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Transcript of Indiana University Health
12/1/2011 1
Supply Chain OperationsJourney to Preeminence
Indiana University Health
Indiana University Health is Indiana’s most comprehensive healthcare system. A unique partnership with Indiana University School of Medicine, one of the nation’s leading medical schools, gives patients access to innovative treatments and therapies. IU Health is comprised of hospitals, physicians and allied services dedicated to providing preeminent care throughout Indiana and beyond.
• Hospitals
– Total 20
• Patients
– Total Admissions 115,250
– Total Outpatient Visits 1,882,795
– Total Staffed Beds 2,889
• Staff
– Total Full-Time Employees 21,883
Mission, Vision and Values
Indiana University Health's mission is to improve the
health of our patients and community through innovation
and excellence in care, education, research and service.
We value:
• Total patient care, including mind, body and spirit
• Excellence in education for health care providers
• Quality of care and respect for life
• Charity, equality and justice in health care
• Leadership in health promotion and wellness
• Excellence in research
• An internal community of mutual trust and respect
Agenda
• Current Environment/Challenges
• Service Line Commitment Alignment
– Developing Metrics that Drive Change
– Managing External Factors/Communication
– Thinking and acting like a system
• Physician Council: Collaboration around the patient
– Aligning Incentives: Value = Patient
• Success Criteria
Current Environment/Challenges
• Hospital payment reductions
• Value-Based Purchasing
• Accountable Care
• Penalties for high readmission rates
• Promoting better quality, while avoiding unnecessary
costs
Creating a Patient Centered Model
• Promoting value and quality for our patients
• Improve quality and cost for delivery‐system
components
• Coordinate consistent care and services across the
system and reduce variation
• Assess and manage population health risk
• Reimbursed based on savings and quality = Value
Service Line Alignment
• Define system objectives, goals and formulate system
strategy
• Review data, compare against national benchmarks
and determine opportunity
• Establish Roles & communication plan
• Develop multidisciplinary team which includes
physicians, nurses, supply chain and system leaders
• Anticipate outside factors/ influences
– Identify conflicts of interest
– Relationships with manufacturers
Strategy
Price Decrease: Based on Benchmarking data, when we
consolidate and standardize as a system our buying power for
price reductions improves
Utilization/Best Practice:
• Patient Outcomes
• Evidence Based Product Review
• Process Efficiencies
•Procedure supply waste reduction
Total Value Components
DEFINE
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Quality Outcomes / Patient Care
• Reduced Errors
• Reliable, accurate, repeatable processes
• Build and track metrics
Responsiveness
• On-time every time
• Flexible to meet changing demands
• Rounding
Cost
• Reduced Variation
• Better information management
• Without sacrificing quality of care
What is the role of Supply Chain
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What is the role of Supply Chain
• Exceptional Service - Enhancing Patient Care
• Reducing cost of products, services & equipment
– Working with clinical staff and physicians
• Supporting the local community
– Partnering with local charter school
– Helping families and organizations in need
– Diversity Business Focus
• Communicate, developing tools & monitor progress
• Celebrate successes!!
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Leadership Model
1. Create a shared vision
• Enlist your teammates in a shared vision for the future
• Connect your goals and activities to that vision
2. Be explicit about values
• Be clear on the organizations values and your values
• Publicly connect behavior to those values
3. Set high standards
• Any game is worth playing is worth winning
• Bring your best to every project, meeting, call, etc
4. Take ownership for the whole
• Think and act as if you ran the whole company
• Be an active advocate on behalf of other departments and peers
5. Develop & Enable great teams
• Set high standards and actively coach and develop your teams to them
• Reward high performance and be candid with underperformers
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Leadership Model
6. Ensure clear focus & process
• Seek to hone your focus on what is most important (vs. only urgent)
• Ensure management processes support this focus
7. Take personal accountability
• Each commitment you make reflects your word and reputation
• Take public ownership when you fall short of a commitment
8. Execute relentlessly
• Habits shape culture - follow through on each commitment big and small
• Practice habits that drive execution - agendas, recap notes, follow-up
9. Communicate constantly & candidly
• Leadership requires consistent, regular communication
• 360 degree candor is vital to a performance culture
10. Celebrate success & have fun
• Positive recognition fuels performance and shapes cultures
• We all work too many hours to not enjoy each other and have some fun
Who are our Customers?
• Our patients
• Our patient’s families
• Our community
• Those who care for and serve our patients
Supplier Management System
• Who are our Partners?
– Distributors:
• Medline– Logistics/Medical Surgical
• Cardinal– Pharmacy Distribution
• Sysco– Food & Nutrition Distribution
• Fisher Scientific– Laboratory Distribution
• Guy Brown– Office Supply Distribution (Diversity)
• D2P – Furniture Distributor (Diversity)
– Manufacturers:
• Medtronic - Cardiovascular/Ortho Manufacturer
• Boston Scientific - Cardiovascular
What do our Customers want?
• The right products and services (Accuracy)
• When they are needed (Timeliness)
• With the best design to do what is needed (Quality)
• To do all of the above at the lowest cost (Cost)
• To be informative, helpful, and supportive (Customer Satisfaction)
Service Design, Management
& Improvement Model
PLAN
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What do we do with Customer
Requirements?
– Negotiate Contracts (Products, Equipment & Services)
• Involve physicians/clinicians in product evaluation process
• Work with facilities/divisions leadership to understand product/service needs
• System wide pricing
– Develops and maintains supplier relations and service levels
• Manage Sales Rep visits, behavior and ethics
• Manage Supplier Communications
• Evaluate Supplier Fill Rates, Deliveries, Invoicing Issues, Pricing, Contract Compliance
– Purchase Supplies and Services
– Support Inventory Control, Equipment, Crash Carts, Mail, Laundry Services
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Supply Chain Decision Making Factors
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Position Your Data for Success
– Review and understand the data
– Physician/clinician involvement in product decisions
• Guide decision making process
• Soliciting input on alternative products balancing quality, price & outcomes
• Begin to formulate product strategy
– Identifying savings & compare against national benchmarks
– Develop reports to track results. E.g. Price per unit, Buy Right, Supplier Market Share
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Transparency/Benchmarking
DESIGN
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Design and Strategy• All processes are explicitly mapped and evaluated for efficiency, and
effectiveness.
• Initiative Negotiation Strategies are created with the input from physician/clinicians before negotiations with vendors.
12/1/2011 24
12/1/2011
Ortho Trauma Negotiation StrategyOverall
Strategy_______________________________________________
Impact Estimates and Key
Assumptions_________________________
Key Challenges to
Impact_____________________________________
Mitigating
Actions____________________________________________
Current
Status______________________________________________
Topics for
Discussion_____________________________________
Addressed Spend: $10.81M Total Impact Goal: $2.27M
Bloomington Spend: $ 1.37M Bloomington Goal: $ 315K
Key Assumptions/calculated methodology:
• All IU-Health facilities to receive same pricing
• No promise to shift market share
• Vendor recognition of IU Health as a system
• No promise of increased market share to vendors
• Synthes dominates our market and might feel comfortable
• Owned vs. consigned inventory- will vendors partner for consignment?
• Resolve differences in contract terms and price structures across
the system
• Identify key stakeholders and involve in decision-making process
• Grant “preferred vendor” status on e-Req to provide visibility of most
competitive pricing in the IU Health system to end-users
Completed Tasks:
• Market Share Analysis and VHA benchmarking
• Savings Opportunities identified by category, vendor, and facility
• Xcelsius Report to show savings opportunities
Next Steps:
• Communicate strategy to surgeons and OR management
• Send RFP to vendors (bids due by 8am on 2/21/11)
• Analyze RFP data
• Physician preferences for product/vendors (internal and external
fixation)
• Strategy with vendors during RFP bid period
Achieve cost savings on orthopedic trauma implants
Include all IU Health facilities in current initiative
Compile savings opportunity data based upon market intelligence and
benchmarking
Present cost-savings opportunity to administrators at each IU Health
facility to garner support for initiative
Present cost-savings opportunity to physicians in order to collaborate for
creation of system-wide strategy
Notify vendors of Ortho Trauma Initiative and send RFP
Prepare Cost Analysis based on vendor bids; collaborate with physicians
and nursing leadership to identify opportunity
Negotiate with vendors to meet and/or exceed the identified savings
target
Grant “Preferred Vendor” status to vendors with most competitive pricing
for the purpose of the e-Requisition tool
Implement new 3-year agreements with participating vendors
ASSESS
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Opportunity Assessment
• IU Health Supply Chain Operations (SCO) prides its self on being a data driven decision making organization, and it shows in the advanced, interactive tools that are created for the decision makers.
• Interactive What-if analysis are created for savings initiatives so that SCO decision makers, and clinical stakeholders, can assess the impact of different scenarios on the savings opportunity.
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Stent Market Share
What if analysis
Ortho Total Joints
MEASURE
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Manage & Control Your Supply Chain
• Manage vendor compliance, market share to negotiate pricing terms
• Manage end user compliance to preferred item lists
• Identify contract vs. non-contract items at point of purchase
• Capture all spend through off catalog ordering function
• Track spend by:
– Department
– UNSPSC
– On and off-contracted spend
– Vendor
– Diversity
• Establish a Cost Management/Margin Enhancement program to support achieving a increase on cost savings/cost avoidance results
12/1/2011 32
What do we Measure?• Diversity Report: Tracks Tier 1 & 2 performance by facility, department and
supplier
• Supply Chain Ratio: Total Supply Expense/Total Net Revenue.
• Price Per Unit: Total Supply Expense/Number of Units. (Illustrates realized savings by product category)
• Hospital Price Index: External price benchmarking tool
• Buy Right: Measures percentage of purchases made on preferred products. (Tracks performance to preferred products and or suppliers)
• Inventory Efficiency Metric: Compares inventory usage against current inventory levels. (Measures how well we manage the inventory levels against utilization).
What do we do with Measures?
• We use it at a tool to evaluate performance against our established goals
• We look for trends, both positive and negative
• We communicate and work with those leaders and entities where improvement and focus is needed
• We use the Plan, Assess, Design, Measure model to identify opportunities and improve processes
Supplier Diversity
Supplier Diversity Plan• Tier 1 and Tier 2 business relationships with M/V/WBE suppliers who
provide quality, cost-competitive products and services
• Leadership Team Meetings:
– Review monthly Supplier Diversity reports and communicate opportunities
– Encourage making Diversity spending the 1st thought instead of last
• Conduct Targeted Outreach Sessions
– Creates “small group” atmosphere for individual departments to communicate with vendors that provide specific goods and services for them
• Design and Construction
– Raising the bar on an already successful initiative. Seeking 18% MBE and 5% WBE participation
Financial Metric Tracking
Initiative Metric Tracking - PPU
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Supplier Service Levels
– Supplier Service Levels
• Backorder and price integrity
• Product recall
• Help Desk established to collect and trend service level activity
– Market Share Reports
• Established process for tracking product conversions
• Shows supplier commitment to program and leads to lower price points
• Strengthens partnership and opens additional opportunities
12/1/2011 39
Order Efficiencies / Internal Controls
– Maximize online order entry and reduce rework in Order Processing and Payment
• EDI - Ensure correct products are available for online ordering
• Accurate real-time product and pricing information- Item File
• Price/Product discrepancy resolution prior to invoice
• Backorder / Product Recall resolution
12/1/201140
EDI Rejections by Type
End of year
contract expiration
-
44%-
55%
-
68%
Arnett Cass
Building IV
Solution
-64%
U
B
U
IMPROVE
Technology Driven ERP Process Improvement
Improving the Patient Experience
12/1/2011 42
• Improve clinical quality
• Reduce adverse events and improve patient safety,
• Encourage more patient-centered care by rounding
• Avoid unnecessary costs in the delivery of care
• Stimulate investments in structural components or systems-such as IT
capability and care management tools and processes that have been
proven effective in improving quality and/or efficiency
• Make performance results transparent and comprehensible so that
consumers can be empowered to make value-based decisions about their
health care and to encourage hospitals and clinicians to improve the quality
of care
E-Requisition
Custom built advanced online ordering portal built on top of Lawson ERP to enhance user experience that pushes valuable purchasing information to departments and helps drive product compliance.
• Acts as a communication tool for Supply Chain to disseminate key information to end users.
– Material Safety Data Sheets (MSDS)
– Equipment Specification Documents
– Products substitutes
• Drives standardization by linking non preferred products to the product standard thereby driving compliance and savings.
– Communicates preferred products
Preferred
products
are sorted
to the top
Information display used to
link to replacement
products. i.e.. Backorders,
obsolete products, non
preferred
Click to Chat = Increase Service
12/1/2011 45
Instant
service for
end users
Information Dissemination Through Ordering
Mobile Supply
Chain
Management
(MSCM)
Mobile Supply Chain Management (MSCM)
12/1/2011 48
• Has accelerated the delivery of purchase order (PO) and non-PO packages
to their final destination.
• Streamlining the entry and management of data through bar-coding and
coordination with other Lawson Procurement applications.
• Decreasing the number of lost packages and thereby lowering the costs
associated with staff searches, unnecessary reorders, and excessive
inventory levels.
• Reducing the time and effort needed to conduct issues and returns, while
lowering the potential for errors versus manual entry.
• Eliminating or decreasing staff overtime.
• Enabling requesters to track their deliveries from their computers, using a
web browser.
12/1/2011 49
MSCM
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MSCM: Receiving
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MSCM: Delivery
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MSCM: Tracking
FUTURE
12/1/2011 53
Physician Variation
Success Criteria: Supplier
• Work collaboratively with health system to capitalize
on system-wide agreements and throughput.
• Focus product development on evidence based
outcomes for the patient versus focusing on nice to
have features and increasing volume
• Work collaborative with health system to prove out
value statement to patients
Success Criteria: Physician
• Physician participation and leadership is critical to
improving processes and efficiencies as we move
toward an accountable care model
• Partner with physicians by sharing data and jointly
developing strategy and engagement
• Develop organizing regional redesign teams to help
implement improvement processes
• Developing measures and analysis of quality and
patient satisfaction data
Success Criteria: Administration
• Develop clear system objectives and rules of
engagement
• Transparency: Keep physicians and facilities engaged
throughout process in order to control messaging and
direction
• Physician, Facility and System alignment is a key
success criteria
• Spend time with Physicians to understand needs and
value points to patients. E.g. Operating Room, EP
• Hosting ongoing summits to help educate and engage
physicians and quality teams in the process
Thank You!
12/1/2011 58