JHC-Feb.25

Dialogue That Drives Outcomes

JHC’s Contracting Professional of the Year says collaboration with clinicians is the secret sauce for Kaiser Permanente’s supply chain.

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Dialogue That Drives Outcomes

JHC ’s Contracting Professional of the Year says collaboration with clinicians is the secret sauce for Kaiser Permanente’s supply chain.

pg12

2 Publisher’s Letter: New Year, New President, Same Issues and Challenges

4 Cleveland Clinic and LogicSource Set Benchmarks for Non-Clinical Procurement

Health systems spend between 20-25% of net revenue on indirect categories, seek savings.

8 Virtua Health Recognized for Warehouse Operation Changes

The New Jersey health system is minimizing redundancies, reducing inventory and standardizing product lines.

20 Managing Recalls in Mindsight

Supply chain equation juggles manpower, technology and workflow.

28 Patient Access to Care in All Forms

Increased chronic disease, aging populations and behavioral health awareness will accelerate inpatient and outpatient volumes.

31 Impact of Tariffs on Healthcare: Meet the Trump Trade Team

32 Supply Shortage Strategies

Two Western health systems talk philosophies at JHC’s IDN Insights West.

36 Streamlining Care

Increasing specialization within the ASC care continuum.

39 Health Systems Gobble Up Urgent Care Locations

Providers seek to meet patients where they already are.

41 Primary Care Clinics Opening in Former Walmart Health Locations

Health systems see opportunities to meet their patients where they already are.

42 Supply Chain By the Numbers

46 ACOs and National Healthcare Savings

Ochsner Accountable Care Network achieves top-ranking healthcare savings for Medicare.

48 Industry News

New Year, New President, Same Issues and Challenges

I have been very interested in what the incoming Trump administration will mean to healthcare. In past Publisher’s Letters, I have lamented that healthcare seemed to be a low issue for the candidates in this last presidential election cycle. My hope is that it will be a higher priority for this administration than it was during either of the last two presidential terms.

From what I have read and heard, industry experts say President Trump will attack healthcare in three ways: decrease spending, increase competition and a heavy dose of de-regulation.

Being a pragmatist, I can’t help but think the new administration will come after healthcare pretty aggressively. A recent issue of the Keckley report outlines the financial situation the country and healthcare are in, and seems to make it an imperative that it is addressed ASAP!

The last year data is available from the CBO is 2023. That year:

ʯ The federal government spent $6.1 trillion to $1.7 trillion more than its revenues.

ʯ The federal government spent $1.45 trillion for Medicare and Medicaid (24% of total federal spending).

ʯ The deficit for 2023 hit 6.3% of the GDP vs. an average of 3.7% for the last 50 years.

This dire financial situation tells me healthcare reform or improvement will work its way to the top of the new administration’s to-do list.

I think it would be wise to familiarize yourself with MAHA – Make America Healthy Again. I think we are all about to find out MAHA is way more than a slogan for campaign speeches.

In short order, I believe we will see a renewed focus on three components that will make up MAHA:

1. Preventive Health and Education

2. Assuring Accessible and Affordable Healthcare 3. Community and Lifestyle Wellness

So, the million-dollar question is, what will be Supply Chain’s role in MAHA? As health systems find their roles, I am sure those objectives will work their way into all corners and metrics of the organization, and Supply Chain will find out soon enough!

Wishing you a great 2025! Thank you for reading this issue of The Journal of Healthcare Contracting.

John Pritchard

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Cleveland Clinic and LogicSource Set Benchmarks for Non-Clinical Procurement

Health systems spend between 20-25% of net revenue on indirect categories, seek savings.

BY DANIEL BEAIRD

Cleveland Clinic and LogicSource announced a collaboration last September aimed at bringing leading practices and benchmarking of non-clinical procurement to health systems.

LogicSource has honed procurement practices in other industries for 15 years and this brings it into healthcare through Cleveland Clinic’s top-ranked healthcare supply chain. It allows health systems to apply benchmarks from complex and difficult-to-assess spending categories

and provide health systems with access to LogicSource’s extensive category experts.

“There are significant opportunities for health systems to find efficiency and savings in non-clinical expenditures,” said John Dockins, executive director of sourcing and vendor management for

Cleveland Clinic. “We are working with LogicSource to take our learnings a step further – to help make the business side of managing a health system more financially viable for everyone involved.”

Health systems spend between 20-25% of net revenue in non-clinical procurement categories but they are broadly underinvested in these categories compared to other industries, according to Mark Van Sumeren, Board Advisor and Chair, Healthcare and Life Sciences

for LogicSource. He says healthcare can benefit from practices and benchmarks established across non-healthcare industries to improve profitability for the organization and free capital to enhance high-impact clinical initiatives.

“Healthcare is at an inflection point for innovative solutions,” Van Sumeren said. “We’re all eager for improvement, and non-clinical spend is one of those high-impact opportunities ripe for innovation that we have a responsibility to explore, advance and share.”

Finding best practices

Cleveland Clinic and LogicSource hope to find and share best practices from their collaboration at industry events with other healthcare supply chain and procurement leaders. These leaders are dealing with increased costs, talent challenges in retention and recruitment, and are navigating a rapidly changing technological landscape that all impacts their bottom line.

“Almost all health systems are turning the dial on cost savings,” said Steve Downey, chief supply chain officer for Cleveland Clinic. “They turn to suppliers for savings but that’s not necessarily the only answer. Some of it is utilization. How often do you get your trash emptied? How often do you wash your windows? But knowing some of those answers is difficult. So, we were seeking a partner with knowledge and expertise there to combine with our clinical supply chain knowledge and expertise to help others.”

LogicSource brings experience in retail, consumer packaged goods, financial services and manufacturing, along with other industries.

“We wanted to learn from Cleveland Clinic and see if our benchmarks could stand up in healthcare,” Van Sumeren said. “They are applicable and meaningful, and are a standard that we should ascribe to healthcare.”

LogicSource and Cleveland Clinic are helping each other understand which benchmarks can be effectively leveraged in healthcare. Furthermore, Cleveland Clinic expects to gain insight from LogicSource’s nearly continuous access to the market through their 20,000+ annual sourcing events, and from access to deep specialized category expertise on an as-needed basis. LogicSource also intends to advise on risk management as risk can also impact indirect spending for health systems.

Dockins says most hospitals or health systems don’t have a single leader over the indirect side. It might be layered into another role, or they might rely on their GPO for what’s available on the indirect side.

“For decades it’s been about implants and med/surg devices,” he said. “The commodities world has been standardized for a long time with the GPOs. Most supply chains don’t have much to do with the indirect side.”

An IT manager might negotiate a network contract. The facilities team might negotiate cleaning contracts, while the supply chain team might not be involved at all in these.

Finding savings

“Almost all health systems are turning the dial on cost savings. They turn to suppliers for savings but that’s not necessarily the only answer. Some of it is utilization. How often do you get your trash emptied? How often do you wash your windows? But knowing some of those answers is difficult. So, we were seeking a partner with knowledge and expertise there to combine with our clinical supply chain knowledge and expertise to help others.”

– Steve Downey, chief supply chain officer for Cleveland Clinic

While there’s a lot of focus on direct expenses like clinical supplies and pharmaceuticals in healthcare, there isn’t much on indirect costs. But every dollar saved can go directly to patient care.

“If you don’t understand the servicebased contracts, it’s a really hard problem to solve, and the GPOs haven’t really tried to tackle it yet. There are some solutions out there but it’s much easier to put your finger on it when it’s SKU-based like products are,” Dockins said.

For example, Dockins asks, what’s the unit of measurement for snowplow

removal? Is it an open parking lot? Is it a hospital where patient and visitor cars are parked all the time? Do you have light poles? Do you have flower beds? All of these things come into play. It’s not an easy factor or a unit of measure to benchmark.

Unfortunately, most indirect spend for health systems has grown due to a lack of attention from health systems themselves.

“We find that outside of healthcare, 20% of revenue is eaten up by indirect spending but in healthcare it’s 22%,” Van Sumeren said. “We think it’s higher because we’ve paid less attention to it in healthcare and the supply chain departments don’t gain this credibility overnight to serve this area.”

Finding credibility

But Cleveland Clinic’s supply chain team has been investing in indirect procurement for close to 20 years and that’s almost two decades of credibility gained with the CIO, the chief marketing officer and the chief human resources officer at the health system.

“Without establishing that credibility, you’re really not at the table,” Van Sumeren said. “But Cleveland Clinic’s supply chain has gotten there.”

It’s important to be able to judge the validity of any contract in any category or anything coming from a vendor. It’s not just a price per unit but it also comes with a level of service expectation. Expertise and scope of services are required from vendors to solve specific issues and there are multiple dimensions built into that benchmarking

“If you don’t understand the service-based contracts, it’s a really hard problem to solve, and the GPOs haven’t really tried to tackle it yet. There are some solutions out there but it’s much easier to put your finger on it when it’s SKU-based like products are.”

– John Dockins, executive director of sourcing and vendor management for Cleveland Clinic

analysis, according to Van Sumeren, as opposed to simply a line item on a spreadsheet.

“It’s much different than benchmarking products where there’s a manufacturer ID, there’s a product ID, there’s a unit of measure and a price point,” Dockins added. “When you get to services, those usually don’t exist. Take something like a videoconferencing application, for example. Do you have an enterprise license so everybody can use it as much as they want to for a price? Keep in mind, you can only have 250 people on at one time. It’s different aspects that come into play.”

He says you must invoice match to really understand why a price is set versus another price point.

Finding the right price

The credibility for supply chain teams to centralize control on indirect spend and build their reputations on it is critical. It helps in finding source savings and drilling down the right price.

If you think about how much savings ought to be achievable, it should be upper single to lower double digit percentage increases year over year, according to Van Sumeren. “We think it’s worth 1% or 2% operating margin impact potentially, depending on where the organization is in its life cycle,” he said.

That credibility helps supply chain teams talk to vendors about how much they’re using a service and what changes they need to make. It also helps supply chain teams talk to their executive suite about when they need to implement a service for their health system.

“There are all sorts of levers out there that can be pulled,” Downey said. “Maybe you weren’t thinking about them before, but they can be used for additional savings.”

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Virtua Health Recognized for Warehouse Operation Changes

The New Jersey health system is minimizing redundancies, reducing inventory and standardizing product lines.

BY DANIEL BEAIRD

HealthTrust Performance Group bestowed one of its highest honors on Marlton, N.J.-based Virtua Health last August with its Operational Excellence Award for revamping its warehouse operations by minimizing inventory redundancies, reducing expired inventory and standardizing product lines. The academic health system’s presence in South Jersey includes five hospitals, more than 400 locations, seven emergency departments and eight urgent care centers.

Virtua partners with Penn Medicine for both cancer care and neurosurgery, while clinicians from the Children’s Hospital of Philadelphia provide pediatric care to kids and newborns at Virtua. The Journal of Healthcare Contracting ( JHC ) spoke with Ana Victoria Sanchez, vice president of Supply Chain and Support Services for Virtua, about its warehouse improvements that resulted in increased efficiency, resiliency and streamlined workflows.

“When I came on board about two years ago, we had gotten to that critical mass state of 2,500 items at our warehouse, but with the expectation to reach 5,000 SKUs in a short period of time,” Sanchez said. “We were using an ERP rather than a warehouse management system, so we implemented a five-year plan that included a warehouse management system.”

That was the first piece of technology to support greater volume, modernization and improved efficiency. HealthTrust recognized Virtua for implementing foundational practices ahead of launching its new warehouse management technology system.

The system was implemented last March, Sanchez said, and it took four months to stabilize, but Virtua is seeing the output of productivity, accuracy rate, put away and outbound, and it’s starting to experience enhanced efficiencies between 15-20%.

“We will have the capacity to manage over 5,000 SKUs and three times the volume in 75,000 square feet, combining the footprint expansion and the purchase of the Perfect Pick® automated storage and retrieval system that uses iBOT® wireless robots to deliver inventory directly to operators,” she said.

Acute and non-acute

And it’s not just Virtua’s acute settings that the warehouse transformation will help. Eighteen ambulatory surgery centers (ASCs) affiliated with Virtua were recently recognized by Newsweek for being among the best ASCs in the nation in 2025 based on quality of care, performance data, patient experience and peer recommendations.

will go live with it. Perioperative departments will go through clinical inventory management changes, which will enable inventory and consumption accuracy. This will integrate with Epic and begin Virtua’s most expansive hospital work revamp to date. It’s also changing the way it schedules orders to make sure they aren’t delivered during the busiest times on the nursing floors and perioperative departments.

“ The product information has to be accurate. That’s part of our perioperative inventory system interfacing with Epic. By scanning all items, we have a more robust operative record and that drives additional revenue.”

“We’re also looking to run additional ASC business through our warehouse,” Sanchez said. “These are big aspiring plans and we’re moving quickly as it keeps growing.”

“Think of the time and effort spent by nurse managers having to call procurement to ask, ‘where’s my order,’” Sanchez assessed. “With this warehouse expansion, we will improve the experience of our colleagues by reducing time spent managing and tracking orders. Greater efficiency means greater expansion into medical offices and our joint ventures with ASCs.”

Technology takes center stage on all projects

Virtua has almost 70 supply chain projects happening simultaneously and technology is at the center of them all. An ERP change is scheduled for next July and inventory management on nursing floors

“We started it with the perioperative labs, and we’ll go live with the OR in January at our Camden, N.J., hospital, Virtua Our Lady of Lourdes,” Sanchez said.

Once the ERP and warehouse management systems are implemented across the entire organization, the health system will have visibility into consumption and where everything is at a nursing unit level and department level. “The combination of the technology implementations and warehouse automation investments will yield greater accuracy and throughput, and help to forecast how much growth we can take on in inventory planning. It’s helped us look at the operational and logistics side of the hospital and lay the foundation for the use of AI.”

“Never underestimate the process,” Sanchez added. “You can implement technology, but if it doesn’t align with your process, you won’t get the output from it.”

Supply side data and staff adoption

On the supply chain side, Virtua is working with its GPO – HealthTrust – on resiliency and better visibility from its vendors. It participates in HealthTrust’s technology advisory committee, which is on the journey of linking technology and visibility for better resilience and inventory planning.

“The product information has to be accurate,” Sanchez said. “That’s part of our perioperative inventory system interfacing with Epic. By scanning all items, we have a more robust operative record and that drives additional revenue. The data, the governance, the technology – it’s all like the parts of a complex machine.”

Virtua is also shifting the way it categorizes products from its past standard to the United Nations Standard Products and Services Code® (UNSPSC®). Classifying what’s an implant and what type of implant it is, for example, can greatly help the health system achieve the right kind of data, including mitigating insurance claim denials.

“Supply Chain is often the leader on the data we’re using for clinical decisionmaking,” she said. “It’s critical to have a change management approach at the mid-management level because they’re the ones who are often on the front lines.”

Sanchez said Virtua’s supply chain team aspires to develop internal talent and recruit external talent with experience in inventory, planning, forecasting and product standardization to manage big data and data governance structure. Internships are also part of the plan to meet the future needs of the organization.

As is often the case, major changes also impacted staff retention. “We experienced a turnover rate of about 25%. We’re not an especially large team, so it

“It’s critical to have a change management approach at the mid-management level because they’re the ones who are often on the front lines.”

was challenging. We incorporated temporary staffing and hired the best performers seeking permanent work. We knew the benefits would outweigh the difficulties.”

New team members and veteran staff can’t imagine going back to the old system. They even enjoy competing with one another on productivity.

“Our team is embracing new ways of working together to best support the organization,” she explained. “One of our goals is to provide that Amazon-level of visibility for clients so that everyone feels informed and empowered every step along the way. There’s no going back to the old ways. Not when the future is so promising.”

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Dialogue That Drives Outcomes

JHC’s Contracting Professional of the Year says collaboration with clinicians is the secret sauce for Kaiser Permanente’s supply chain.

Nestor Jarquin may look at physician engagement with the supply chain a bit differently than most. A healthy sign of collaboration to him isn’t when everybody is on the same page at the start of the process. He believes it’s when clinicians and supply chain leaders can actually sit down and debate during their meetings – from the clinician’s product preferences to the business ramifications those choices will create for the organization.

“Those kind of collaborations – where they are open to dialogue – give you a good feeling about how connected you are to the clinical group,” said Jarquin, strategic sourcing sr. category manager, surgical, Kaiser Permanente, and this year’s Contracting Professional of the Year.

Indeed, Jarquin doesn’t take for granted that Kaiser Permanente clinicians are open to having a business dialogue about the products and instruments they use. “Those dialogues are hard,” he said. “But in our culture, it’s not argumentative, it’s collaborative. The clinicians understand that on the supply chain side, we’ll always honor and respect their clinical expertise and opinions. Conversely, they understand and respect the business paradigm. It’s a unique blend between the two perspectives.”

Kaiser Permanente’s seasoned physicians know the market and the organization’s business practices and can put that mindset to use when making clinical decisions. That cohesion helps the organization come to a solution that’s ultimately meaningful for the patient and the business.

More than just moving boxes

Jarquin describes his career in supply chain as a “winding path.” While in college, he worked at a major medical center as an orderly. In that role, he became interested in the science of caring for patients, beyond just ordering and stocking supplies. He would eventually secure a managerial role at that medical center and become involved in the supplies for the entire organization. From there, he worked as a director in materials management at several different institutions.

Those roles involved traditional supply chain responsibilities for the ordering, stocking, and delivery of supplies throughout the entire medical center or hospital. He gained experience in supply management, contract management, and in some of the institutions, stakeholder management. He worked beyond the purchase order, collaborating with clinicians to better understand their needs and requirements, and how the products were being used, an aspect of the work that appealed to him.

In October 2006, Jarquin joined Kaiser Permanente’s supply chain department. He admits he didn’t totally know what to expect working for the organization and how its supply chain operated. “When you’re outside of Kaiser Permanente, you always wonder how they do what they do,” he said.

Jarquin marveled at the connectivity of the supply chain to its end users. Supply

chain wasn’t just about moving boxes; it touched the entire procurement cycle. Although there are different departments, they’re still part of one family and fully engaged in the entire buy-to-pay process. “From strategic sourcing to receiving, payment, inventorying, and picking – all that falls within supply chain,” he said.

“We see the whole continuum.”

clinical necessity, qualitative outcomes, and cost. There are some categories that, qualitatively, have similar device options, but one company has a business model that portrays it as being unique in the market, when in fact it’s not. And, if it’s a physician preference item, supply chain has to weigh that consideration heavily into its purchasing decision.

We’re trying to keep our costs down so that the cost of membership for Kaiser Permanente is kept to a competitive space.

Kaiser Permanente’s supply chain team relies on one another to ensure they have a successful strategy to deploy – in whatever category they’re talking about. “I’m directly linked to the storeroom clerk and the clinical end user,” Jarquin said. “I don’t see that happening throughout healthcare in general. We’re a single supply chain. We’re all connected and we benefit from that. All the way from that storeroom clerk who needs to order a particular item, to me and strategic sourcing who are trying to ensure we’re making the right decision based upon clinical evidence and outcomes.

The fact that we’re a part of that cycle from buy to pay gives us a different perspective from most organizations.”

Kaiser Permanente’s “secret sauce”

He also noticed early on how aligned the organization’s supply chain team was with clinicians. “It’s our secret sauce,” Jarquin said. Indeed, supply chain leaders often have a delicate balance to make between

Recently, there was one category where Kaiser Permanente ended up with a favorable proposal that made sense both clinically and financially. What encouraged Jarquin was how in sync the clinicians were about the decisionmaking process they had built together.

“I knew our clinicians wanted these products, but all things being equal, they were not willing for the company to pay X amount more. They told us that they had to help reduce the cost of care here. That was our constant message.”

Eventually, the company agreed to a proposal with Kaiser Permanente. Jarquin was able to give the clinicians something they wanted and hadn’t had in quite some time.

“It happened because our clinicians understand our model,” he said. “They understand the cost. It goes back to our culture, which is all about tying the business, outcomes, and cost together. We’re trying to keep our costs down so that the cost of membership for Kaiser Permanente is kept to a competitive space. It was only because of a mutual understanding with our clinicians that we were able to do something like that.”

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Sustainability and lifecycle management

Because of its alignment with clinicians, Kaiser Permanente can tackle big initiatives. For instance, the organization has lofty sustainability goals. “We have tremendous goals in reducing waste, eliminating the use of plastics, being stewards of our resources, etc.,” said Jarquin. “All of our category managers are driven by those metrics and have individual goals to go out and affect the environment positively.”

 More than 2,700 tons of organic waste collected for composting, a 55% increase over 2021.

 More than 3,200 tons of cardboard waste collected for recycling.

 More than 1,375 tons of electronic waste collected for reuse or recycling.

In addition, over 1,290 tons of plastic waste was avoided by the use of reusable sharps containers. Over the years, through programs to recycle single-use

Instead of revenue, manufacturers could focus on evidence that their product line is going to provide a different state, whether it’s a better outcome, shortened length of stay, or even a better cost.

In 2020, Kaiser Permanente became the first U.S. health care organization certified as carbon neutral, and they have continued to maintain the certification annually. In 2022, they publicly stated their goal of reaching net-zero emissions by 2050. Sustainability is a key part of Kaiser Permanente’s procurement collaboration, and new suppliers are selected based in part on their environmental commitments. Kaiser Permanente also works with existing suppliers on their greenhouse gas reduction goals, innovation, and process improvement to drive action and accountability.

According to its 2022 “Sustainability & Responsibility” report, just over half –51% – of Kaiser Permanente’s nonhazardous waste was collected for recycling, reuse, and composting in 2022, including:

 More than 39,000 tons of waste collected for recycling.

devices, Kaiser Permanente has diverted 1.2 million devices to be re-manufactured instead of thrown away, Jarquin said.

Kaiser Permanente’s clinical groups are also heavily involved in sustainability efforts. “As we go through our reviews and discussions with clinicians, they’re saying, ‘Hey, that’s made out of plastic. Can we do something with it?

That’s a single-use device scope with precious metals in it. Do we have to throw it away?’ Sustainability is a part of our requirements, even with the clinical groups,” Jarquin said.

Eyes wide open

For almost two years following COVID, Jarquin gave up his day job to work on sourcing material and supplies in the market at large, both domestic and international. “We had to prepare ourselves for the unknown.”

Jarquin and his team learned how the international supply chain market operated, how products came across the water, and how they were validated. He was surprised by the delicate nature of the international raw material market and how one disruption could lead to issues throughout the supply chain. For example, during this time, Jarquin observed one overseas manufacturing plant that started hoarding a particular commodity. This resulted in a domino effect throughout multiple product categories. Jarquin’s team discovered that there weren’t enough protections in that international market, both from a supply chain resiliency side and a qualitative side.

“We didn’t know that until we dove into the international market,” he said. “It was a realization that you have to go into this with your eyes wide open and work with the diligence that any other Fortune 500 company would when looking at its supply chain. Get into those details. Bring people onto your team who know what questions to ask. That’s what we’ve built over the years.”

As a result, Kaiser Permanente is now staffed and equipped to take a deeper look at manufacturers’ supply chains, especially with certain product lines like PPE and surgical instruments. Not only are they asking suppliers if they can ship the product, but they want to know things like where the product is manufactured, what the raw material source is and where the supplier gets it, and how the supplier is making its own supply chain resilient so that when (not if) the next pandemic hits, they be will able to continue to produce.

“Now we’re including language in our contracts that sort of changes the definition of force majeure,” said Jarquin. “What we’re saying is that a pandemic is not a force majeure event. It’s an event

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that you need to plan for. So, what are you doing to plan for that event?”

Kaiser Permanente has also developed its own product quality department within its sourcing structure that includes a director of medical device quality who gets into the details of quality processes in design and manufacturing. “Not clinical quality, but medical device quality,” said Jarquin. “How do you validate? How do you test? This person is well versed in ISO certifications and testing. They have developed a policy that tells the manufacturers their obligations around quality specific to Kaiser Permanente in addition to the FDA.”

The pandemic opened everybody’s eyes to the need to do things differently in supply chain. There’s now more of an appetite for increased transparency across the board. On the hospital or healthcare side, transparency has meant being clear about what their needs and requirements are for a category beyond just an RFP. It can no longer be “three bids and a whirl of dust” to determine which supplier to go with, Jarquin said. “It’s more, ‘This is my situation, these are my requirements, and here are my asks. Can you provide those?’”

In turn, suppliers are being asked about their inventory levels, manufacturing locations, product testing, and certifications. “In the past, health systems

just sort of accepted those things without really asking,” Jarquin said. “Now we’re validating some of the requirements that we always assumed were there.”

“It’s not just about bids,” Jarquin continued. “What are we trying to do? What are we trying to achieve? If we can make that shift on both sides, providers and suppliers, I think we can meet in the middle. Just remember why we’re in this. We’re here to provide care.”

Driving value

Jarquin believes the U.S. healthcare system would benefit from moving away from episodic care to more holistic principles around the value of care. “It’s more about managing the lives of the patient from both sides of the equation, clinical and business.” Instead of focusing on volume, value-based care would free up clinicians to focus more on improved outcomes. Instead of revenue, manufacturers could focus on evidence that their product line is going to provide a different state, whether it’s a better outcome, shortened length of stay, or even a better cost.

Why should supply chain care about that? “Because of the fact that the products, equipment, and services we source and distribute are all part of the patient journey in some form or fashion. So, if

Kaiser Permanente’s Footprint

Kaiser Permanente is one of the nation’s leading not-for-profit health plans, serving nearly 12.5 million members. Kaiser Permanente has 40 hospitals, 614 medical offices, 24,605 physicians, 73,618 nurses, and 223,883 employees, according to the latest figures.

you’re more about episodic versus the holistic view of managing the overall care of the patient, you’re not seeing the forest for the trees,” Jarquin said. “You’re not seeing that end state for the patient.”

In the last several years, many companies that supply products to Kaiser Permanente have had to adjust their supply chains, which has resulted in disruptions. Kaiser Permanente’s supply chain team and clinicians have come together as a group to determine whether certain alternate products meet clinical practices while the supply chain recovers for its regular product orders. Some disruptions continue even through today. “The challenging part is, some of these supply chain constraints were sole-source devices in the sense that they’re the only thing in the market out there for particular procedures. So, this forces us to look at options and workflow differences, collaborating with our clinicians.”

Kaiser Permanente has three-year contract cycles. So, in essence, 18 months after signing a contract, Jarquin and his team have to revisit it. They’re already thinking about and preparing for 2026. “I have to study,” he said. “I have to become an expert in new technology every year and be able to understand our requirements and project those requirements to the supplier base.”

Fortunately, Jarquin doesn’t have far to look when seeing the impact he and his team have on the health of patients. It’s one of the most rewarding parts of his job, and something that keeps him going two decades plus into his career.

“The fact that I’m so closely aligned with clinicians means I can see the impact,” he said. “Every year, it’s a new challenge, and I can say there’s never a dull moment in this particular category.”

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Managing Recalls in Mindsight

Supply chain equation juggles manpower, technology and workflow.

BY R. DANA BARLOW

If healthcare providers had one wish about device and product recalls, it would be to put them out of business – the recalls, that is, so that their frequency, if not existence, didn’t threaten the delivery of patient care.

Call it a tale of two transactions hampered by the Dickensian best and worst of processes. When you buy a car or a major household appliance from a retailer and there’s a recall on a broken or compromised component that could lead to issues, the manufacturer and/or retailer contacts you directly – hopefully before initial media reports – with instructions for repair or replacement.

Conversely, when a consumable item from a grocery/drug store is found to be laced with a foreign substance or infectious material, consumers generally learn about it via the media, which provide information about the affected stores, brands and product numbers along with instructions to return unused product for refund or just discard. Short of that, the products may end up in diners, restaurants or even in homes with potentially damaging consequences.

For appliances and vehicles, vendors can track individual product purchases directly to the consumer through specific data points; for consumables, they only can narrow it to product purchases at specific retail outlets.

For healthcare devices and products used in medical/surgical and treatment procedures, however, the process seems to straddle both sides. For example, cardiovascular, neurological, ocular,

orthopedic and spinal implants can incorporate elements of the car and household appliance procedure, but for lower-cost consumables, such as intravenous fluids, needles and syringes, the procedure may mirror that of the grocery items, unless they’re patient chargeable.

This motivates a few questions. Should the process and procedures for all healthcare devices and products be standardized? Given the fact that technology exists to track the manufacture, production, distribution and consumption of a product (or implantation of a device) to an individual patient (from enterprise resource planning systems (ERPs) to product item masters to electronic health records (EHRs) to billing for payers) and the availability of supply data standards (e.g., UDI, etc.) as well as the availability of online- and software-based recall technology, why is this not already happening? Does the old “privacy versus security” linger? If so, how can providers and suppliers “get a grippa on working within HIPAA?”

The Journal of Healthcare Contracting reached out to a small group of IDN supply chain leaders for relevant and useful tips on managing recalls based on their strategies and tactics.

Providers generally manage recalls through one of three avenues: They await notification from a device or product manufacturer or distributor, routinely rely on Food and Drug Administration (FDA) alerts or use a third-party service like ECRI or NRAC via license or subscription to provide information automatically – or some combination of all three.

But those three options only cover half of the process – namely, the devices and products sent to or expected into the facility. The other half of the process

covers what happens once they arrive and calls for the provider to determine whether it has the affected devices and products in stock or more importantly, whether those devices and products have been used on or implanted in patients.

The FDA, suppliers and third-party services may serve one side of the process; the providers and end users maintain responsibility for the other side, thereby closing the loop.

provides ECRI purchase order data on a monthly basis, and ECRI then identifies recalls relevant to our organization through their ‘Automatch’ process, by determining items we utilize networkwide or unique to specific HonorHealth locations.” ECRI’s system interfaces with HonorHealth’s ERP that the IDN will change in second quarter 2025 when it plans to migrate to Workday.

“ We track completion percentages by location and individual, as those who fall below the threshold are notified and requested to address outstanding notifications in their work queues.”

Mixing it up

Hospitals, healthcare systems and IDNs populate their recall processes around a mixture of automated and manual procedures, customized by organization. The automation portion encompasses online and computer-based communication and tracking through FDA, supplier, GPO or third-party service. The manual portion focuses on strategic and tactical reconnaissance, record keeping, verifying and sharing and value analysis.

Phoenix-based HonorHealth maintains a manageable balance between the automated and manual elements, according to Bob Mantell, program director, Audit & Controls, Supply Risk & Resiliency, Supply Chain Services.

“HonorHealth utilizes ECRI for recall management,” Mantell indicated. “All recall notifications from the healthcare industry are captured and archived in ECRI. HonorHealth

The IDN identified specific team members from various departments that include Supply Chain, Biomedical Engineering, Lab and Pharmacy to receive recall notifications electronically through ECRI. “Alerts are delivered via email with a link to the team member’s work queue in ECRI where the notifications are provided,” Mantell described. “Team members are assigned to address the notification and provide comments/ notes as to how the affected item was sequestered, disposed of, returned, etc. This allows HonorHealth to provide tracing information to regulatory entities when inquiries occur.”

HonorHealth also maintains a manual backup system should power go out and/or the internet goes down. “Our facilities will act upon notifications that are received hard copy via mail and will manually record the activity associated with addressing the notification,”

Mantell assured. “Once ECRI is available the HonorHealth response will be recorded electronically in association with the digital notification.

“HonorHealth manages the recall program by measuring recall notification completion percentages on a monthly basis,” he continued. “Our network threshold for compliance is 80%. We track completion percentages by location and individual, as those who fall below the threshold are notified and requested to address outstanding notifications in their work queues.”

by location and user that details total notifications received and completed during the given time period, according to Mantell. He then uses the report to alert team members when they are below the organization’s threshold.

HonorHealth relies on ECRI’s expertise to determine the acceptability of an 80% threshold. “The feedback we have received from ECRI is that 80% is within what they consider standard compliance range relative to their client base,” he noted. “We have discussed moving the threshold to 85%

Northwestern receives an alert through its OneRecall central repository and workflow system. Supply chain then runs a query through its PeopleSoft system to locate purchase orders for specific vendors.

Mantell serves as the recall coordinator and manages compliance, user creation/maintenance and regulatory reporting. “Having a central point of contact is key in recall management,” he insisted. But HonorHealth does not designate a full FTE to oversee recall management. “This area is approximately 20% to 25% of my job duties, so assigning an organizational champion is not what I would consider a bandwidth issue for most organizations,” he added.

Mantell provides period updates with all team members in the recall roster to remind them to direct questions and concerns to him. Team members from various departments serve as department/location liaisons to assist should location-specific issues arise. ECRI provides a monthly report of activity

to 90% internally, but have not firmed up at this point.”

A value component

Marietta, Georgia-based Wellstar Health System considers recall management an integral part of value analysis.

“We formally established a Recall Management Program under the auspices of our Value Analysis team last year,” noted Kimberly Broadneax, R.N., recall management facilitator, Clinical Quality Value Analysis (CQVA). “We have a designated lead person as the central source of contact for managing recalls and communicating the information within our System, but it is very much a team effort.

“We monitor our quality reports and incident reporting system, SaFER, as it

relates to medical devices (supplies) and investigations, notify the manufacturer, and make the mandatory reporting to the FDA,” she continued. “While not always recall-related, this is an important aspect of how the recall process begins. Months later, we saw value in the collaborative relationship with another member in our Supply Chain team who could facilitate substitutions and necessary replacements (not limited to recalls).”

Wellstar uses a “Recall Management System” subscription service where it also reports product/device adverse events and has a dedicated recall-related email box for notifications, according to Broadneax. “We address System-based concerns for the times internal recalls may be required and have developed a recallfocused relationship with our service line leaders,” she continued.

“One element that we utilize as a communication tool is the addition of an Operational and Care Impact Assessment where we rank the severity of the recall/shortage using a scale that defines minor challenges as ‘No Impact’ up to our most severe cases as ‘Extreme Care Changes’ needed. Most recently, we joined a no-cost Recall Management Interest Group that was marketed through our GPO where we share feedback, lessons learned, and openly discuss best practices with other organizations throughout the country,” she added. Wellstar works with Vizient as its national GPO and Partners Cooperative as its local GPO, while using Workday as its ERP and Tecsys to manage inventory.

Wellstar maintains sound reasoning for housing recall management inside value analysis.

“We placed recall management within CQVA because that is where any new or

existing products are reviewed for clinical acceptability, clinical evidence and financial impact to the organization,” said Melanie Stone, executive director, CQ Value Analysis. SaFER represents Wellstar’s software platform used for reporting events related to patient and employee safety along with product failures, she added.

Documentation challenges Chicago-based Northwestern Medicine blends automated and manual components within its extensive recall management process that serves 11 hospitals and more than 200 ambulatory care sites within the metropolitan area – and potentially with its newest partner, the London Clinic. Gary Fennessy, Northwestern’s vice president and Chief Supply Chain Executive, has been busy working on that affiliation to improve infrastructure and growth within the United Kingdom’s largest charitable hospital.

Northwestern subscribes to OneRecall Enterprise from Inmar Intelligence to handle device and product recalls for pharmacy, medical/surgical supplies and equipment, according to Fennessy. OneRecall Enterprise manually interfaces with Northwestern’s PeopleSoft supply chain module from Oracle and is integrated into their inventory process, which involves kanban and Cardinal Health’s WaveMark RFID technology.

Northwestern receives an alert through its OneRecall central repository and workflow system. Supply chain then runs a query through its PeopleSoft system to locate purchase orders for specific vendors. If the system finds a product it sends an alert to appropriate responders at any affected facilities who

determine if the product is in inventory or has been removed.

Fennessy grapples with how vast and potentially unwieldly the documentation issue is within recall management and expresses frustration when supply chain’s systems may not integrate seamlessly with the operating room system to tie device and product usage directly from the shelf to the surgery suite and then to the patient. He laments that it’s more than just a challenge for his organization, and that “it’s a national problem.”

What I’m worried about are the patients within the last four years or so and what happened to all the products used for them. That’s not just our problem. It’s an industry problem.”

Standards necessary

Supply chain executives agree that universal adoption and implementation of supply data standards with unique device identifiers (UDI) can make a significant difference in the recall process – something the auto

“ With an item master-to-EHR (EPIC) interface, the charting of supplies used on a patient provides the final stage of the device’s journey to patient use. The impact to this has shown in our ability to locate items used in patients that were involved in a recall, and when an adverse event occurs with the use of a medical device, the reporting of that issue can be investigated by supply chain with notification to the manufacturer and FDA.”

He points to the automotive industry as a prime example of what works. “If you look at the auto manufacturers, they know very easily the number of cars they produced and sold within the last three months based on part number tracking and standardization so that they can track problems per part, per manufacturer and send out notices to everyone,” he said. “The key to that is they know. They’ve got the documentation down. We can very easily track through our systems that X number of patients received this implant, but that’s not the problem.

industry already knows, as does the pharmaceutical industry with its National Drug Code (NDC) system.

“HonorHealth utilizes a specific UDI Tracker for tissue-related events. ECRI provides UMDNS codes on all their notifications,” Mantell assured.

“The FDA established the UDI policy to track a medical device from manufacturing to patient use,” noted Wellstar’s Stone. “The burden has been with manufacturers and distributors to adhere to the UDI, and health systems have the responsibility to develop meaningful use

of UDI. Our system recently replaced our decades old ERP system, and with the new ERP (Workday), gained the fields necessary to capture UDI.

“This burden of work changes the responsibilities of supply chain in the data collection and item master content management and requires a larger built-out team of supply chain information systems staff,” Stone continued. “With an item masterto-EHR (EPIC) interface, the charting of supplies used on a patient provides the final stage of the device’s journey to patient use. The impact to this has shown in our ability to locate items used in patients that were involved in a recall, and when an adverse event occurs with the use of a medical device, the reporting of that issue can be investigated by supply chain with notification to the manufacturer and FDA.”

“The question of data standards is easy to answer. It’s yes,” said Northwestern’s Fennessy. “Unfortunately, our industry has been slow to adopt, and for whatever reason we cannot seem to get past this hurdle that in my opinion is a fundamental issue across healthcare. There are two core reasons that I believe have hindered full adoption. First, time always seems to [pick] other priorities, and we find end runs to accomplish work despite the lack of standards, and second, financial resources to get this work done. It takes time and dedication of resources to push this through. Healthcare supply chain does not have a lot of excess capacity.”

Incentives to embrace and employ supply data standards are there, according to Wellstar’s Broadneax.

“The cost-effectiveness and positive impact on patient outcomes resulting from standardization of devices and products is supported by evidence,” she said. “Standardization allows efficiency

“If I can solve documentation issues, whether through numerical data or visual processes, then I can get a big part of the equation solved in what I can control.”

when addressing non-acute versus acute-care spaces and the application of functional equivalents in record time. By that same token, when the entire nation is impacted by recalls for products – such as what we experienced with the sterile saline/water in November 2023 – allocation and identification of alternate suppliers is paramount on an even grander scale when the majority of healthcare organizations are focusing on resolution.”

Stone concurred: “Incentives for encouraging standardization would include supply continuity, quality of the product, and easy adoption for clinicians.”

High-tech holds promise?

With all the hype surrounding higher-end technology such as artificial intelligence (AI), blockchain (distributed ledger) and robotic process automation (RPA), provider supply chain leaders remain cautiously optimistic about the proximity to actual solutions.

“Communication, secure access/storage of data elements and the recognition of potential/actual impact are key in healthcare,” noted Wellstar’s Broadneax. “As a large integrated delivery network, the speed and reach of the aforementioned technology in Supply Chain alone can ensure the A-Z tracking of product, patient monitoring, and identify potential algorithms. I think of MMIS and ERP as necessary starts for initial processes but with evolving technology, efficiency and improvements, healthcare will always be challenged. In other words, being proactive is no longer ‘just enough.’ We have to aim for being at least 10 steps ahead when it comes to improving patient/employee safety and overall healthcare satisfaction.”

The lynchpin for advanced technology points right back to data standards, according to Northwestern’s Fennessy. “Without data standards that are universally applied, all of this technology has limited functionality,” he asserted. “Further,

clinical documentation, based on some work we have been doing, is pretty lax. We have significant challenges with it, and if you talk with caregivers about it, they are completely honest that there just are not enough hours in the day to comprehensively document everything that is used.

“We recently did some physician utilization comparisons, and it became clear that in many cases the reason some physicians seemed to be performing better was simply because documentation was missing on some of the products that were used in the case,” he continued. “If as an industry we can solve the documentation issues and find ways to automate it, and in parallel create universally applied data standards, we can operate just like the auto industry and grocery business.”

But the healthcare supply chain remains hampered by the lack of supply

data standardization, Fennessy argues. To wit: Every car that comes down the production line has the same manufacturer in terms of parts for that day’s activity. Every patient comes down the treatment and surgical line has non-standard parts and differing “engineers” and approaches.

“If I can solve documentation issues, whether through numerical data or visual processes, then I can get a big part of the equation solved in what I can control,” Fennessy said. “We’re all dependent on our internal databases. So, if those are flawed then AI is going to be flawed.”

FDA issues pilot

In early December 2024, the FDA’s Center for Devices and Radiological Health (CDRH) announced a pilot “to improve the timeliness of communications about

3 Keys

By and large, provider supply chain executives shared with JHC three keys to improve the recall process internally.

1. Clean up their item masters and device/product data points.

2. Integrate internal computer systems to link data sharing between ERP/MMIS, OR, EHR/EMR and AP systems.

3. Standardize device and product identifiers via unique device identification (UDI).

Links to additional informational resources worth reviewing: www.cpsc.gov www.cpsc.gov/Recalls www.saferproducts.gov www.recalldesk.com www.consumerproductsafety.gov.sg/consumers/international-product-recalls www.cmx1.com/blog/a-step-by-step-guide-for-making-mock-recalls-aroutine-business-practice home.ecri.org www.recallalert.org

corrective actions being taken by companies that the FDA believes are likely to be high-risk recalls.”

Provider supply chain leader outlooks remained mixed.

“We generally receive corrective action notifications within two to three days of publishing through ECRI, and upon receipt our team members review and address issues within specific timelines based upon the nature of the notification (critical risk, high risk, medium/low risk),” said HonorHealth’s Mantell. “That said, unless what the FDA proposes is same-day visibility from the time of publishing, I’m not sure any actions they take will materially impact our current process.”

Wellstar’s Broadneax extends a bit more optimism.

“The results of this pilot will be monumental for all organizations,” she told JHC “For one, not only is the FDA identifying and placing emphasis on early alerts even more, but they have the resources and ability for the compilation of the data/monitored testing/bringing it all to fruition. Upon completion of this pilot, we will get a ready-made framework that we compare to our current workflows and adjust based on what our community needs. Not to mention, it may also lead to similar paths of utilization across the nation that allows us to balance what works versus does not work in our large-to-small acute-care and non-acute-care spaces. Additional influences and enhancements that has the potential to benefit our program has many of us at Wellstar eager to follow the outcome.”

Northwestern’s Fennessy pauses but expresses hope.

“I don’t know until I see the details of it, but anything that they do to address it I think is good for the industry,” he said.

Improving Recall Management

What element, facet, strategy, tactic might drive more progress?

Healthcare supply chain executives, leaders and managers among provider organizations rely on manpower, mindpower and techpower to manage device and product recalls that proliferate throughout a given year.

As they look over current procedures and the entire process, they might be tempted to improve one element or facet, and one strategy or tactic from a menu of options, including a dedicated team, MMIS/ERP software module, UDI, AI, blockchain, RPA or third-party software service. Here’s what several sources shared on either.

Element/facet

“I feel it’s critical to have an organizational champion in this space. Regardless of tool/platform used to facilitate recall notification distribution and completion, having a primary point of contact or team to contact to address issues/concerns, ensure appropriate team members are receiving notifications, ensuring compliance to company policy, and regulatory reporting are of the utmost importance and essential to having a successful recall program.

“Perhaps the largest IDNs will choose to have a dedicated FTE or team of FTEs assigned to this, but I think most organizations can effectively manage this by incorporating the job duties into an existing role.”

– Bob Mantell, Program Director, Audit & Controls, Supply Risk & Resiliency, Supply Chain Services,

HonorHealth, Phoenix

“A better-aligned interoperability with the recall and our system-based identification numbers. As of now, although the software for our Recall Management System has an ‘Automatch’ feature for alerts that link with previous purchases, it does not currently align or identify the System-defined ID number. Even with naming conventions and descriptions, this is an element that can be quite time consuming when multiple alerts or varying lot numbers are received.”

– Kimberly Broadneax, R.N., Recall Management Facilitator, Clinical Quality Value Analysis (CQVA), Wellstar Health System, Marietta, GA

“In a perfect world, I would like to see specialized software that assists with this and has a cross-matching element, but as a goal for future development. For now, the Recall Management Interest Group (RMIG) is aggregating information and measuring those common elements that will assist with efficiency and communication while still maintaining and

enhancing safety. Just having a forum that allows input from varying sized facilities and a combined effort that will impact outcomes even more will always be a positive improvement.”

– Melanie Stone, Executive Director, CQ Value Analysis, Wellstar Health System, Marietta, GA

“How manufacturers notify healthcare providers is an area that has improved over the years, but it is still less than optimal. Once we receive notice we can move quickly, but sometimes that takes several days, or I will hear from someone. What to me is more frustrating are some of the notifications that are strictly ‘CYA’ notifications. Not a full recall, but a notification of a possible problem, or a warning. What do you do with those? Finally, what do I really think would help? How about fewer recalls?”

– Gary Fennessy, Vice President and Chief Supply Chain Executive, Northwestern Memorial HealthCare, Chicago

Strategy/tactic

HonorHealth’s Mantell: “I feel it’s critical to have an organizational champion in this space. Regardless of tool/platform used to facilitate recall notification distribution and completion, having a primary point of contact or team to contact to address issues/concerns, ensure appropriate team members are receiving notifications, ensuring compliance to company policy, and regulatory reporting are of the utmost importance and essential to having a successful recall program.”

Wellstar’s Broadneax: “Definitely a dedicated team. Most of us utilize multiple roles in our day to day, so the team effort buoyed by healthcare experience, served as the catalyst and framework for our specific Recall Management Program. Before our Recall Management Program was officially launched, it was our System VP, Joe Castanon, and Value Analysis Executive Director, Melanie Stone, who rolled up their sleeves and outlined the initial processes and next steps. Recall Management can be quite time consuming, but we address everything from actual recalls to facilitating necessary conversations with Vendor leadership. Meaning, I will never downvote the value of the human element and perspective as a core benefit to the Recall process.”

Patient Access to Care in All Forms

Increased chronic disease, aging populations and behavioral health awareness will accelerate inpatient and outpatient volumes.

BY DANIEL BEAIRD

Workforce demands, capacity constraints and ever-changing payer and policy considerations highlight the enormous obstacles faced by the healthcare industry today. An aging patient population and high acuity rates over the next decade will continue to push lengths of stay longer and put pressure on the industry to adapt and make changes. But how does that look?

Sg2’s Impact of Change report forecasted inpatient utilization to rise 3% and days to increase 9% due to the prevalence of chronic disease and behavioral health conditions that spur demand for complex care and other services. Outpatient volumes are projected to jump to 17% due to outpatient surgical services driven by expanded capabilities and procedural needs.

Behavioral health volumes will grow to 8% inpatient and 26% outpatient visits. Finally, it predicts virtual care will encompass 23% of evaluation and management visits through greater adoption of technology, including home health expansion that is set to increase 22%.

“We’ve seen outpatient shift from the hospital to observation and hospital outpatient surgery gradually occur over the

past 20 years,” said Maddie McDowell, MD, senior principal of intelligence for Sg2, a Vizient company. “It has accelerated in the last 10 years due to clinical innovations, payer pressures and changes in CMS payment policy and physician practice patterns, resulting in dynamic shifts across the care continuum and beyond the hospital to lower cost settings, including ASCs, urgent care clinics, virtual visits and the home.

Patient care shifts away from hospitals

While joint replacement surgeries began shifting to outpatient settings before the pandemic, other higher acuity surgeries like cardiac surgery have now joined the trend. Primarily shifting to ambulatory surgery centers (ASCs), health systems are focusing on getting their patients in the right settings and locations for their surgeries.

“They’ve expanded to multiple sites across multiple geographies that connect the dots for the patient care journey so they can have their surgeries done in an ASC or a hospital outpatient department or inpatient depending on the type of procedure and acuity of the patient,” Dr. McDowell said.

As patient care shifts, there has been an uptick to home and remote monitoring as well. “There’s a slow but steady growth in care at home,” she said. “It was rare before the pandemic but spurred by COVID-19, there’s now payment from CMS and artificial intelligence (AI) will augment it over the next decade.”

Dr. McDowell says the model has shown improved quality outcomes, reduced admission rates, shorter lengths of stay and reduced complications. “It’s very successful and some health systems

are continuing to grow their programs,” she said. “A lot of experimentation happened during the pandemic because of the necessity to expand hospital bed capacity, and the results were overwhelmingly positive, resulting in a new care model that will likely continue to grow in the wake of advances in AI-enabled remote monitoring.”

With the aging, high-acuity patient population requiring longer stays in the hospital, how many bed days could care at home save? What other capacity constraints could be relieved by a robust care at home offering? Health systems must ask themselves these questions to ensure their resources are deployed for high quality outcomes.

originally present. But that’s expiring at the end of this year and it’s causing many organizations to press pause on it, according to Dr. McDowell. “They’re unsure about whether to double down and invest in it going further. They’re just waiting to see what CMS will do.”

But conditions like chronic pain and some parts of cardiovascular where remote patient monitoring can expand local services across broader geographies are predicted to see more uptake of virtual care, along with better access to behavioral health in rural and underserved communities through virtual care.

However, anything towards surgical services is less likely to be tied to it.

“ There’s a slow but steady growth in care at home. It was rare before the pandemic but spurred by COVID-19, there’s now payment from CMS and artificial intelligence (AI) will augment it over the next decade.”

Expanded virtual capabilities also help foster care at home. More services like consultations can be delivered in a virtual setting to help patients manage things like chronic disease and keep them out of the hospital.

“Virtual care was also low volume before the pandemic,” Dr. McDowell said. “But the pandemic accelerated its usage. CMS allocated new payment for it, and as a result we saw a dramatic rise in virtual visits. It’s come down now but it’s still well above what it was before the pandemic.”

CMS extended payment parity for virtual visits to match in-person visits and reduced or limited many of the restrictions

Surgical care increasing

Outpatient surgical care is expected to increase 19% over the next decade and physicians have driven growth in the ASC space.

“ASCs were originally for very low acuity surgeries and high-volume surgeries like cataract surgery, for example,” Dr. McDowell said. “They were oftentimes owned by physicians and sometimes partially owned by hospitals. But over time, health systems and hospitals realized their bread-and-butter surgeries, whether they were inpatient or outpatient, were being connected to ASCs.”

Physicians controlled ASCs and could provide high patient satisfaction because

ASCs didn’t have the cumbersome challenges that large hospitals had, along with the complexity, different cases and different staffing models, says Dr. McDowell. ASCs were focused on specific conditions and were very attractive to specialties. So, health systems and hospitals began to partner with ASCs in order to provide the entire continuum of care to their patients.

often require advanced imaging and certain procedures are preferentially done at the hospital.”

Higher acuity, aging patients and longer stays

Even before the pandemic, health systems were seeing longer lengths of stay and

Cancer drugs, gene therapy drugs, cardiac drugs, diabetes drugs, obesity drugs, dementia drugs and drugs that treat autoimmune conditions are all seeing new targeted therapies. These will have an impact on the U.S. healthcare system from pricing to utilization and everything in between.

“Physicians play a large role in ASCs,” Dr. McDowell explained. “They bring in the patients, decide the protocols and execute the operational efficiency piece that can be lacking in large ORs at hospitals. If hospitals do these on their own, they sometimes don’t get the referrals, and they don’t have the same operations and processes in place that are successful and that find attractive.”

And if physicians have joint ownership in ASCs, there are financial benefits for them to succeed. So, it’s a beneficial relationship for physicians and health systems to partner together.

“For things like electrophysiology procedures and treating arrhythmias like cardiac ablations, those things are very connected to the hospital,” Dr. McDowell said. “Cardiologists are often employed by the hospital. There’s a lot of care at a clinic or where other cardiology services are given. The diagnostics that are done

higher acuity coding in the ED. And since then, trends have manifested into rising acuity rates in hospitals due to chronic disease and obesity as well as an aging general population and more behavioral health awareness.

But the rate of acuity in hospitals has also naturally risen as other patients have been shifted to ASCs, care at home or post-acute programs, leaving behind sicker patients in hospitals. “We’re seeing that in the inpatient setting, in the ED and in observation as well,” Dr. McDowell said. “But there are dynamic changes in clinical care brought on by pharmacy innovation. The pipeline for new drugs is quite promising for a whole host of chronic conditions.”

Dr. McDowell says that for dementia alone, there are 32 drugs in Phase 3 clinical trials which demonstrates whether or not a product offers a treatment benefit to a specific population. “In the future, the

introduction of targeted, effective drugs coming on board to treat common chronic conditions will impact the rising acuity health systems face today and have been addressing since the early 2000s,” she said.

Drugs like GLP-1 receptor agonists and SGLT-2 inhibitors which are used to treat Type 2 diabetes and can reduce the risk of cardiovascular disease and kidney failure are a big story too. “These medication classes address multiple diseases, with impressive downstream impacts, such as reducing chronic disease progression, lowering healthcare utilization, decreasing hospitalizations, and generally improving the overall health of patients with cardiac and kidney disease, hypertension, and diabetes,” she said. “They’ve shown efficacy in reducing hospitalizations for cardiac conditions, including congestive heart failure, and in slowing the progression of chronic kidney disease, even in the short time they’ve been available.”

Cancer drugs, gene therapy drugs, cardiac drugs, diabetes drugs, obesity drugs, dementia drugs and drugs that treat autoimmune conditions are all seeing new targeted therapies. These will have an impact on the U.S. healthcare system from pricing to utilization and everything in between. They will increase utilization in some cases for services like diagnostics, infusions or chimeric antigen receptor (CAR) T-cell therapy at hospitals, but they could also decrease utilization downstream.

“If you’re getting these drugs for an autoimmune condition and you’re in remission, you no longer need the monthly infusions, the imaging and the regular visits to the doctor,” Dr. McDowell said. “That will affect the U.S. healthcare system in price, volume, overall care pathways and in how we manage patients.”

Impact of Tariffs on Healthcare: Meet the Trump Trade Team

Tariffs have emerged as a pivotal element in U.S. trade policy. While tariffs aim to protect strategically vital industries and act as a negotiating tool in trade disputes, their impact on healthcare providers has become an area of growing concern. Rising costs attributed to tariffs on medical supplies, equipment, and pharmaceuticals could jeopardize the financial stability of healthcare systems and limit access to critical care for patients.

HIDA is actively monitoring developments in trade policy and educating elected officials on the ways in which tariffs impact the medical supply chain. Tariff Policy Clearinghouse has the latest developments on trade policy. You can access this resource on our website at www.hida.org/tariffs.

Healthcare providers in the United States operate within a tightly regulated, resource-constrained environment. Tariffs on imported medical equipment and pharmaceuticals could lead to price disruptions across the supply chain. A report by the American Hospital Association (AHA) has underscored these challenges, stating that “rising costs tied to tariffs on medical goods risk eroding access to necessary supplies and compromising patient care outcomes.” The AHA emphasizes the need for policymakers to balance trade policy with the essential public service mission of healthcare providers.

The Trump Administration’s Trade Policy Team

President Donald Trump’s trade team has signaled a commitment to advancing a tariff-centered agenda. Each member brings a unique perspective and potential influence on how healthcare providers will navigate the new trade landscape:

 Treasury Secretary Scott Bessent: Bessent has advocated for using tariffs not only as revenue tools, but also as leverage in international negotiations. His emphasis on fiscal discipline – including

spending cuts and tax shifts – may influence broader policy decisions that indirectly impact healthcare funding.

 Commerce Secretary Howard Lutnick: Lutnick has endorsed tariffs as a means to “protect the American worker” – aligning himself with President Trump’s philosophy that prioritizes domestic manufacturing. His leadership in driving the Office of the U.S. Trade Representative’s agenda suggests an aggressive approach to applying tariffs on goods that could include healthcare-related products.

By Wyeth Ruthven, Director of Congressional and Public Relations, Health Industry Distributors Association

 U.S. Trade Representative Jamieson Greer: Greer has been an outspoken advocate of using tariffs to address trade imbalances, particularly with China. His recent support of tariffs on medical products exemplifies the potential impact on healthcare providers.

 Senior Counselor for Trade and Manufacturing Peter Navarro: Known for his pivotal role in shaping U.S. trade policy during Trump’s first administration, Navarro remains committed to bolstering American manufacturing through tariffs. His influence ensures that healthcare providers will likely remain a focus area as medical products are vital components of U.S.-China trade tensions.

As the Trump administration’s trade policy evolves, healthcare providers and policymakers alike must engage in collaborative discussions to ensure the stability of the healthcare sector and preserve the health of the American public. In an era where trade policy and healthcare intersect, prioritizing patient outcomes must remain paramount.

Supply Shortage Strategies

Two Western health systems talk philosophies at JHC’s IDN Insights West

BY DANIEL BEAIRD

Editor’s Note: Responses are from an expert panel at JHC’s IDN Insights West

When Baxter International’s North Cove manufacturing facility in North Carolina was affected by flooding by Hurricane Helene and closed for production as the company assessed the extent of impact, health systems across the country prepared for the potential IV shortage. Baxter is the largest manufacturer of IV fluids and peritoneal dialysis and IV solution in the U.S. It produces approximately 60% or 1.5 million bags of IV fluid according to the American Hospital Association (AHA).

The closure caused massive supply disruptions as hospitals coped with these shortages.

“As soon as we heard that there was an issue with the facility and the hurricane hit, we mobilized all our logistics people to see exactly what we had on hand,” said Nancy Ewing, Director of Purchased Services for UCHealth in Colorado. “We also connected with our Informatics Data team and put together charts and dashboards to assist in tracking the IV fluids. We got a real-time look to see what we had in our hospital warehouses and in our storerooms on the floor.”

Ewing says UCHealth also connected with its distributor to see what it had on hand and what plans were in the making. It sent communications to its clinicians alerting them of the issue and advising them to put conservation measures in place, while also seeking alternative measures.

“Wherever there was the opportunity for someone to be hydrated orally versus infusion, we’ve done that,” she said. “We also determined which medications could be given orally versus intravenously, so we’re giving it close attention and making sure we’re communicating with our clinicians.”

Garret Hall says Intermountain Health is doing similar things. He is the director of control tower and supply chain operations for the Western-based health system.

“The shortage was an issue imminently but also long term,” he said. “So, it’s also about what we’re doing three to four months down the road.”

Hall says it’s a central management function, so Intermountain Health looked across its organization to store inventory. It has a building center in

Salt Lake City and regional caches, and it has moved inventory there in order to manage allocations internally and also externally through its manufacturers and distributors.

“Anyone in the organization that uses IV solutions is reaching out to make sure they are kept whole, so it’s about how we spread the utilization around the organization and look at it holistically,” he said.

Handling back orders

The COVID-19 pandemic taught health system supply chains that having all their eggs in one basket was a poor way to do business and many switched to multiple agreements with vendors to help mitigate any shortages.

“Our purchasing team knows what our secondary and tertiary options are now, so if we run into a back order situation, we know what items are approved by the clinicians and what they can purchase, if needed,” Ewing said. “There are some items, like sharps, for example, that need to be assessed by our Value Analysis Team and our educators before we pivot to different options due to OSHA requirements and to keep our clinicians safe.”

Having backups available has helped UCHealth stay out of an outage situation.

Similarly for Intermountain Health, it’s a lot of sub-identification for back orders. When they come up, it’s about how the health system builds a pre-identified sub-list, so it knows what it’s pivoting to. But its primary goal on back orders is not being reactive to potential stockouts.

Hall says it’s about being proactive into potential back orders through supplier relationships and manufacturer partnerships to get notification

of coming back orders to identify the appropriate substitutions.

“If we aren’t able to do that, it’s about how we pivot internally,” he said. “How do we redistribute some of the supplies so that we’re not bringing in too much variation? As soon as we open Pandora’s box, it’s much harder to reel back in.”

He says it’s really about working through partnerships. What’s the exposure? What’s the duration? How many subs need to be brought in? Where do subs need to be brought in?

“We’re trying to minimize the impact of those subs,” he explained. “If we can transition a number of our formulary product to the majority of the sites while keeping them whole and then push some of those subs to some other individual sites, then that limits the exposure of subs.”

That allows any additional training on subs to only happen at those individual sites. It’s a multifaceted approach to managing back orders for Intermountain Health.

Ensuring resiliency

Partnerships help ensure resiliency. UCHealth makes sure it has good partnerships with its key suppliers, and when there’s an issue, they meet to work things out together.

“We have a very robust Value Analysis Team,” Ewing said. “The nurses that make up our Value Analysis Team are directly a part of Supply Chain. We can fall back on them, and they can help us from an options perspective. If we’re running short on something or we hear something in the news that might be short, we can lean on our Value Analysis clinicians to help guide us to where we can pivot.”

UCHealth leans on its primary distributor and has regular meetings to ensure it has enough stock on hand. It entertains a secondary distributor in case of needed back up. Ewing adds that the health system also has regular business reviews with its key suppliers to make sure those suppliers are giving UCHealth advance notice if any issues arise.

Hall says Intermountain Health uses dual-source and multi-source for things like IV solutions. But it’s a double-edged sword. He says having too many dualsource or multi-source limits the health system from an operational perspective to drive efficiency through supply chain.

“It’s a fine line of having resiliency through dual-source and multi-source,” he added. “So we work with our suppliers, manufacturers and internally through our forecast demand planning team to anticipate what key items might either run dual- or single-source.”

If something comes up, Intermountain Health can approach it with its primary distributor and secondary distributors to help support what inventory it has on hand and how to pivot to any dual-source inventory.

“It’s a mix of the sourcing and the inventory we keep and the appropriate buffers that try to prevent any of the reactionary nature from the operations side,” Hall said.

When a natural disaster like Hurricane Helene affects a supplier, it’s important to have a good backup plan and domestic options. Ewing says UCHealth works with a supplier that was impacted by Hurricane Helene, but it has redundancies in Spain and Mexico, and it was able to ramp up production at those facilities.

“When meeting with vendors we make sure they have backups to their supplies and raw materials, and ask them

what they do to ensure production if there’s a natural disaster,” Ewing said. “Also, what happens if there’s an issue in China or where the materials are coming from? Or there’s a problem in the ocean or there’s a port strike? What’s their backup plan to get materials to the U.S. so they can continue manufacturing?”

Ewing says supply chain has evolved over the years because of these disasters and is now asking more in-depth questions to suppliers about emergency backups.

“They need to be diversified in their raw materials just as much as being diversified in their manufacturing,” Hall added. “Also, are they diversified where they store finished product? Do they have off site warehouses that they’re able to pull inventory from and are they able to do it effectively?”

Hall says it’s very different if they have warehouses full of finished product but can’t effectively pull from them because there aren’t systems or mechanisms available to distribute the product in an urgent time frame.

“It’s that full end-to-end piece we’re looking for,” he said.

Business reviews with vendors

The full end-to-end piece is necessary to serve the patients that health systems treat. But they want to make sure they are getting the best product for their patients at the best value. A high-quality product at a fair price is top priority.

“You may negotiate what you think is the best price and it looks like you’re getting it from a benchmarking perspective,” Ewing said. “But then there’s somebody down the street who may have a higher volume and better prices, then your benchmarking doesn’t look good. You constantly need to be monitoring.”

Ewing says supply chain personnel historically have taken the higher price in critical situations to ensure top priority and product availability. But she thinks that’s changing. Partnering with vendors versus transactional relationships are taking center stage as health systems investigate vendors’ ability to meet their needs from a resiliency perspective and what they bring to the table through innovation while still getting a competitive price. Ensuring that solid KPIs are built in the contracts and monitored ensures a strong and resilient partnership.

“When meeting with vendors for business reviews, we are interested in hearing about new items that manufacturers have that could help us both operationally and in the care of our patients,” she said. “If there’s something in their R&D coming up, that’s really helpful for us to know too, so we can prepare and share it with our clinicians.”

Intermountain Health has two tiers of supplier meetings. One is from a broader perspective that evaluates price and what’s coming in the future. Hall says the health system goes over KPIs and also has some tactical supplier relationship meetings.

“The tactical meetings roll up into the broader meetings,” he said.

Those meetings at Intermountain Health review open P.O. information and things related to it and it’s through those meetings that Intermountain Health gleans some information about products that are likely going to be discontinued or there is going to be a long-term manufacturing back order.

Hall says they need to share some of the challenges they face with vendors too.

“There’s a lot of time and energy spent on the front end setting up a lot of these agreements and distribution patterns and things like that,” he said.

“But then it’s the ongoing maintenance of those. How do we share feedback when some of those things aren’t going well?”

From a tactical perspective, having those communication mechanisms helps Intermountain Health know what it’s looking at and making sure the agreed upon KPIs are being met.

Onshoring versus offshoring

There’s more talk around onshoring and reshoring products to the U.S. and Ewing says that if it’s something like IV solutions then it’s absolutely necessary.

“If the availability of product is going to be more guaranteed with a supplier that has both domestic and offshore capabilities, then that’s something we consider,” she said. “Other vendors that primarily manufacture overseas and ship into the U.S. must have a record of being able to deliver whether it’s by ocean or air transport without passing the freight cost along to us if something goes wrong.”

That’s something UCHealth considers from a supply perspective as well as anything that might have a software implication or language in agreements that shows that the supplier keeps data onshore from a cybersecurity angle.

The distribution network for anything offshore is important too. If they are shipping a lot of product across the world, a consistent routine supply chain must exist to ensure health systems aren’t going months without product or they get too much product at once.

“How effective is that supply chain for anything that is offshore,” Hall asked. “What’s the cost structure that’s potentially being passed on? What’s the cost benefit analysis?”

Those are critical questions for health systems working with suppliers offshore.

— Mark Welch, Senior Vice President, Novant Health

Streamlining Care

Increasing specialization within the ASC care continuum.

BY PETE MERCER

Outpatient care is booming – in fact, more than 80% of surgeries are now performed in outpatient settings, outsourcing these procedures to ambulatory surgery centers. ASCs are highly regulated care facilities that provide outpatient surgery and preventive care for their patients, performing a more focused scope of procedures compared to hospitals and other healthcare facilities. These facilities are creating unique opportunities for physicians to provide high-quality care in a high-value market.

One of the more interesting opportunities for patient care at an ambulatory facility is that the procedures are increasingly becoming specialized. Specialization in an ambulatory setting is when patients receive a specific kind of medical care or surgery at an ASC. As ASCs have recently grown to become the dominant provider of specific surgical procedures in the U.S., many have diversified their services to offer a wider range of surgical specialties and other services, including pain

management, diagnostic imaging, and gastroenterology services.

ASCs continue to drive innovations that are transforming the world of outpatient surgery. In order to fully understand how the ambulatory care market is effectively streamlining patient care protocols, we need to look at why these facilities are trending towards specialization and what that specialization means for physicians and patients alike.

The influx of specialization

Part of what makes specializing work in the ambulatory space is the autonomy granted to these facilities by simply not being a hospital. In a hospital setting, there are so many different moving pieces that go into a patient stay that it becomes just about impossible to offer any level of specialized care for the patients.

Dr. Neal Badlani, an orthopedic surgeon who specializes in minimally invasive spine surgery, wrote in The Journal of Spine Surgery , “Compared to hospitals, ASCs have a much greater capacity to pick and choose what procedures they perform, who their patients are, and what processes both clinical and administrative are to be used in their centers. This autonomy results in, proportionately, far less overhead for the facility. Specifically, the lower overhead costs can be achieved by limiting the scope of procedures.”

This surge of ASC specialization is likely because physicians are pushing the drive to develop new ASCs. A report from the ASC Association says that by leveraging a focused model for specific procedures, ASCs can provide a more consistent and controlled environment

that largely avoids the many challenges of delivering a multitude of different surgical and medical services.

Increased physician autonomy

Consistency in healthcare is critical. Physicians in an ASC environment have a significant amount of control over many components of the healthcare continuum; they can build more convenient procedure schedules, assemble a team of specially trained and highly skilled staff, obtain high-quality equipment that best fits the specific sets of procedures they offer, and even design their facilities to fit the specific needs of their patients and the procedures they provide.

ASCs allow a level of autonomy that is hard to come by in the healthcare industry, making them more attractive to physicians who would otherwise have to operate within the parameters and boundaries of a hospital.

Part of the autonomy that piques the interest of so many physicians is because approximately 52% of all ASCs are operated in a physician ownership model. In this scenario, doctors own 100% of the equity in the ASC, are responsible for all management decisions, and make all decisions related to the quality of care.

“There are great benefits to physician ownership such as autonomy and control,” Badlani writes. “This usually leads to a clinical environment with a high quality of care for patients and convenience for physician owners. There is a flatter hierarchy which can lead to better access for patients to physician operators who have direct knowledge of the patient’s clinical situation and control over the care environment. Physician entrepreneurs often stimulate innovation and progress.”

In this ownership model, physicians can also partner with a management company to handle all the contracting and administration tasks that come with owning an ASC. These partnerships allow physicians to maintain their focus on the care of the patient and the quality of the procedures, without sacrificing too much control or their equity in the facility.

Another added benefit to operating a specialized ASC is they are often associated with lower facility costs. By providing a focused set of procedures, these facilities can significantly reduce overhead costs. A study conducted by UnitedHealth Group showed that conducting more joint replacement surgeries in ASCs could result in 500,000 fewer

As ASCs continue to branch out and specialize in more procedures, it gives the patient a larger menu of options to choose from.

ASC Data found that the specialties with the highest growth rate in 2023 were cardiology, musculoskeletal, and orthopedics, while the specialties with the most potential for growth in 2025 are orthopedics, cardiovascular, and gastroenterology.

The impact of specialization

There are many benefits of increased specialization within the ASC space. From the patient’s perspective, it’s a significant time saver. Patients undergoing procedures in ASCs are often in and out of the facility within the same day, spending whatever recovery time is necessary from the comfort of their own home. The increased convenience, flexibility, and accessibility of an ASC makes it a compelling option for outpatient care.

Patients in an ASC setting also see significant cost-savings by opting for outpatient procedures. The ASC Association reported that a Medicare beneficiary “could pay as much as $496 in coinsurance for a cataract extraction procedure performed in a hospital outpatient department, whereas the same beneficiary’s copayment in the ASC would be only $195.”

hospitalizations and $3 billion in annual savings across the board.

The study found that hospital-acquired infections have been a significant challenge for patient safety, with up to 3% to 4% of hospital patients contracting infections – this also includes infections in patients following 1% to 2.5% of joint replacement surgeries. Because of this, up to 26,000 joint replacement patients

each year face additional treatment and a longer stay in the hospital.

Procedures like joint replacement don’t necessarily require a hospital stay. Patients who get an outpatient hip or knee replacement are often discharged the same day, with no increased likelihood of infection or readmission compared to inpatient procedures. In fact, an outpatient procedure might even decrease the likelihood of infections – hospital-acquired infections are a huge risk and safety challenge.

Looking toward the future

As ASCs continue to branch out and specialize in more procedures, it gives the patient a larger menu of options to choose from. ASC Data found that the specialties with the highest growth rate in 2023 were cardiology, musculoskeletal, and orthopedics, while the specialties with the most potential for growth in 2025 are orthopedics, cardiovascular, and gastroenterology.

With the increase of specialization in the ambulatory care space, it will be interesting to see how this affects the rest of the care continuum. ASC Data predicts that private insurance will continue to shift towards ambulatory, which will completely reshape the hospital environment.

Additionally, the consolidation of ASCs through mergers and acquisitions will continue to enhance efficiency for physicians and staff, while also enabling ASCs to negotiate better reimbursement rates with payors. Technology will also continue to evolve in the ambulatory space, allowing physicians to better streamline their workflow and patient care processes. Specialization will continue to advance across the board, allowing for more patients to tap into cost-effective, efficient, and highquality outpatient care.

Health Systems Gobble Up Urgent Care Locations

Providers seek to meet patients where they already are.

As MedExpress Urgent Care locations faced closure in 2024, health systems across the landscape began to scoop them up. The Morgantown, W.Va.-based clinics have been part of UnitedHealth Group’s Optum since 2015 when they were purchased for $1.5 billion. But nurses were laid off at nearly 150 locations this past August as part of larger layoffs at Optum and health systems like Pittsburgh-based UPMC jumped at the opportunity to take over some MedExpress Urgent Care centers in Pennsylvania, West Virginia and Virginia beginning this spring.

UPMC formed a joint venture with GoHealth Urgent Care to become UPMC-GoHealth Urgent Care to run the centers. During the transition, MedExpress, UPMC Urgent Care and UPMC Express Care will operate under their current names.

The urgent care provider and operator GoHealth has partnerships with 11 health systems and manages over 250 urgent care centers in 14 states, including one with ChristianaCare to operate five new urgent care clinics in Delaware previously managed by MedExpress.

GoHealth currently has partnerships with ChristianaCare, Hartford HealthCare, Henry Ford Health, Inova, Legacy, Memorial Hermann, Mercy, Northwell Health, Novant Health, Nuvance Health and UCSF Health.

For example, in 2024:

 HCA Healthcare purchased 41 Texas urgent care centers from FastMed.

 Baylor Scott & White also had 41 urgent care clinics across Texas join its network through a partnership with NextCare Urgent Care.

 Baptist Health purchased five urgent care centers, which maintained their care teams with expanded access to Baptist Health specialists in Arkansas.

 Memorial Hermann Health System partnered with GoHealth Urgent Care to operate 10 existing urgent care centers in the Houston area.

 Ochsner Health acquired Diamondhead Urgent Care and has two locations to provide urgent care in Mississippi.

Doctors Care is South Carolina’s largest urgent care network and employs 1,100 healthcare professionals.

Why urgent care?

Why are so many health systems acquiring urgent care clinics and partnering with urgent care operators?

The urgent care industry has seen rapid growth, driven by factors like increasing patient demand for convenient care, the rising costs of healthcare, and the need for services outside of regular office hours. Many urgent care centers also offer extended hours, making them a popular choice for patients seeking quick medical attention.

Some health systems see urgent care acquisitions as a way to expand their footprint in a certain geographical area, while all of them see it as a way to meet their patients where they already are.

As of recent estimates, there are over 10,000 urgent care centers across the country.

Health insurers and hospitals have become focused on keeping people out of the emergency room since those visits are around ten times more expensive than visits to an urgent care center. And, like other health care options, urgent care centers make money by billing insurance companies for the cost of the visit, additional services or the patient pays out of pocket.

Urgent care in the Carolinas

GoHealth’s partnership with Novant Health in North Carolina spans 33 locations.

The two partnered in 2018 and their most recent location opened in December. All Novant Health-GoHealth Urgent Care locations are in the Charlotte metropolitan area, Asheville and the Triad region, providing the communities with a direct link to Novant’s network of high-quality healthcare services.

Winston-Salem, N.C.-based Novant is now taking that success in urgent care to South Carolina.

In 2024, it acquired a 200-provider urgent care group from Blue Cross and Blue Shield of South Carolina called UCI Medical Affiliates, which included Doctors Care and Progressive Physical Therapy. Doctors Care is South Carolina’s largest urgent care network and employs 1,100 healthcare professionals.

A Novant spokesperson told Becker’s Healthcare that the acquisition allowed the health system to expand its reach in South Carolina and extend its safety and quality program to these South Carolina clinics. The purchase now makes Novant the largest urgent care provider in the state. It also complements Novant’s three South Carolina hospitals and associated physician clinics, as well as its Ridgeland clinic established in partnership with Ochsner called Ochsner and Novant Health 65 Plus – Okatie.

“Expanding access to high-quality outpatient care is a key part of our strategy to transform healthcare in South Carolina,” said Carl Armato, president and CEO of Novant Health, in a statement. “The addition of our urgent care and physical therapy network enhances our ability to support patients across the state with their unexpected care needs and recovery from injuries.”

Primary Care Clinics Opening in Former Walmart Health Locations

Health systems see opportunities to meet their patients where they already are.

BY DANIEL BEAIRD

Three former Walmart Health locations in Northwest Arkansas have reopened as Mercy clinics.

The Missouri-based health system has opened Mercy Clinic Primary Care locations inside Walmart Supercenters in Springdale, Rogers and Fort Smith, Arkansas. These primary care facilities allow Mercy to meet their patients where they are, according to Dr. Lance Faddis, regional physician executive for primary care for Mercy Arkansas Communities.

Walmart Health closed all 51 of its locations across five states in 2024 after it couldn’t operate a profitable business due to a challenging reimbursement environment and rising costs, including labor costs tied to a shortage of healthcare workers in the U.S. The closure announcement came just one month after Walmart announced it planned to open 22 new locations in 2024 and more in 2025.

Walmart is not involved in providing or overseeing care at the new Mercy Clinic Primary Care locations. Mercy and community leaders marked the opening of the new clinics on Nov. 4-5.

“These new locations reflect our commitment to making healthcare more accessible and to supporting the well-being of Arkansas families by providing care in the places they already visit frequently,” Dr. Faddis said.

Each location is between 5,000-6,000 square feet with space to expand. They offer primary for all ages with appointments and walk-ins during regular hours. Services include:

 Medicare annual wellness visits.

 Sports physicals.

 Vaccines and immunizations.

 Health screenings and exams.

 Preventative care and more.

AdventHealth opens telehealth primary care clinic in

Kentucky Walmart

AdventHealth has partnered with Walmart to open a hybrid telehealth primary care clinic in Kentucky. AdventHealth Clinic Corbin started seeing patients Nov. 4 for routine checkups, chronic disease management, preventative care, virtual consultations and

lab services inside the Walmart Supercenter in Corbin, Kentucky. The retailer recently celebrated a grand reopening for the newly remodeled store with the AdventHealth addition.

Jamie Couch, interim administrator and vice president of operations at AdventHealth Manchester (Kentucky), said the health system is excited to serve the Corbin community with convenient whole-person care. The AdventHealth clinic will leverage the latest technology to connect patients with experienced healthcare providers.

Walmart stores are positioned to provide affordable care in underserved communities and with Walmart Health exiting the stage in 2024, larger health systems have seen the opportunity to fill those spaces. The American Hospital Association (AHA) says technology, partnerships and flexible care models will help determine which players can succeed in healthcare in meeting consumer needs and profitability in the future. Managing the framework alone proved a daunting task for retailers like Walmart as their strategies have to adjust to healthcare regulations, unpredictable reimbursement models and staff shortages.

Supply Chain By the Numbers

BY JOHN STRONG, CO-FOUNDER AND CHIEF CONSULTING OFFICER, ACCESS STRATEGY PARTNERS INC

It’s not a longshoreman’s deal until it is signed

Everyone along the healthcare supply chain breathed a sigh of relief when just weeks before last fall’s election the members of the International Longshoremen’s Association agreed to extend their current contract until January 15, 2025. As of press time, a tentative deal has been reached, thus averting a potential strike that could have damaged the American economy.

The numbers get large quickly

The longshoremen undoubtedly deserve a raise. However, a look at the numbers illustrates how quickly this settlement could add up.1

47,000

$39 per hour vs. $63 per hour

60%

Number of dockworkers affected, keeping in mind not all of them work full-time.

Highest hourly rate at the end of the proposed 6-year contract.

Dockworkers at the ports of New York and New Jersey who made between $100,000 and $200,000 through June 2020. Some will earn more than $500,000 annually.2

The fight is not over

As you work diligently to reduce the cost of supplies and gain efficiencies, think about this:

ʯ Perhaps the biggest fight is yet to come over automation.

“Operators can afford the 62% pay increase, but not the low productivity that the work rules require”.3

ʯ This becomes a critical issue in the United States because we need more port capacity. The only port to add capacity in the U.S. since 2009 was the port of Charleston, South Carolina, in 2021.4

ʯ This is a concern to many experts – and one that could derail the talks – although there is still time to avert a strike threat again.

ʯ As you or your distributor continue to import goods from overseas, keep an eye on the state of the talks.

Expect to hear more about stethoscope hygiene in 2025

In 2024, the Centers for Disease Control and Prevention (CDC) introduced new clinical guidelines that for the first time classifies the role of the stethoscope in transmitting disease from previously “non-critical” to now considered “potential vectors for pathogen transmission under the Transmission by Touch” category.

New protocols make opportunity costs high

There are now stricter disinfection protocols in place requiring more rigorous disinfection practices for stethoscopes. Not surprisingly, getting clinicians to spend the time to disinfect scopes has proved elusive over the years given the suboptimal options they have to work with.

A recent Baylor study highlighted the opportunity costs of disinfecting a stethoscope correctly. According to the study, disinfection compliance is only around 11%.6

However, spending one minute every time you want to disinfect your scope between patients can create staggering opportunity costs as illustrated in the study.

20-Bed Emergency Room

90 Auscultations per Day

Clinician Productivity Impact

Clinician auscultates on average 30 times per shift. Three physician shifts.

32,850 auscultations per year.

547 Hours or almost 23 days (at one minute per disinfecting per scope) of Stethoscope hygiene annually for one average size Emergency Room

With physician satisfaction already at historic lows, and emergency rooms often seeing increasing numbers of visits, today’s solutions for stethoscope disinfection do not work well.

Present solutions: Time-consuming and costly

Today’s solutions include alcohol wipes, other forms of disinfectant wipes, disposable stethoscopes and stethoscope covers. While alcohol wipes are relatively inexpensive, they also do not kill C. diff spores. C. diff and MRSA are expensive and time consuming to treat.

Cost of Treatment

C. diff $24,205 per occurrence7

MRSA

$38,561 per occurrence8

Diaphragm covers are a solution, but they can cost up to 50 cents each based on research, and some clinicians complain about sound being muffled by the cover. The cost of “pop-up” wipes (such as PDI wipes) can also be very high. Disposable stethoscopes are not a realistic answer either, primarily driven by a cost of $3.30 or more per each unit. They also create significant landfill waste and are usually red bagged, adding to the disposal cost.

New solutions coming

Look for a new solution emerging in 2025 from an early-stage company called Skope. The Skope Station dispenses a hypochlorous solution onto diaphragm contact heads that thoroughly, gently cleans it in 1-2 seconds. The solution is environmentally friendly and safe for patients and stethoscopes. Hypochlorous solution is currently used in many clinical institutions to treat wound dressings and bathe neonates. It kills 99.9% of all germs, viruses and spores. Each hypochlorous solution refill cartridge is good for 1000 “swipes”.

The wall unit is compact – similar to a hand disinfection station at 12” x 5.5” x 2”. It also features a viewing window so staff can see how much disinfectant is left in the unit and has a safety lockout mechanism ensuring a clinician can’t use the device if it is empty.

Brazilian study looks at reuse of cotton fabric for hospital wraps

I hate to admit this, but I am old enough to remember the Central Processing Department placing cotton wraps on a light table after they came back from the laundry, and patching those areas that appeared to be “weakened” by repeated use and laundering. Those days were replaced by the age of disposable “blue” wrap, which was – and may still be – seen as superior.

The objective of the Brazilian study was to verify the efficacy of cotton fabric made of serge bonding 2 x 1 as a microbial barrier when new. It determined that the reuse number must be controlled, not exceeding 65 times.7

Another study from Latino-American Enfermagem confirmed that “[t]he physician changes of the fabric did not interfere with the fabric barrier efficiency.” 8 Unsurprisingly,

ʯ Clinical use and processing do exert an impact on the barrier system;

ʯ There is a fabric weight loss, reduction in size and increase in water absorption over time;

ʯ The longer the use, there were more loose fibers found; and

ʯ Penetration by microorganisms did not increase over the 15 months of the study.

While every provider is different, some may find a return to reusables to be cost efficient, as well as resulting in a significant reduction in their waste stream. Greater convenience avoiding complex recycling solutions may also result.

Maximizing efficiency in healthcare procurement

A recent study among more than 170 healthcare leaders clearly demonstrated some important priorities when it comes to maximizing your efficiency. The results highlighted that reducing the overall cost of supplies was still first.

Efficiency Priority

Accurately forecasting demand

Controlling rogue spending

Eliminating product waste

Increasing procurement effciency

Optimizing the ordering process

Reducing overall cost of supplies

One of the most interesting findings, especially when it comes to routine areas such as office supplies, was that 76% of the respondents see rogue spending as an area for improvement. Having a policy that limits spending to the purchasing department and a very minimum number of others can be highly effective.

While supply formularies and other tools such as a policy sharply restricting those who can spend can work well, I’m sharing a technique I used years ago in a 700-bed teaching hospital. While this might not be for everyone – and much to our surprise – demand for office supplies did not suddenly rebound at the end of the month this technique was used. There

One of the most interesting findings, especially when it comes to routine areas such as oIice supplies, was that 76% of the respondents see rogue spending as an area for improvement. Having a policy that limits spending to the purchasing department and a

SUBHEAD: IV solution market share becomes more o hurricane

was a significant reduction in “stash” inventory among more than 300 cost centers, however.

With the approval of the C-Suite, we announced on the last day of the month we were taking a 30-day pause in the procurement process for most office products, copier and printer supplies and related products. The only exceptions

would be for special project needs with a tight deadline and real emergencies. Requestors were encouraged to borrow products from others if they were short of a certain product.

Although administration and purchasing caught a lot of grumbling, employees were understanding and the results were impressive. A reduction of

hidden inventory of about $30,000 and no real “bounce” in demand the following month – people used up some of their hidden stash.

SUBHEAD: IV solution market share becomes more o hurricane

Obviously, this won’t work for every hospital or buyer, but it did reduce inventory and save money on a one-time basis. It also counted toward our cost savings goals for the year.

It was a rough hurricane season for medical product manufacturers here in First, a Pfizer plant got hit. Next was the huge Baxter IV plant in North Cove, North Carolina. The impact of this plant outage was magnified by Baxter’s IV market, as illustrated below. 9

It was a rough hurricane season for medical product manufacturers here in First, a Pfizer plant got hit. Next was the huge Baxter IV plant in North Cove, North Carolina. The impact of this plant outage was magnified by Baxter’s IV market, as illustrated below. 9

IV solution market share becomes more obvious after hurricane

It was a rough hurricane season for medical product manufacturers here in the U.S. First, a Pfizer plant got hit. Next was the huge Baxter IV plant in North Cove, North Carolina. The impact of this plant outage was magnified by Baxter’s share of the U.S. IV market, as illustrated on the right. 9 Based on Google Earth images and news footage it looked like Baxter had taken considerable care to protect the plant, including the construction of a levy around part of the property – which was either breached or overtopped. The Baxter team pulled together to ensure excellent communication, importation of products, working with the FDA to extend the shelf life of certain products and get the plant back in full operation. Cheers!

Disclosures:

Estimated U.S. Market Share:

Manufacturers

Estimated U.S. Market Share: IV Manufacturers

Baxter International, Inc. ICU Medical, Inc.

B. Braun Medical, Inc. Other Companies

B. Braun Medical, Inc. Other Companies

The author is a consultant to, and investor in Skope, Inc. Daniel Stromberg, MD, the author of an article cited herein, is a product developer of and investor in Skope, Inc.

1 New York Times “With Interest” column, Sunday, October 6, 2024, Sunday Business section at page A2.

2 Tirschwell, Peter, Now Comes the Hard Part of the Dockworkers Fight: Automation, The Wall Street Journal, October 8, 2024, p. A15.

3 Ibid.

4 Mask your Scope.com, acquired October 31, 2024 using CoPilot AI.

5 Peacock, William Frank, Department of Emergency Medicine, Baylor College of Medicine, Clin Exp Emerg Med 2024; 11(1): 6-8.

6 Adopted from Peacock, William Frank, Clinical and Experimental Medicine, Baylor College of Medicine (2023) Clin Exp Emerg Med 2024; 11:(1), 6-8.

7 Rodrigues, E., Levin, A., et al., Evaluation and the Use and Re-Use of Cotton Fabrics as Medical and Hospital Wraps, May 12, 2005, Brazilian Journal of Microbiology (2006) 37:113-116.

Based on Google Earth images and news footage it looked like Baxter had considerable care to protect the plant, including the construction of a levy the property which was either breached or overtopped. The Baxter team together to ensure excellent communication, importation of products, working FDA to extend the shelf life of certain products and get the plant back in full Cheers!

Based on Google Earth images and news footage it looked like Baxter had considerable care to protect the plant, including the construction of a levy the property -- which was either breached or overtopped. The Baxter team together to ensure excellent communication, importation of products, working FDA to extend the shelf life of certain products and get the plant back in full Cheers!

8 Bouman, B., de Melo Costa, D., et al., Reusing sterile cotton fabric barriers in the clinical practice: an observational and longitudinal study, Latino Enfermagem. (2023); 3Accessed September 18, 2023.

9 Research provided by CoPilot AI and calculated on October 7, 2024.

Baxter International, Inc. ICU Medical, Inc.

ACOs and National Healthcare Savings

Ochsner Accountable Care Network achieves top-ranking healthcare savings for Medicare.

BY JENNA HUGHES

The Centers for Medicare and Medicaid Services (CMS) announced data from the 2023 Medicare Shared Savings Program (MSSP) for accountable care organizations (ACOs), with Ochsner Accountable Care Network (OACN) achieving top-ranking results for clinical performance and healthcare savings for the Medicare population.

The CMS Medicare Shared Savings Program aims to save Medicare money while simultaneously supporting highquality healthcare access throughout the nation. The program yielded more than $2.1 billion in healthcare savings in 2023, according to CMS, which is the largest in the program’s history.

According to the 2023 MSSP report, OACN’s participating physicians and advanced practice providers lowered the expected cost of care by $30.9 million for the more than 58,000 Medicare beneficiaries in its care.

“OACN has successfully reduced the expected cost of care for Medicare beneficiaries in 2023 through a strategic combination of care coordination, technology, and preventive care,” said Eric Gallagher, CEO, Ochsner Health Network. “Key to this achievement is the seamless integration of care coordination across our network, which ensures that healthcare providers work collaboratively to manage patients’ health needs efficiently. This reduces unnecessary procedures and hospital admissions, leading to significant cost savings.”

Despite serving a patient population with significant health disparities, OACN has made many improvements in ACO preventative care, such as increasing annual wellness visits by 37% from 2022, achieving among the top 9% of ACOs in hypertension control and screening for depression and follow-up plans, and nearly 87% of patients received appropriate breast cancer screenings.

ACOs and cost savings

Accountable Care Organizations are groups of doctors, hospitals, and other healthcare providers that collaborate to provide coordinated, high-quality care to people with Medicare, according to CMS. ACOs focus on delivering proper, wholeperson care at the right time to avoid unnecessary services and medical errors that often lead to higher healthcare costs.

When ACOs succeed in the delivery of high-quality care at an affordable cost, they may be eligible to share in the savings they achieve for the Medicare Program. ACOs may also share in losses if they increase spending, according to CMS, driving lower health care costs for people with Medicare.

“Accountable Care Organizations (ACOs), like OACN, play a pivotal role in enhancing healthcare delivery while

significantly reducing costs nationwide,” said Gallagher. “ACOs bring together groups of physicians, hospitals, and other care providers to ensure that patients, particularly those with Medicare, receive well-coordinated, high-quality care. This collaboration minimizes redundancies and ensures seamless communication among healthcare providers, which leads to more efficient and effective patient care.”

CMS specifically strives to improve preventative care services through ACOs by advancing the integration of technology in healthcare, emphasizing value-based care, streamlining processes, and enhancing communication between healthcare providers.

“Technology integration enables ACOs to perform more precise and effective care coordination, improving health outcomes while reducing costs,” said Gallagher. “Emphasizing value-based care improves the health of beneficiaries and also contributes to cost savings, making healthcare more affordable and sustainable.”

Rural healthcare initiatives

Delivering quality healthcare to rural populations can be especially challenging due to regional lack of access to healthcare. Far distances within these communities from clinicians’ offices and hospitals and lack of infrastructure pose greater health risks to populations in rural regions. Technology advancements within healthcare have significantly helped ACOs bridge these types of care gaps and provide much-needed patient care in remote areas.

“Through the strategic use of technology, ACOs bridge geographical gaps, enabling healthcare providers to reach rural patients more effectively,” said Dr. Sidney “Beau” Raymond, Ochsner Health Network.

“Advanced data-sharing capabilities empower clinicians with the information they need to make timely and informed healthcare decisions, which is crucial in areas where resources may be limited.

In addition to technology, collaboration between clinicians is also a key component to providing coordinated healthcare to rural populations.

“By working closely with local healthcare providers, ACOs ensure that care plans are tailored to meet the specific needs of rural communities,” said Dr. Raymond. “This collaboration fosters relationships built on trust and understanding, which are essential for effective healthcare delivery.”

Shared Savings Program ACOs, including more 608,000 clinicians who provide care to nearly 11 million people with Medicare.

CMS continues to support Shared Savings Program ACOs in increasing investment in primary care services. The 2023 CMS report specifically showed that out of 453 accountable care organizations nationwide, Ochsner Accountable Care Network ranks in the top 11% for quality.

“OACN is dedicated to continuing to develop healthcare plans that meet the unique needs of each community we serve. By closely collaborating with local clinicians, we ensure that our initiatives are not only effective but also resonate with the specific health

The 2023 CMS report specifically showed that out of 453 accountable care organizations nationwide, Ochsner Accountable Care Network ranks in the top 11% for quality.

Attributed beneficiaries can also utilize the Connected Care programs through Ochsner, according to Dr. Raymond, which allow for remote patient management of chronic conditions such as hypertension and diabetes no matter where a patient lives.

Future of ACOs

From performance year (PY) 2022 to PY 2023, ACOs’ nationwide performance improved on many quality measures overall, according to CMS, including statistically significant improvement on data related to diabetes, blood pressure control, breast and colorectal cancer screening, and more.

The Shared Savings Program has now grown into one of the largest value-based payment programs in the country, with 480

challenges of each region,” said Dr. Raymond “Through these goals, OACN aspires to lead the charge in innovative healthcare, fostering healthier communities and setting new standards in accountable care.”

The network’s clinical successes, according to a 2024 Ochsner press release, can be attributed to ensuring appropriate care coordination; increasing primary care visits; focusing on high-risk patient care coordination and support; and improving patient satisfaction.

“Looking ahead, OACN aims to deepen its focus on health equity by addressing disparities across diverse communities,” said Dr. Raymond. “By deploying tailored healthcare solutions, we strive to close the gap in healthcare access and outcomes for all patients.”

Leading health systems invest in AI Platform

Industry News

Northwestern Medicine, HonorHealth, and Allina Health are part of a $105 million series D investment in Qventus, a provider of AI-based care automation software for health systems.

Qventus has built an AI-first care operations automation platform deployed across leading health systems in inpatient and outpatient settings.

Qventus said the investment will help to the company to provide AI-based automations and AI operational assistants in more care settings, building upon the success of its existing offerings like Qventus’ Surgical Growth and Inpatient Capacity solutions as well as new solutions built on its first-to-market AI Operational Assistants platform capability.

Since its inception in 2012, Qventus has built a suite of AI solutions to address health system pain points across care settings. In the last year alone, Qventus’ Inpatient Capacity solution, which reduces the length of stay and creates capacity, eliminated over 36,000 excess days for its health system partners, saving them millions of dollars and helping them create the capacity to serve more patients in their communities. The company’s Surgical Growth solution drives strategic surgical volume for hospitals, generating $95M in annualized contribution margin in 2024 through Qventus enabled cases. This year alone, Qventus’ platform touched more than half a million surgeries and drove 35% more robotic cases using its technology to spot gaps of time available, helping patients receive the critical care they need.

SMI completes second cohort of Advancing Women Leaders Program and announces cohort three

SMI celebrated its second cohort of Mentees for completing their groundbreaking leadership program called Advancing Women Leaders (AWL). This 12-month program brings together a Mentor, Sponsor, and Mentee pairing from SMI member organizations for the advancement of women into senior level executive roles. SMI celebrated the second cohort of sixteen Mentees and launched the program’s third cohort at the SMI Fall Forum in Austin, Texas.

SMI’s Advancing Women Leaders (AWL) program strives to elevate leaders into Senior Executive Positions by guiding women to leverage their networks, and work alongside a Sponsor and Mentor in unison, thus creating a more diverse healthcare supply chain. As part of this program, SMI members nominate a mentee and participate in the program as their Sponsor. SMI Members serve as mentors, providing the mentee an opportunity to learn and gain valuable experience from outside their organization. As a result, 80% of the women leaders in the Advancing Women Leaders program have received a promotion during their first 12 months.

SMI has partnered with the McGuckin Group, a talent-innovation firm, to develop this first of its kind program, which includes one-on-one mentoring, networking, peer-to-peer learning, workshops, and self-assessment tools.

SMI launched Cohort 3 for the Advancing Women Leaders program in October. Fifteen mentees were announced at the SMI Fall Forum and will now embark on this 12-month program along with their Mentor and Sponsor. See the list of Cohort 3 Mentees.

To learn more about SMI, its programs, and its community of members, visit: www.smisupplychain.com

US Access Board Releases New Standards for Examination + Procedure Chairs

US Access Board Releases New Standards for Examination + Procedure Chairs

According to the US Access Board 1, “Currently, on the market there is one examination chair which reaches a low transfer height below 17 inches, the Midmark 626 Barrier-Free ® examination chair...” For clinics looking to improve both patient access and caregiver safety, this chair represents a crucial advancement.

01

Height: 15 ½"-

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