As ASCs and surgical hospitals seek new ways to reduce spending without affecting patient care, healthcare leaders often overlook one key way to improve their bottom line and ensure operational excellence: Establishing a strong distributor relationship.
A properly aligned distributor relationship can help drive operational improvements, ensuring ASCs thrive in the changing healthcare environment, according to Chris Childers, the national sales director of strategic accounts for Dublin, Ohio-based Cardinal Health.
Mr. Childers spoke with Becker's Hospital Review about the dynamic healthcare landscape and how a distributor relationship can provide ASC leaders solutions to the industry's growing list of challenges.
Editor's note: Responses have been lightly edited for length and clarity.
Question: What key challenges are ASCs and surgical hospitals facing today that are different than a year or two ago?
Chris Childers: In my opinion, there are three key challenges: consumerism, reimbursement and competition. With consumerism, we continue to see patients look at the cost of procedures more than they have in the past. Patients are now comparing costs of care at an ASC versus a hospital. In regards to reimbursement, regulators are looking at new procedures to bring to the ambulatory space and how to reimburse them, which poses challenges for surgery centers and hospitals, where the procedures have historically been performed. There is also heightened competition from integrated delivery networks, hospitals, operators or management groups, as well as vendors and manufacturers. Essentially, players in this space continue to see the value and potential of business in the ASC market, adding to the competition from all angles.
Q: How can distributors help ASCs and surgical hospitals overcome these challenges?
CC: The first thing a distributor should do for its customers is skillfully manage logistics to ensure a facility's operations and supply chain function efficiently. Having logistical expertise to make the day-to-day operations run as smoothly as possible for busy surgery centers is imperative. Without that expertise and confidence that the supply chain is a well-oiled machine, you can't begin to solve the other challenges. Secondly, once operations are managed well, a distributor can help improve clinical efficiencies. Specifically for Cardinal Health, we leverage our clinical team, made up of former perioperative nurses, to complete clinical assessments that diagnose inefficiencies, find unnecessary expenses and provide solutions to cut costs without affecting patient care. The third benefit of a proper distributor relationship is understanding the best cost to serve model for each customer. The right distributor will use a cost-to-serve model that brings value to each facility, and provides transparency so you can easily see the value.
Q: What are the benefits of a distributor-led supply chain assessment?
CC: ASCs or surgical hospitals should expect their distributor to be able to help them achieve operational excellence through in-depth assessments of their supply chain and clinical operations. At Cardinal Health these assessments help customers improve first time fill rates, remove excess or expired inventory and find solutions to the space constraints in ambulatory facilities.
Cardinal Health these assessments involve our account and clinical teams diving into the operations of a facility for two to three days to really observe how things are managed. Because we’ve done these assessments across the nation, we are able to aggregate our learnings and provide solutions that a facility may not have thought of or implemented in the past. Our clinician team then creates a summary of findings and an actionable plan for the surgery center leadership and staff so they can focus on improving inefficiencies.
I believe these assessments should take place on a regular basis, and probably aren’t done as often as they should be in many facilities. If you aren't looking closely at your clinical and supply chain operations at least once a year it’s likely that you will miss out on cost savings opportunities.
Q: What is the key to a strong distributor relationship?
CC: Relationships thrive when vision is shared. It's not only critical to build specific mechanisms to hold each other accountable to reach mutually agreed upon goals, but it is also important to develop tailored strategies and approaches for each customer based on the unique needs of their operational model.
Those are the first things I look at within these relationships. For example, my team uses these relationship-building strategies to create strategic roadmaps and tailored marketing campaigns on conversion opportunities to drive value for our customers.
It's one thing to put something on paper that shows value, but it's a completely different thing to have people realize the savings associated with a business relationship. Cardinal Health has trackers in place and clear communication between facilities and our own team to ensure everyone is on the same page. To overcome challenges and drive improvement, it all comes down to transparency and holding each other accountable in the business relationship so both parties understand the long-term value.