The non-acute supply chain behaves completely different from acute care programs. In this article, I define the two models and discuss a few major differences.
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- Acute care refers to hospitals where a patient receives active but short-term treatment for an injury or episode of illness, an urgent medical condition, or during recovery from surgery.
- Non-acute care refers to surgery centers, physician clinics, long-term care etc. and is defined as specialized multidisciplinary care in which the primary need for care is optimization of the patient's functioning and quality of life.
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Cost to serve - in the acute care market, cost to serve is low and forecasting is much easier because hospitals have greater visibility into their spend. They also have dedicated materials management personnel. In contrast, the cost to serve in the non-acute market is quite high, purchase order history is not always available to support forecasting and they have fewer dedicated resources.
Technology - most acute care hospitals have automated their supply chain programs by now. This effort began 20 years ago. The majority of hospitals leverage an EDI platform to drive savings. Nearly all of them have real time visibility into back orders and price exceptions however data integration with existing clinical and financial systems is still a challenge. The non-acute market trails far behind acute care. These facilities are rarely automated and have little visibility into exceptions or what's actually coming on the truck tomorrow. This lack of visibility costs the non-acute market big money every year. They often staple the paper purchase order, to the paper receipt and paper invoice and manually compare these 3 documents. In fact, many non-acute facilities still rely heavily on the fax machine.
Inventory - Inventory areas in hospitals have a large number of SKU’s with storerooms and storage areas on various floors. The non-acute market, in contrast, has a smaller number of SKU’s and little storage space (supply closets, cabinets, drawers). Without dedicated resources, technology and a disciplined process, running a perpetual inventory can be challenging for both programs.
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Purchasing - in a hospital setting, PO volume can be high even when they order case and pallet quantities for med-surg products. The non-acute market has a lower PO volume and they buy in box and each quantities. In fact, non-acute sites still spend a lot of time ordering from multiple websites, phoning and faxing orders. Most hospitals today have a single sign-on for all suppliers and again greater overall visibility into their spend making it easier to drive change.
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It's no secret that acute care supply chain programs are expanding into the non-acute space. The reality is, acute technologies don’t always work in the non-acute space. They can also be super expensive. There are however, great web-based tools in the market that connect you to all your major business partners and they integrate to clinical, financial and even acute care systems. But not all web-based solutions are the same. Experience really matters because ideally, you want to partner with a neutral technology company that will be here in 10 years thriving and evolving with the market.
For more free information on supply chain automation in the acute and non-acute healthcare space reach out!