In today’s healthcare landscape, every hospital is trying to save money and one of the smartest ways to achieve that is by examining the supply chain. The key, however, is to look at more than just upfront supply costs. Dale Locklair, vice president of procurement and construction at McLeod Health, says rather than looking for the cheapest costs, the better supply chain approach is to look at best value.
“Everyone in the healthcare industry is looking to reduce their spend,” Locklair says. “One way we look at reducing cost is to find the right product for the right use to get the best result. It’s not always about cost; it’s about value. Over the last few years, we’ve worked with quality and safety teams and done value analysis to make sure we get the right products. It’s simple, basic stuff and the kinds of things all hospital systems ought to work on.”
McLeod Health is a regional healthcare provider in North and South Carolina. The system serves a 15-county area and operates five hospitals with approximately 1,000 beds among them. It also operates a number of other facilities and medical offices. Needless to say, McLeod Health goes through quite a bit of supplies and is continuously investing in making its supply chain network more efficient.
Its most recent investment is a suite of procurement software called GHX, which bolts onto its electronic ordering system. Locklair says the software clamps down on rogue spending by guiding employees to approved products in the McLeod network.
“We want to drive volume to where we are buying the same products and standardizing,” Locklair says. “It helps to standardize the product by directing requisitioners to the right product for the right use. We have over 6,000 employees so you can imagine that telling them to only buy a certain kind of ink pen because it’s the best value is very difficult to communicate. But when you direct them through technology, it makes it easier to redirect them to what they need while making sure we are getting the right price.”
This level of automation can be seen in several aspects of McLeod’s supply chain. The health system uses a centralized system in which orders for medical and surgical units are fed into one repository and fulfilled via a centralized warehouse. McLeod uses automated replenishment software so that when a product is used it is scanned into the centralized system. That system will then read current levels of that particular supply, and if the supply has reached its minimum reorder point, a new order is automatically placed. The system also has a built-in interface that ties the supply directly to the patient’s bill if it is a billable item. Supplies are purchased through McLeod’s group purchasing organization called ROi and delivered via its primary distributor, Owens and Minor. McLeod is developing an identical system for its facility operations.
People and Place
“If you think in terms of the 3 million square feet we manage and the number of light bulbs, heating and air filters we have, it’s necessary to have a set of standards,” Locklair says.
“We have effectively taken people out of positions that were not value-producing work and through automating processes take those people and put them in a position where they can work one-on-one with nurses’ units,” he adds. “The supply chain employees have become more of advisors and counselors rather than box pushers, and that’s been a direct result of the things like the procurement suite and the centralized warehouse.”