What is a Rep Managed Supply Chain?
What is a Rep Managed Supply Chain and how does it impact hospitals?
The rep-managed supply chain refers to all the just-in-time supplies, typically implants, instrumentation, and accessories, that a medical device sales representative (sales rep) brings to a hospital for a specific patient’s procedure. Typically comprised of sterile packaged devices and non-sterile trays, these supplies are commonly referred to as Bill-Only items, trunk stock, physician preference items, or patient-specific-implants.
The decision of which implants to use on a patient is typically decided by the surgeon and influenced by the sales rep. At some point after the office visit and before the surgery, the sales rep is informed of the surgeon’s final choice. Since the sales rep has control over managing these implants rather than the hospital, at Casechek, we call this the “Rep Managed Supply Chain.”
Misaligned Incentives: the Impact to Hospitals
While hospitals pay for implants from medical device vendors, the decision of utilization and purchase is in the hands of the surgeon and sales reps. Even though hospitals and medical device companies rely on each other, their goals and KPIs often conflict.
Health systems drive physician alignment in a tightened reimbursement environment to minimize procedural expenses and improve operational efficiency. On the flip side, sales reps are hired and retained for their ability to serve and form relationships with physicians. A sales rep’s success is typically measured by their ability to leverage physician relationships to maximize procedural revenue. With the physician as the primary customer (although the health system foots the bill), reps are not financially incentivized to drive care site efficiency or lower procedural expenses (implant costs). This misalignment has operational and financial consequences, which the health system ultimately bears.
Manual Systems Make Hospitals Vulnerable
Health systems are not built to manage patient-specific implants and Bill-Only payments. They are set up to manage inventory levels and order stock items in advance. This does not apply to implants, because implants are not stocked on shelves. Therefore, from procurement to payment, the hospital has no visibility or ability to control and manage their patient-specific implants.
Manual bill processing systems prevent hospitals from being able to catch things like unnecessary fees, incorrect quantities, or items not on contract. With most hospitals having manual systems, health systems are extremely reliant on medical device companies to do the right thing. For example, after a procedure, the process of verifying a bill by cross-referencing prices and quantities from an item master and the patient record is manual and strenuous. For many hospitals, a bill has to be passed through multiple departments before it can even be submitted for a purchase order. This manual and burdensome process leaves the hospital vulnerable to mistakes and overpayments.
While medical device companies are not responsible for the systems at the hospital, the lack of visibility does work in favor of the reps. The more opaque the implant supply chain is, the more dependent the hospital and physician are on the sales rep. The greater the dependency on the supplier, the better it is for the supplier.
Empowering Hospitals with Casechek
Since its founding in 2014, Casechek has worked diligently to create solutions that remove manual burdens from hospitals. Casechek’s Procurement and Payment solutions were designed hand-in-hand with health systems to ensure that they effectively solve hospital problems. By replacing manual billing systems and seamlessly integrating with the EHR/ERP, Casechek helps hospitals reduce costs and operate more efficiently.
Learn more about our Payment Solution I Bill-Only Automation
Glossary
Rep-Managed Supply Chain
The rep-managed supply chain refers to all the just-in-time products, typically implants, and accessories, that a medical device sales representative brings to a hospital for a procedure.
Just-in-Time supplies
Just-in-time supplies, often referred to as “Just-in-Time” (JIT) inventory management, is a business strategy and supply chain management approach focused on efficiently and effectively managing inventory and production processes. The primary goal of JIT supplies is to minimize waste, reduce carrying costs, and optimize production by ensuring that materials and components are delivered to a production facility precisely when they are needed, neither too early nor too late
Bill-Onlys (the payment process)
Refers to the invoicing process and products specifically procured for a patient by a vendor sales representative during or near a medical procedure. It is not possible for a hospital to pre-order patient-specific items and stock them in inventory like other non-patient-specific supplies. Instead, the hospital “only” pays for the items used post-surgery, resulting in the term “Bill-Only.” The process of Bill-Only involves purchasing and paying for these products after their use.
Truck Stock
“Trunk stock” refers to the inventory of medical implants and supplies that a medical device company keeps on hand, often in the trunk of a rep’s car.
Physician Preference Items (PPIs)
Refers to medical devices, supplies, and equipment that physicians or surgeons prefer to use during procedures based on their experience, training, and familiarity.
Patient-Specific Implants
Custom or personalized implants are medical devices designed and manufactured specifically for individual patients based on their unique anatomical characteristics. PSIs are typically used in orthopedic surgeries, where the shape and size of an implant need to be tailored to the patient’s specific needs.
KPIs
A KPI, or Key Performance Indicator, is a measurable value or metric that organizations use to assess their progress toward specific goals and objectives.
Items not on Contract / Non-contract items
In healthcare, items not on contract typically refer to supplies, equipment, or services that are not part of a formal contractual agreement between a healthcare facility (e.g., hospital, clinic) and a supplier or service provider. Non-contracted items often do not benefit from the negotiated pricing and terms that contracted items enjoy. This can result in significant cost variability, making it difficult for healthcare organizations to control expenses and manage budgets effectively.
Item Master
An ERP’s core set of data that feeds into functions such as purchase orders and inventory control.
Casechek’s Procurement Solution
With our Procurement Solution, find the right rep for the right case and manage vendor support requests through our EHR-integrated platform. Track the status of vendor trays in real time to ensure everything is ready for surgery.
Casechek’s Payment Solution
Take control of your Bill-Only process with Casechek’s Payment Solution. Give your rep-managed supply chain the same predictability and visibility as your hospital-managed expenses. Automate and streamline your Bill-Only process to improve expense capture and reduce cost and cycle times.
EHR/ERP
An electronic record of health-related information on an individual that can be managed by authorized clinicians and staff within one health care organization. Ex. Epic, Cerner
Purchase Order (PO)A document sent from a purchaser to a vendor that confirms/authorizes a purchase.