What adjustments do supply chain teams need to make as more care is moving outside the traditional care setting?
May 2024 – The Journal of Healthcare Contracting
McKinsey & Co. estimates that up to $265 billion worth of care services, representing up to 25% of the total cost of care, for Medicare fee-for-service (FFS) and Medicare Advantage (MA) beneficiaries could shift from traditional facilities to the home by 2025 without a reduction in quality or access. That represents a three- to four-fold increase in the cost of care being delivered at home today for this population.
John Pritchard, publisher of The Journal of Healthcare Contracting, discussed the shift to home care with healthcare supply chain industry leaders in a webinar sponsored by Hollister Incorporated.
The webinar participants included:
George Godfrey, Chief Supply Chain Officer and Corporate Vice President, Financial Shared Services, Baptist Health South Florida
Tim Nedley, Vice President, Supply Chain Management Operations, UPMC
Charlotte Luey, Senior Manager, Ambulatory Strategic Sourcing, Providence St. Joseph Health
Adam Smerecki, System Director HME, The University of Kansas Health System
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John Pritchard: Patients are transitioning from acute care or an ambulatory setting to their home. What does supply chain have to be concerned about in order to take care of those patients throughout all settings?
Tim Nedley: We’re seeing 700,000 home care patients per year at UPMC. From a supply chain perspective, it’s all about preventing patient leakage from the system. We’re doing things like filling their first prescription while they’re still at the hospital. For example, when U.S. veterans leave the hospital on average there’s a seven- to 10-day lapse in them being able to get their pharmaceuticals. That’s been our experience in northern Pennsylvania. So, we’re trying to fill their first prescription at our hospitals. It’s all about following that footprint. Do we need visiting nurses to see them? Do they need their medical supplies shipped to their home?
George Godfrey: Hospital to home is a large topic. Anything that can be done to reduce patient stay and get them home takes pressure off of the hospital and gets the patient, if they’re healthy enough, into a comfortable home environment sooner. That’s expanded services from home infusion to deliveries of medical supplies. We’re at the beginning of that life cycle at Baptist Health South Florida. It started on the pharmaceutical side and is beginning to expand to general medical supplies.
Charlotte Luey: From a supply chain perspective, Providence St. Joseph Health shifted its focus three years ago from the acute space to ambulatory trying to drive down the cost of care and length of stay for patients, shifting to preventive care or at home care. We’ve focused on alignment and driving standards because Providence is such a large organization. Initially, we had a lot of variation, but we’ve been more successful in our physician enterprise group and some more immediate care areas.
There are some unique patient needs in the home community care space. That’s made it more difficult to drive some of those standards but removing variation where we can has been a big focus for us. We have formularies in place, and we drive standardization to our committed suppliers. We have to be aware of the unique needs of those patients. They might have prescribed products that aren’t Providence standards or Providence contracted products.
Adam Smerecki: Being a part of the continuity of care is important when it comes to patient leakage from the system. We must think about it from an all-medical equipment perspective and from the discharge process. Patients have a choice of the companies they would like to use on their way home. Being a part of the discharge process is one of the things that will help – providing education to the patient about which companies are associated with the health system’s complete care or the hospitalist who’s worked with them through their care. Our HME at The University of Kansas Health System has deliberate access to the patient’s electronic medical record and that’s important because some of the companies outsourced don’t have that access.
We also focus on readmission rates from an HME perspective. When a patient goes home and they are under our care, we work with them and stay in touch with their physicians to keep readmission rates down. We look at our services like a vendor, even though we’re part of the hospital.
Also, during the discharge process, we have the ability to work with underinsured, uninsured or charity care patients. Other companies in the area don’t have the ability to work through charity care. Transportation, logistics and everything else is involved in that.
Pritchard: How important is it to maintain positive income after transitioning a patient to another care setting or to their home?
Smerecki: Those decisions need to be made responsibly. Looking at our fee schedules and our reductions, we must look at it from the perspective of how we are supplying the service and other creative ways to continue to bill for the services we provide. Many patients may need to go back to the hospital for a procedure and there are pieces of equipment that can be billed or a procedure code that would put us over the top from a positive income perspective.
We have to look at drop shipping as opposed to making home deliveries like in the old days. It’s different now utilizing telemedicine and drop shipping to ensure we have a positive bottom line. But if we don’t think a patient will be able to function with a drop ship or telemedicine, we have to make that adjustment. Looking at a patient as a whole makes a lot of sense.
Luey: We’ve been focused on distribution fees and shipping costs. That’s a hot topic. Product variation weighs into that because if can align to our contracted preferred suppliers, then we can get them that best-in-class pricing that we’ve been able to negotiate, while still being considerate of some unique patient needs. There are certain categories of product that drive volume and spend like incontinence and wound care in the ambulatory space and home community care space. It’s all about pulling caregivers into our nursing councils to make sure they are helping make those decisions.
Godfrey: The focus is always on the best outcomes for patients and then we’ll find the best return. The challenge at home is the standardization process. Who’s deciding what’s in and what’s out? What’s the profitability of that mix? Our hospitals are very seasoned in profit and loss responsibilities in that setting, but having that at home is new to us. Every health system is set up for thousands of transactions with the need to automate those in a cost-effective way. It’s very important.
But at home goes against that. It goes to customization by patient. It’s not a standard pick list to a medical supply cabinet in a nurse’s station. Each patient becomes customized from a supply chain standpoint. It starts to challenge the infrastructure set up to support ongoing business. So, what can be leveraged with existing technology? Electronic medical records are an advantage, and a pharmacy link is an advantage in delivery methodologies.
Nedley: Think about the quality of care. It’s our job to meet patients in the place they are most comfortable in receiving care. For many, that’s in their home. They don’t have the ability or desire to go into the city to one of our hospitals. If we can care for them at home, hopefully we’re positively impacting their care and potentially driving down readmissions. Reduced funds come with readmissions.
We have visiting nurses going to a patient’s home and we’re trying to tee up shipments to get there by a certain time of the day, so that’s a premium freight. We’re big on telemedicine and we have a joint venture with a DME company that we own. It’s everything from oxygen concentrator to DME and hospice beds. We have many avenues for getting those products there.
Pritchard: How are you supplying home healthcare settings? Who is your distributor partner and how is product getting there?
Nedley: It’s a combination of non-acute care distributor and our joint venture. We ship the visiting nurse’s trunk stock. There are normal supplies they need and there are other things that go directly to our patients.
Godfrey: We rely on the distributor more than anything else right now, but we’re getting ready to test on the medical side ourselves to see the complexities of delivery. Does the patient need to be home to sign for the goods? What training is necessary to employ? What kind of skillset does the delivery person need? How do we keep products stored and transported properly? All of those things.
Luey: We have patient home direct distributors we work with. We manage it differently within our different pillars. Our infusion pharmacy group is dialed in to one order per month per patient, but their scope of products is unique. They have nutritional products they might be delivering, and they’ve developed a schedule that might not be as easily managed in other areas like hospice or skilled nursing.
The patient home direct space is the one we’re most focused on right now. We’re trying to find innovative ways to drive down costs but also make sure patient needs are being addressed.
Smerecki: We can have a bed shipped to a patient’s home, but we need technicians and nurses at the home to set up the bed and teach the patient or there won’t be payment from Medicare for that. The customization of each patient is how we look at it. For hospice, we know we’ll be at that home several times and we’re not going to direct ship anything unless it’s a larger product. But we know a hospice patient will be more expensive from a cost of services perspective. Each service line under HME needs to be looked at from a cost of services perspective.
To listen to the full discussion, visit jhconline.com/podcasts.