How the pandemic has changed the vendor-ASC relationship: Q&A with Administrator Joe Peluso

Joe Peluso, an administrator at Greensburg, Pa.-based Aestique Surgery Center, spoke with Becker's Healthcare about shifting vendor-ASC relationships amid the pandemic and the need to shift to group purchasing options. 

Note: Responses were edited for style and clarity.

Question: What are your top supply chain challenges today?

Joe Peluso: The higher costs of [personal protective equipment], implants, and medical, surgical and general supplies have led to supply chain vendors requesting "preferred customer contracts'' with product availability based on "guaranteed" annual purchase targets. The options for vendors who do not reach purchase targets include retroactively adjusting prices for medical or surgical supplies distributed at higher levels, shipping discontinued products, terminating early agreement, and entering into new short-term risk agreements for ASCs with higher pricing for products.

In addition, allocations based on previous usage history and back orders caused by raw material shortages have also created new challenges. These vendor practices have led ASCs to consider moving from just-in-time inventories to "just-order-everything" inventories, which impact storage and paying for infrequently used medical supplies.

Independent ASCs who currently are not part of a group purchasing organization need to work toward developing group purchasing partnerships, which will have contracts with vendors for medical and surgical supplies. Supply vendors are beneficial in aligning strategic business relationships that will enable ASCs to deliver high-quality and accessible care with timely and cost-effective products.

Q: Is it easier or harder to work with supply and implant vendors than before the pandemic? Why?

JP: The COVID-19 pandemic has triggered shifts in supply chain management that will continue through 2021 and beyond. ASCs will continue to be pressured to reduce costs and pursue value-based care while supply costs spike, affecting cash flow. ASCs and vendor business relationships are changing, and supply chain arrangements have increased financial risk for ASCs.  

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