Improving Operations Through Standardization - Executive Brief

HOW HEALTH SYSTEMS OPTIMIZED OPERATIONS THROUGH

STANDARDIZATION AND INNOVATION

PRESENTED BY:

Improving Operations Through Standardization and Innovation 2

INTRODUCTION

In August 2015, operational leaders from Baptist Health South Florida and Ochsner Health System presented a webinar to describe the growth and optimization strategies that generated results for their organizations. They shared lessons learned and insights that led to increased operational performance and an innovative culture.

This is a recap of the highlights and information shared during the webinar. Topics covered include:

Establishing and strengthening strategic partnerships and alliances to drive growth

Fostering a collaborative and innovative culture

Increasing productivity and cost savings

Creating vendor score cards that maximize value and performance

EXPERTS

Mark Muller

Senior Vice President of Strategy & Business Development

Ochsner Health System

As Senior Vice President of System Strategy & Business Development,

Muller is responsible for the Ochsner annual operating calendar,

strategic plan, market analysis and business development, strategic

programs, and Lean deployment. Previously serving as the System Vice

President of System Strategy and Business Development, Muller also

has a leadership role in the development of International Business.

Suzzanne Thomson Quintero

Corporate Vice President

Baptist Health South Florida

Suzzanne joined Baptist Health in 2001 as Assistant General Counsel.

Through a series of promotions, she was promoted to her current position

in April 2010. As the Corporate Vice President for Supply Chain &

Insurance Services, she sets the strategic direction and priorities for all

sourcing, vendor relations and procurement, and logistics for all areas

within Baptist Health. Baptist Health's logistics needs are fulfilled by a

state of the art Distribution and Services Center. With annual revenues of $4 billion, 15,000

employees and 6,000 active suppliers, Baptist Health is the largest private employer in South

Florida.


THE VALUE OF STRATEGIC PARTNERSHIPS

As we look at potential strategic partnerships, one of

the things we try and do is identify what we can bring

of value to our partners, and then in turn what they

can bring of value to us. We find it’s important to

clearly understand what each partner

will be giving and what they’ll be getting

in any potential collaboration.

It’s certainly a challenging and dynamic

environment that we’re living in today.

State and federal budget deficits

continue to place pressure on

reimbursement, the retail insurance

environment continues to grow, and

with the recent Supreme Court decision

we continue to see growth in public and private exchanges. CMS has come out with putting a

stake in the ground. Around 50% of reimbursement will be value based by 2018. I know here

in New Orleans we’ll be part of the hip and knee replacement bundles, as I’m sure many of

you will be across the country.

Industry Trends Affecting Providers

Higher Costs & Payment Cuts

Transparency of Information

New Payment Models & Exchanges

New Competition & Delivery Models

Utilization Management & Declining Discharges

Technology Enabling Self-Care

All these value based payment models are really designed to drive unnecessary utilization out

of the system, which in turn will reduce volume for us as providers. At the same time, we see

major consolidation going on in the payer industry into what looks like the Big Three national

insurers, which will most likely place additional pressure on us as providers.

600,000 unique patients

13 hospitals, 50 health centers

1,000 group practice physicians

200,000 managed lives

Clinically integrated network

Top 1% clinical quality in United States

Leading system in Gulf South


And also, meanwhile we see new retail competitors and virtual care models popping up

virtually every month. And maybe most importantly, consumers are now empowered and

engaged with more information and tools and technology than they’ve ever had before to

begin managing their own healthcare.

So at Ochsner, as we looked at these trends, we realized that we needed to not only adapt,

but we needed to lead the change, at least in this part of the industry. We needed to

approach these challenges and opportunities fundamentally different than we had before.

And specifically, we couldn’t continue to try and do everything ourselves. I think as we

stepped back, we looked at what are the fundamental problems that we need to solve.

I think we probably all agree that as providers we need to get better, faster, bigger, leaner,

and innovative. And at Ochsner, for us, what we’ve tried to translate that into is that we need

nimble, asset light strategies that deliver value based solutions, not necessarily through bricks

and mortar facilities. We need to utilize scale to reduce variation, improve quality and cut

costs all at the same time, and we really need to help activate patients to begin to take care of

their own health, and while they’re doing that, take healthcare to patients when and where

and how they need it, and fundamentally change the whole relationship with the patient.

Pro

ble

ms

to S

olv

e Structural

Too Expensive

Inconsistent Quality

Difficult Access

Poor Experience

Go

als Better

Faster

Bigger

Leaner

Innovative


Instead of seeing a chronic disease patient maybe three or four or five times in the clinic, or

even in a convenient clinic like CVS more often, to really develop a continuous, ongoing

relationship with patients. So at Ochsner we’re looking to optimize operations through

collaborative partnerships and a focus on innovation. So let’s take a little deeper look at a

couple of examples of this.

OCHSNER HEALTH NETWORK

We’re aligning physicians through our clinically integrated network together. If

you look at the Ochsner Health Network today, it’s a statewide network with

nearly 30 hospitals and 3,500 physician partners that enable us to serve over

one million patients better, faster and more affordably than we could on our

own. Through the combined capabilities of our partners, we’re already starting

to see and gain some significant economies of scale and experience and help

optimize our combined operations.

PAYER CONTRACTS

We now have seven payer contracts, which include network insurance products,

products for the exchange and Medicare products. We’re also building a

population health infrastructure that, instead of each of us making our own

separate investments, we can do this together and again leverage scale and do

this once, and do it right, and do it big, as opposed to trying to duplicate

investments. And as part of that, we’ve partnered with EPIC EMR and some of

our IT partners to develop IT solutions and extend those to our partner

members.

TELEMEDICINE

In the area of clinical care delivery, we’ve partnered with Cisco and EPIC for

telemedicine. We now have a telemedicine network that spans about 45

hospitals across a couple of different states. I’ll be talking a little bit about what

we’re doing in the area of digital health with Apple. We’ve got a very unique

partnership in academics with the University of Queensland. The University of

Queensland is the 34th ranked medical school in the world. It’s located in

Brisbane, Australia.

And through this program, you have U.S. students who go to Australia for their

first two years of classrooms and come back to New Orleans for years 3 and 4 of

clinicals, and then come to the States to practice. And that’s a great opportunity

not only for us, but for our members to recruit physicians, especially in areas


where there are shortages today. And we also have many partnerships with

pharmaceutical companies in the area of clinical research trials.

GROUP PURCHASING ORGANIZATIONS (GPO)

For operational improvement and driving savings, we’ve partnered with our

GPO, MedAssets, as well as GE and other suppliers in the area of supply chain.

And we’ve actually formed our own supply chain collaborative called S3P. We

now have 55 hospital members. This is primarily focused around physician

preference items. And every one of those members were able to save 10% or

more on their physician preference items. So clearly all of these solutions, we’re

trying to work together in a theme that we believe we can be better together

than apart.

INNOVATION OCHSNER

The other area that Ochsner is working in to transform healthcare is through

innovation. In March we launched an innovation accelerator called iO, or

innovation Ochsner. And the mission of iO is to fundamentally change

healthcare by changing the relationship with the consumer. And again, just like

we did with our strategic partnerships and the network, we started with clear

guiding principles.

And iO is focused on solving healthcare’s most pressing problems. We’re trying

to build these solutions around the consumer and the patient and their needs,

and not the caregiver. We’re also trying to design these solutions for scalable

and efficient operations so that we can pilot small and move fast, but we can do

it in a way that we can translate across thousands of patients. This is going to be

fully integrated with a personal electronic health record for every patient and

enabled by the newest digital health technology.

So the intent of iO is to really serve as a catalyst for patient centered health

innovations. And by doing that, we’ll partner with other leading innovators both

inside and outside of the healthcare industry to find new solutions and provide

resources and support to develop these new models of care.

So one example of this, you know, we’re still early on in this, but this summer

we announced and launched a three year health innovation challenge, with GE

as a partner and the Idea Village here in New Orleans as part of the New

Orleans Entrepreneur Week. And we did that to really help ignite healthcare

innovation. Each year there’s going to be a different theme, and we’ll hold


“Shark Tank” like events each year. And the first year will be focused on

wearable technology that will enable a more personalized patient experience.

Another initiative that iO has underway is we’ve begun to tackle the leading

cause of adult admissions and readmissions in the U.S., which is congestive

heart failure. And through the use of digital scales linked with the EMR and

dedicated care teams, we’re already starting to see an impact. So we’re

delivering 45% reduction in 30 day readmits and a 95% reduction in 30 day

mortality.

iO has also begun to tackle the area of hypertension, dubbed the silent killer.

Now in Louisiana this is the hotbed of chronic disease, and in our state one in

five adults has out of control blood pressure. So iO has created an integrated

practice unit, or IPU, dedicated for hypertension, and is the first system in the

world to successfully partner with Apple and connect Health Kit and the Apple

watch with the EPIC EMR.

We can now seamlessly use digital blood pressure monitors networked with the

patient’s personal devices and really help patients control their own blood

pressure and avoid coming into the ED or even the clinic, and routinely we can

get information and send alerts back to the patient on an ongoing basis. So

again, it’s early, but through this innovation, 66% of patients whose blood

pressure was previously out of control now have their blood pressure under

control just within 90 days.

Another innovative approach is through the O Bar, which again is really styled

after Apple. And if you’ve been in an Apple store and an Apple Genius Bar,

we’ve now got Ochsner physicians that are beginning to prescribe apps instead

of medications. So patients can go to the O Bar and receive assistance to

download health apps directly to their personal device. And it’s only been in

existence for a few short months, but already we’ve got thousands of patients

that have visited the O Bar and begun to take greater responsibility for their

own health.

All of these innovations are just new ways to help enable patients to take a more active role in

managing their own care. So at Ochsner we’re trying to transform health through

collaborative partnerships and innovation focused and aligned with our triple centers of

excellent strategy.


Key Takeaways: Lessons Learned

Cultural: Commitment starts at the top

Structural: Part-time resources don’t yield full-time results

Fiscal: Can’t do it alone – need strategic partners

VENDOR SCORECARDS

A scorecard: Everybody has, throughout their career, heard if you don’t measure it, it doesn’t

happen. Like many organizations, we’re rooted in the concept of managing materials, and so

we had perfected, many years ago, how to manage inventory. However, as I look at a large,

complex organization, the reality is we cannot successfully serve the community without

patients, physicians, employees and suppliers, whether it’s a good, service or equipment.

So we felt the need, just like we measure

employee performance and results and we

measure physician performance and results, to

apply comparable skills and discipline to

measuring vendor or supplier

performance and results. We started at a

very tactical level, realizing that we have

literally thousands of thousands of

transactions, commercial transactions

with a supplier on a daily basis.

However, we’re not always so great with

sharing with suppliers our point of view of each transaction. At the end of the day, our

suppliers want to be more efficient. At the end of the day, we want to be more efficient. And

both organizations have the ultimate goal of meeting its mission, providing good quality,

regardless of what it is that they do, and ultimately keeping patients happy.

1 million patient visits each year

15,000 employees

2,200 physicians

40 outpatient centers

9 hospitals


The scorecard here is a very tactical scorecard, the theory being the more administrative time

that we spend going back and forth with suppliers increases our costs and ultimately doesn’t

drive value. So we started with every aspect of the quote transaction. Not a strategic

relationship, but the transactions. So you’ll see we’re looking at processing time, did you hit

the mark in terms of when you should have been here, did you hit the mark of hitting all of

the key terms of our relationship.

A Supplier’s score can range from 1-5 and consists of 7 quantifiable factors:

• Average Receipt Cycle Time • % Received On Time

• % Accepted • % Received Late

• % Rejected • % Received Early

• % PO Cost Variance


We also decided to use the now all familiar star system so that when we’re working with

suppliers, both Baptist Health as well as the supplier, we fully share these scorecards, solicit

feedback as to where our information is inaccurate or perhaps misleading, and just as

importantly, behaviors that we as a provider are engaging in that are contributing to less than

desirable outcomes.

I can easily see, with the largest, most sophisticated suppliers, where we will get to a place

where we have risk relationships associated with achieving goals over a one, three and five

year period. So we flipped over to another part of our score carding system, again, like you

would drive employee performance or you would drive physician performance, looking at

your top 20 and your bottom 20.

Part of the reason why we look at the top 20 is to gain a better understanding of what those

suppliers are doing that’s different and producing a great outcome, as well as whether there’s

an element that we are treating those suppliers differently. Eventually we hope to have

councils amongst various supplier groups so that a little bit of learning goes a long way. We

certainly appreciate and understand that most of our suppliers are for profit organizations

and have quarterly pressures on earnings. However, the pie is getting smaller, and so big

picture, a lot more people must work together in a more collaborative manner.

One of the keys for us, like most provider organizations, is understanding how many

different suppliers we’re doing business with. Baptist Health happens to have a very, very

consolidated supply chain, so we consider suppliers across the continuum of care, regardless

of care location, regardless of whether it’s a service, a piece of equipment or a product.


Because we are such a centralized supply chain, we’re able to look throughout the supplier

base.

Currently we have more than 4,500 suppliers that are active, excluding infrequent, one time

purchases. From my perspective, 4,500 suppliers is a lot of suppliers to manage change

through, so over the course of the next and three years, we will be looking to not just

consolidate the supplier base, but assess and determine whether we’re actually using

suppliers for the optimal need versus a legacy relationship where it’s been in place for five,

ten, 15 years.

In closing, we believe that regardless of what the future looks like, regardless of how

automated and innovative we all are in providing care to patients, we’re not going to be

able to do it without suppliers. So learning the skills, the tools, the means, the methods to

drive not only strategic supplier performance, but also efficiently enable much needed

transactions with suppliers is a competency that we will all need to demonstrate for many

years to come. With that, I will turn it over to the moderator, and thank you all for your time

and for taking a few minutes to listen.

Q&A

HOW HAVE YOU ACTIVATED AFFORDABLE CARE?

We’ve formed pretty, pretty seasoned executives with very seasoned physician

councils to look at spend from top to bottom.

We’ve divided up our councils by functional areas, so lab, surgical,

cardiovascular, facilities, IT, construction, and empowered our teams to

challenge the status quo. The pace certainly is never as fast as the supply chain

executive would like. However, I think the mutual successes become the catalyst for what else

can we do, let’s tackle another area. So for us transparency, collaboration and slicing the pie

has enabled us to help cut costs and focus care to the right location.

WHAT IS THE FUTURE OF WEARABLE TECHNOLOGY FOR CHRONIC DISEASE PATIENTS?

I think it’s almost limitless. I would go back to my experience, though, with

telemedicine and just say that at the end of the day, the technology itself,

while very useful and hopefully practical, and oftentimes pretty sexy, is

probably the least important thing in the value chain at the end. So it’s still


about the patient’s activation with that wearable technology and then the relationship with

the caregivers on the other end to help be a partner in care.

But the wearable technology, the costs have come down so much, the portability, the ability

to link that directly with the EMR has been tremendous. So now you can have digital just

about any tests at home, and they continue to expand. So on the CHF side we’ve used digital

scales to be able to track fluid retention around the heart, which then you can see in weight

increase and immediately adjust meds. The digital blood pressure monitoring on the

hypertensives. With diabetics, digital glucose meters, digital thermometers and on and on.

So I think there’s an opportunity for most chronic diseases, and some acute, but most chronic

diseases to really link that with EMR, wearable devices, and in a way that helps coach and

drive sustainable behavioral change with patients and their entire support system, including

their families and friends.

ARE YOUR ORGANIZATIONS CONSIDERING RISK SHARING ARRANGEMENTS WITH SUPPLIERS?

We are sharing, in a very limited experimentation model, risk with some key

suppliers. We fully intend to continue to expand that model. From our

perspective, just like the payers want to reduce costs and still stay in business

long-term, so do the suppliers. And risk helps everybody have skin in the game.

I would say we’re certainly starting to, and that would be on both the risk and

the reward. I think there’s probably more focus on our end in trying to take cost

out of the total system, and looking at the entire value chain, especially not just

the product elements, but beyond that, and all the SG&A costs and everything

else that goes into it. I think there’s probably more appetite—and I don’t want

to speak for our supply chain folks—but probably more appetite on the provider side than

there is on the supplier side, in many cases, to share in that. But we would be open to

entertaining any of those models.

RESOURCES

Visit www.ModernHealthcare.com/OptimizingOperations to watch video clips from the webinar and

download more resources on innovation and standardization.

http://www.modernhealthcare.com/OptimizingOperations

Improving Operations Through Standardization - Executive Brief

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