Irish National Healthcare ConferenceDublin, IrelandMay 28, 2015

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Bonafides…• 20 years in healthcare sales,

marketing, business development• Particular focus on inventory

management and procurement strategies for high cost physician preference inventories (stents, implants, etc.)

• 10 years developing web-based tools for cardiology, OR supply chain solutions (400 US hospitals use these platforms)

• Currently responsible for O&M’s commercial operations in Europe

• Keenly interested in supporting the Irish NHS’ efforts

• I’m Irish

Owens & Minor, Inc.

Leaders in Healthcare Supply Chain

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Supporting Nationally Branded Medical & Surgical Suppliers.

Years in Healthcare:

2013 Revenue:

World Healthcare Expenditures:

132Services

Coveredby O&M facilities74% $9.1 B

Supplier Management Distribution Services Product Sourcing Analytics

Resource Management and Consulting Clinical Supply Management Custom Web Development Contract Management

Continuous Model Redesign

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Home Office

• 5,800 teammates• 55 distribution centers across the US• Serving 4,500 healthcare customers• 300,000 order lines per day

O&M International Operations

• 2,600 teammates• 11 pharma & medical distribution

centers• 600 medical manufacturer clients• Daily hospital deliveries across

Europe• 4.5 million deliveries per annum• 800 temperature controlled vehicles• 2.1 million procedure kits per year• Daily deliveries to almost all

hospitals• Complete product sourcing

operations in China and Malaysia

Making Changes to Procurement & Logistics

• When changing supply chain operations, governance is a pre-requisite to everything; sets the priority, scale and pace of change

Strong analysis planning governance/authority status quo• Healthcare’s many non-obvious, conflicted obstacles to operational changes

don’t go away under Activity-based Funding models– Balance conflicting motivations re: necessity of care vs. service volume expectations– Product selection and contracting efforts misaligned with physician preference– Capital investment requests run up against other priorities; political capital,

unexpected constituencies– Decisions related to service providers, locations bump into politics, pre-existing SLAs– Example –

Bon Secours Hospital, Grosse Pointe, MIAcquired by Beaumont Health System

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Changing Logistics in an Activity-based Model• Prepare to push though strongly held but dubious convictions…

– “When contracting, 1 supplier is better than 2, 2 is better than 3, etc.”– “Reducing the price per item is the best way to reduce costs”– “Consignment is free and less inventory on the shelf is the ideal”– “Automating supply management (e.g., RF-ID, cabinets, etc.) is cost effective”

• Identify which logistics costs track with patient volumes and which don’t– Manage expectations, prioritize investments & procurement strategies

• Invest in technology that captures data for the lowest possible cost per common unit (who uses what, on whom, for what purpose)

• Start by creating common metrics that can cross organizational barriers– Supply costs per adjusted patient day

• Cross pollinate data sets using data warehouses– Laboratory orders to pharmacy orders to housekeeping to infection rates

Tips, Guidance for Logistics in an “Activity-based Funding Environment

• Don’t target supply chain efficiencies… target clinical operational efficiencies– 25%+ of a clinician’s time can be spend on supply chain activities (Geisinger, 2011)

• The patient schedule must be connected to the supply chain operation– Aside from ER and some OB, all acute care logistics can be planned

• Leverage service providers – people, building, trucks• Transportation is the key to logistics network efficiencies (and don’t own trucks!)

– Supplies, mail, printing, pharmacy, office supplies, etc. all need to be moved• Focus on suppliers cost to manufacture and sell, not product price

– “How much is that drape if I pick up the container in Asia?”• Consider moving all logistics work off campus

– Administration, kitting, case picking, vendor management, storage, contracting, etc.• Be bold

– (“We’re going to use drones for home delivery.” – Jeff Bezos, Amazon 2014)