A strong supply chain strategy is essential for health systems large and small, as organizations seek greater operational efficiencies, better patient experiences and lower costs. McLaren Health Care, Grand Blanc, Mich., is experiencing positive benefits from a supply chain overhaul in its non-acute care clinics executed alongside supply chain experts at Cardinal Health. As healthcare provider organizations navigate tumultuous times, they can learn from McLaren’s initiative to standardize its supply chain for lasting effects.
Seeking a Standardized Approach
After a successful supply chain transformation in its acute care locations (13 hospitals at the time—the fully integrated, nonprofit system now includes 15 hospitals in Michigan and Ohio), McLaren Health Care wanted to take a similar approach in its 200 clinic locations throughout Michigan. The clinics are part of McLaren Medical Group, which employs nearly 500 physicians.
Each clinic had a unique supply chain setup, resulting in inconsistencies in areas such as product purchases and inventory stockouts, and purchasing decisions were based primarily on clinician preferences. In addition, the clinics weren’t using the health system’s enterprise resource planning (ERP) software, with individual clinics instead functioning as standalone facilities and ordering supplies from local and internet suppliers using a mixture of payment methods. Further complicating matters, McLaren’s supply chain leadership had minimal visibility into clinic purchase orders, additions and changes, and the system lacked a well-defined process for communication between supply chain leadership and the clinics.
“The individual clinics were each responsible for their own world, and there just was not a good, standardized approach,” says David Bueby, corporate vice president, Supply Chain Management, McLaren Health Care.
To help fix these issues, in 2016, McLaren expanded its existing partnership with Cardinal Health and embarked on an initiative to build a more efficient, standardized supply chain.
Building a Better Supply Chain
In its plan to standardize the medical group clinics to McLaren’s already existing supply chain practices, the team set multiple goals, including:
- Unifying all clinic locations to cohesive system processes.
- Ensuring clinic spending aligns with established contracts and finance practices.
- Empowering staff to manage procurement for their individual locations.
- Continuing development of an integrated delivery network product formulary with a focus on clinic alignment.
- Supporting providers and practices with a standardized product experience across all locations.
A major part of the initiative was bringing all clinic locations on board with the health system’s ERP system and establishing an enterprisewide product formulary. To help ease initial resistance from some of the clinics, which were being asked to make a substantial transition in their products and processes, Bueby and his team made face-to-face meetings at the clinics a priority.
“This was not done remotely or through email—it was a joint effort with Cardinal Health and my staff to go out physically to those clinics and speak with clinic leadership, physicians and the staff who are responsible for ordering product,” Bueby says.
As the clinics transitioned to McLaren’s ERP system, the supply chain team held weekly Q&A sessions and meetings with clinic leadership and staff members to identify and problem-solve workflow and ordering challenges. The team also provided clinic staff with educational reference materials and set up an informational hotline.
As a result of the supply chain transformation initiative, clinic staff now place and send orders via a series of internal approvals that the McLaren Health Care corporate team and Cardinal Health support. Supply chain leaders have access to data and insights previously unavailable, which helps them monitor and compare supply chain performance systemwide. Additionally, the standardization of clinic formularies has reduced the clinics’ SKU count from more than 3,400 items to 1,979 items, with a more effective approval process in place for adding or removing items.
Key Lessons
Bueby says three key lessons stand out from his experience with this initiative. The first is the importance of having a clear goal. For McLaren, that meant approaching this project through the lens of what Bueby refers to as the “one McLaren” environment.
“That means the experience in a single clinic in the middle of Michigan is no different than that in a large hospital in an urban setting,” he says. “If you start with that goal in mind, it can bring the success you’re expecting such as reduced cost, improved processes, efficiency and patient satisfaction.”
The second lesson is the importance of organizational commitment “from top to bottom,” according to Bueby. “That includes committed staff, committed leadership and a committed supplier partner,” he says.
Finally, having a competent collaborator that understands the organization is vital.
“You can have the best plans in the world, but if the partner that supports those goals falls short, the plan doesn’t mean anything,” Bueby says. “More than half the successes we have had are because of the significance of what Cardinal Health has brought to the table. It’s important for health system leaders to look to your partners and evaluate your partners and make sure they are up to the task.”
For more information, please contact Lynne Kelly, vice president, Business Development and Acute Sales, U.S. Medical Products and Distribution, Cardinal Health (Lynne.Kelly@cardinalhealth.com).