system type (AMC, community hospital, etc.), and perhaps total spend or bed count as a proxy.
Today, healthcare supply chains support a dizzying array of provider service models; system size-variation has been consolidated to “large”, “mega-large”, or “enormous” and GPOs are evolving into service companies beyond aggregate purchasing.
We believe that our industry needs new ways to define themselves and to help leaders plug into the right network by identifying an affiliate group of leaders to exchange ideas and learn from.
Can we build new common ground around shared strategic priorities?
Here are some of the big strategy questions that face our partners today:
They are making key decisions about self-distribution.
Strategic explorations of self-distribution usually align to one of three models:
- “Taking the plunge”: making a large capital investment upfront to move a majority of system spend into self-distribution.
- “Starting a pilot”: testing self-distribution with a flagship facility or for defined categories.
- “Entering partnerships”: partially or wholly-outsourcing to 3PL partners, to allow the health system to control some steps on the value chain without taking end-to-end ownership of it.
It’s worth noting that these models can be flexible when required. A few organizations who “took the plunge” early ended up engaging additional partnership support to maintain high-quality operations.
We think that the growth of self-distribution makes sense as a driver of health system value, especially in this era of mega-systems. Achieving expected ROI on such a large investment requires patience and careful management. We know that direct sourcing for clinical supply categories drives exponential value for self-distributing systems and we’d expect to see direct sourcing expanded in all categories of purchasing.
Self-distributors should learn from each other and from out-of-industry. Their business challenges are unique and will diverge further away from non-self-distributing organizations as they grow in sophistication.
They are adding new competencies to the supply chain organization.
New supply chain strategies require new supply chain skills and organizational competencies. Data and analytics challenges are top of the list for most leaders. Their organizations need to move from being an end-user of third-party software tools to becoming their own IS experts: designing their own data infrastructure, completing large-scale integrations, building custom analytic views, and defining new tech-enabled workflows.
Other new capabilities for supply chain organizations include:
- Novel hiring and staff development strategies: Healthcare supply chain organizations face a tight talent pool. They will need to compete for the best staff and invest in all new hires.
- Serving patients-as-consumers: Supply chain leaders are accustomed to dealing with diverse end-users of products in the health system and they are fluent in clinical quality as a product value metric. What’s new for supply chain leaders is thinking about consumer preferences and tastes for products and services. Supply chain leaders might have considered consumer preferences in the past, for select purchased services – food service, perhaps valet parking, signage and wayfinding, or landscaping. But health systems now compete for consumers and sustained consumer loyalty directly, in a market crowded with disruptive technologies and service models. Supply chain leaders must learn to think about some categories as “patient preference items”, to incorporate the consumers’ point of view.
We think these challenges are shared by most supply chain leaders; best-in-class organizations might take the lead in educating the industry on a particular topic.
They are coping with system M&A.
Post-merger, all eyes turn to the supply chain organization to deliver on new economies of scale and centralization. We think that delivering on the promise of the mega-merger will be career-defining for the supply chain executives involved.
There are lessons to be learned from post-merger activity for all supply chain leaders, not just those on the frontlines of a headline-worthy merger. Activities like IT systems integration, multi-facility product standardization, and staff structure alignment happen on an unprecedented scale in large mergers, but also happen inside every health system.
We expect executives who are in the trenches for supply chain merger activity to learn from each other, but we also expect lessons for all supply chain leaders from this activity. We look forward to reading “merger memoirs” when the dust settles.
Everyone is aligning with new strategic partners.
Your strategic relationships used to be defined by your GPO relationship. Now, your GPO relationship is only one piece of your network of supply chain support. Who else do you partner with? Can that relationship form the basis of an affiliate group?
We’re always thinking of ways that we can help our own customers learn from each others’ best practices in direct sourcing, and we know that other strategic partners to health systems share this drive to connect.
We expect new connections in new venues as strategic partners like ASP Global impact more health systems. Perhaps strategic partners will gather to serve and educate supply chain executives, or partner companies will align to one of the new segments proposed above. One-size-fits-all executive education and networking will no longer serve leaders well – instead of seeing the same suppliers sponsor and influence industry-wide confabs, we expect to see very focused conversations thoughtfully convened around topics or services of shared interest.
Our team at ASP Global wants to learn how these strategic challenges will shape the healthcare supply chain landscape of the future. We’re especially interested in how supply chain leaders will regroup into peer or affiliate groups. When our industry gathers together to learn and network, we’ve traditionally separated ourselves as providers or suppliers; by bed count; by GPO participation. Today, health systems can be suppliers of services. Bed count might be replaced with “state count” as systems grow and grow. GPO affiliate labels might be replaced by “self-distributed/partner-distributed”.
We’re curious: how do you define your healthcare supply chain organization today? Does that definition reflect your strategy? Does it help you to find your peers and learning opportunities? We are ready to support you wherever you are in your journey.
For more information about ASP Global services, please contact William Fallon at william.fallon@aspglobal.com.
