Translating Your Hospital’s Data into Translating Your Hospital’s Data into SCMetrix™ FormatSCMetrix™ Format

Vicki Smith-Daniels, Ph.D.Vicki Smith-Daniels, Ph.D.Department of Supply Chain ManagementDepartment of Supply Chain Management

Contact Us: Contact Us: scmetrix@asu.edu

AgendaAgenda

How to translate data into the required SCMetrix™ How to translate data into the required SCMetrix™ format format

Strategies for making informed decisions on which Strategies for making informed decisions on which level of benchmarking is most appropriate for your level of benchmarking is most appropriate for your hospital hospital

How to make an informed decision on whether to How to make an informed decision on whether to estimate a data field or insert a missing value estimate a data field or insert a missing value indicator. indicator.

Specific procedures for estimations; common Specific procedures for estimations; common conversion problems will be covered through conversion problems will be covered through illustrative examples illustrative examples

Suggestions on how to collect additional data in Suggestions on how to collect additional data in the futurethe future

Benchmarking ParticipationBenchmarking Participation

1Facility

2Departments & Service Lines

3High Supply

Intensity, High Volume DRGs (Optional)

Total Supply Expense Total Purchased ServicesRevenue Total Non-Labor ExpenseAdj Operating Exp Rebates

Surgical Pharmacy Diagnostic RadiologyOutpatient Oncology Clinical LaboratoryEmergency Obstetrics Dietary Orthopedic Cardiac Cath Interventional Radiology

Surgical: Joints, Implants, Stents, etc. Medical: Respiratory, Infections, etc.

SCMetrixSCMetrixTMTM Data Collection Toolkit Data Collection Toolkit

Review all tabs from left to right Record data in spreadsheet

Online submission of hospital profile Online submission of financial, operational, and supply chain structure

Data DefinitionsProvided in Spreadsheet

GuidelinesGuidelines

Follow AHRMM-HFMA supply expense definitionFollow AHRMM-HFMA supply expense definition Include all supply expenses for which your hospital Include all supply expenses for which your hospital

receives revenuesreceives revenues• Inpatient, Outpatient, and EmergencyInpatient, Outpatient, and Emergency

Allocate supply expenses in the department in which Allocate supply expenses in the department in which they were usedthey were used

If actual data is not collected for a specific If actual data is not collected for a specific department /service line department /service line • Estimate data fields when departments/services lines are Estimate data fields when departments/services lines are

either significant revenue drivers and/or high supply either significant revenue drivers and/or high supply expenses areas.expenses areas.

• Input missing value when some department/service line data Input missing value when some department/service line data is not available and/or cannot be estimated is not available and/or cannot be estimated

Adoption of the Industry StandardAdoption of the Industry Standard

Standard Supply Expense DefinitionStandard Supply Expense Definition

The net cost of all tangible items that are expensed including freight, The net cost of all tangible items that are expensed including freight, standard distribution cost, and sales and use tax minus rebates. This standard distribution cost, and sales and use tax minus rebates. This

would exclude labor, labor related expenses, and services as well as some would exclude labor, labor related expenses, and services as well as some tangible items that are frequently provided as part of service costs. tangible items that are frequently provided as part of service costs.

SCMetrix™ benchmarks Total Delivered CostSCMetrix™ benchmarks Total Delivered Cost

Customizing Your HospitalCustomizing Your Hospital

Every hospital has these departments in SCMetrix™

•Clinical Laboratory• Housekeeping• Inpatient Pharmaceutical• Inpatient Surgical

Identify only departments/service linesfor which you will be providing data

QuestionsQuestions

Continue to send your questions Continue to send your questions through the chat featurethrough the chat feature

Questions will be answered Questions will be answered throughout the webinarthroughout the webinar

ororResponses sent after the webinar Responses sent after the webinar

sessionsession

Case Studies

Community Hospital of Spartanland

Valley of the Sun Hospital

Napa Valley Medical Center

Hypothetical Case Studies

• General Ledger Codes • Different Data Types

• Frequently Asked Questions

Case Study

Community Hospital of Spartanland

Hospital Profile

63 Bed General Medical-Surgical Hospital Top 5 Service Lines By Revenue

• Obstetrics• Cardiovascular• General Medicine• Orthopedics• Respiratory

Departments/Services Offered at the Hospital• Emergency• Obstetrics• Orthopedic• Outpatient Services• In-house Dietary

Thoughts and Questions

I’m entering a maze with no end in sight

Can I benchmark with SCMetrix™? My hospital does not:

Allocate rebates to the actual spend Allocate rebates to the actual spend

Allocate freight to departmentsAllocate freight to departments

Collect inventory data in all departments Collect inventory data in all departments

Level 1 Appears to be the Right Level of Participation

Spartanland’s Information Sources

Product CategorySupply Expense

Reports

Financial Statements

DRG Reports

Procedure Data

AHA Annual Survey

Rebate Reports

Department Managers

SCM Manager

Distributor Representative

Financial

Operational

Supply Chain Structure

HospitalProfile

Goal

Total Facility Supply Expense: ComponentsTotal Facility Supply Expense: Components

Components • Surgical Supplies• General Medical• Drugs/Pharmaceutical• Lab Supplies• Oxygen and Related Medical Gases• Radiologic Films and Chemicals• Dialysis Supplies and Fluids• Linens, Patient Apparel, and Hospital-

Acquired Scrubs and Uniforms• Dietary Products• Housekeeping/Cleaning Supplies• Office Supplies• Freight Associated with Any Supply Item• Standard Distribution Fees• Supply Component of Outsourced

Contracts• Supply Component of any Equipment

Rental or Lease• Sales Tax• MINUS: Rebates

Make Total Facility Supply

Expense as accurate as possible

• Exclude specific supply expenses

• Input Actual or Estimate for each component

• SCMetrix™ automatically calculates total supply expense based on the data fields

Supply Definition from AHRMM/HFMA

Tot

al F

acili

ty S

uppl

y E

xpen

se

Translating Into Supply ComponentsTranslating Into Supply Components

Guidelines:

1. All product supply/price data should be allocated into a supply expense category

2. If appropriate category cannot be identified, assign to General Medical Supplies

3. If product supply data includes acquisition price, freight, and distribution fees, then record total amount in category

Computing Total Delivered CostComputing Total Delivered Cost

Guidelines:

1. Provide total freight and distribution fees if not included in product supply/price data.

2. Include sales tax based on state policies for goods and service purchases.

3. Include rebates for all purchases made during the benchmark period.

Calculating RebatesCalculating Rebates

1/1/07 7/1/07 1/1/08

Goods Purchased

RebateReceived

RebateReceived

RebateReceived

Guideline:Report rebates associated with the spend during the benchmarking

periodEstimation:

Sum actual rebates received during the benchmarking period plus pending/projected rebates

or Estimate total rebates using actual average rebate rate of your total

spend on contract for 2007

Department Supply Expense Data CollectionDepartment Supply Expense Data Collection

Total Delivered CostFor Dept Supply Usage

Including

Dept Specific SuppliesGeneral Medical Supplies

Office SuppliesFreight

Standard Distribution FeesSupply Component of

Rentals/LeasesSales TaxRebates

Department Freight Example: Clinical LabDepartment Freight Example: Clinical Lab

Available DataAvailable Data Spartanland does not collect freight at the department Spartanland does not collect freight at the department

/service line level/service line level All other clinical lab supply expense data availableAll other clinical lab supply expense data available

Estimating Freight ExpenseEstimating Freight Expense

1.1. Estimate facility freight as a percentage of total supply Estimate facility freight as a percentage of total supply expense : expense : Freight/Total Supply Expense = 1.2%Freight/Total Supply Expense = 1.2%

2.2. Clinical Lab Supply Expense Without Freight: Clinical Lab Supply Expense Without Freight: $200,460$200,460

3.3. Compute Freight Using the Following EquationCompute Freight Using the Following Equation Total Clinical Lab Supply Expense = Freight + $200,460Total Clinical Lab Supply Expense = Freight + $200,460 Clinical Lab Freight = .012*Total Clinical Lab Supply ExpenseClinical Lab Freight = .012*Total Clinical Lab Supply Expense Total Clinical Lab Supply Expense = $202,895Total Clinical Lab Supply Expense = $202,895 Clinical Lab Freight = $2,435Clinical Lab Freight = $2,435

Product Delivery DataProduct Delivery Data

Inventory TurnsInventory Turns

Central StoresCentral Stores

Central SupplyCentral Supply

Clinical LabClinical Lab

PharmacyPharmacy

Inpatient SurgicalInpatient Surgical

Inventory ValueInventory Value

Central StoresCentral Stores

Central SupplyCentral Supply

Clinical LabClinical Lab

PharmacyPharmacy

Inpatient SurgicalInpatient Surgical

Consignment Consignment Inventory Inventory

Clinical LabClinical Lab

PharmacyPharmacy

Inpatient SurgicalInpatient Surgical

On-Time OrdersOn-Time Orders

Central StoresCentral Stores

Central SupplyCentral Supply

Clinical LabClinical Lab

PharmacyPharmacy

Inpatient SurgicalInpatient Surgical

• Insert missing value 99999999999 (11-9’s)• Cannot benchmark these metrics

Revisiting Level of ParticipationRevisiting Level of Participation

Top 5 Service Lines By RevenueObstetricsCardiovascularGeneral MedicineOrthopedicsRespiratory

Departments/Services Offered at the Hospital

EmergencyObstetricsOrthopedicOutpatient ServicesIn-house Dietary

BenchmarkObstetrics

Total supply expenses for obstetrics INCLUDES surgical supplies, general medical supplies, drugs/pharmaceuticals, office supplies, freight, standard distribution fees, supply component of any rental or lease, sales tax MINUS rebates.

Service line supply expenses available for• Surgical supplies• General medical supplies• Drug/ Pharmaceuticals?

Yes, Yes, Include in the Hospital ProfileInclude in the Hospital Profile

QuestionsQuestions

Continue to send your questions Continue to send your questions through the chat featurethrough the chat feature

Questions will be answered Questions will be answered throughout the webinarthroughout the webinar

ororResponses sent after the webinar Responses sent after the webinar

sessionsession

Case StudyCase Study

Valley of the Sun Hospital

Two Critical Estimation Issues

Valley of the Sun Hospital provides extensiveValley of the Sun Hospital provides extensiveoutpatient servicesoutpatient services

Problem: Problem: Supply expenses for inpatient and outpatient Supply expenses for inpatient and outpatient services combined together in supply reportsservices combined together in supply reports

Valley of the Sun Hospital receives sizeableValley of the Sun Hospital receives sizeablerebates rebates

Problem:Problem:Rebates tracked at facility level and needs to be allocatedRebates tracked at facility level and needs to be allocated

to strategic department/services linesto strategic department/services lines

Estimating Outpatient Supply ExpenseEstimating Outpatient Supply Expense

Outpatient Supply Expense

Total supply expenses for outpatient services INCLUDES surgical supplies, general medical supplies, lab supplies, drugs/pharmaceuticals, dialysis supplies and fluids, office supplies, radiological films and chemicals, freight, standard distribution fees, supply component of any rental or lease, sales tax MINUS rebates.

Estimation Procedure:

1. Estimate the outpatient adjustment factor as the % of revenue from outpatient services• Outpatient Revenue/Total Revenue

2. Compute the adjusted supply expense facility • Remove oxygen, linens, dietary, and housekeeping supply

expenses3. Calculate Outpatient Supply Expense

• Adjusted Supply Expense * Outpatient Adjustment Factor

Other Methods: Inpatient and Outpatient

Estimate outpatient if greater than40% of revenue

Facility MetricsFacility Metrics

• Supply Expense Per Adjusted Patient DaySupply Expense Per Adjusted Patient Day

• Supply Expense Per Adjusted DischargeSupply Expense Per Adjusted Discharge

Facility Revenue Metrics

Net Inpatient Revenue Per Inpatient DaysOutpatient Revenue as a % of Patient RevenueOutpatient Revenue per Total Outpatient Visits

Allocating Rebates Across Departments: Allocating Rebates Across Departments: Inpatient Surgical ExampleInpatient Surgical Example

Available DataAvailable Data Facility rebates = Facility rebates = $146,000$146,000 Product category acquisition prices Product category acquisition prices

• Supply expenses minus freight, distribution, sales tax, and rebatesSupply expenses minus freight, distribution, sales tax, and rebates

Estimation ProcedureEstimation Procedure

1.1. Compute total facility acquisition spend for all categoriesCompute total facility acquisition spend for all categories Sum of surgical, general med, pharmaceuticals, lab, oxygen, radiological films, Sum of surgical, general med, pharmaceuticals, lab, oxygen, radiological films,

dialysis, dietary, linens, housekeeping and office supplies dialysis, dietary, linens, housekeeping and office supplies

2.2. Estimate inpatient surgical acquisition spend available for rebatesEstimate inpatient surgical acquisition spend available for rebates Calculations same as (1) but only for rebate-eligible inpatient surgical spend Calculations same as (1) but only for rebate-eligible inpatient surgical spend

3.3. Calculate inpatient surgical rebate estimation factor as % of inpatient Calculate inpatient surgical rebate estimation factor as % of inpatient surgical acquisition spend/total facility acquisition spendsurgical acquisition spend/total facility acquisition spend Inpatient surgical acquisition spend/total facility acquisition spend = 13.6% Inpatient surgical acquisition spend/total facility acquisition spend = 13.6%

4.4. Estimate inpatient surgical rebatesEstimate inpatient surgical rebates- Facility Rebates * Inpatient Surgical Rebate Estimation FactorFacility Rebates * Inpatient Surgical Rebate Estimation Factor- $146,000 * .136 = $19,856$146,000 * .136 = $19,856

QuestionsQuestions

Continue to send your questions Continue to send your questions through the chat featurethrough the chat feature

Questions will be answered Questions will be answered throughout the webinarthroughout the webinar

ororResponses sent after the webinar Responses sent after the webinar

sessionsession

Case StudyCase Study

Napa Valley Medical Center

Thoughts and IssuesThoughts and Issues

Full Implementationof Level 2

• Integrated Information System• Service Line Management

Issues:Issues:

• Products used in multiple deptsProducts used in multiple depts.

• General Medical products not General Medical products not allocated to all depts.allocated to all depts.

Issue #1: Assign Based on Where It Is Used

Departmental/Service Line Expenses• Put specific device cost in one place

- Cardiac Cath Lab Supply Expense (with Intervention), or

- Inpatient Surgery Supply Expense Total Cardiac Implant Supply Expense

• Sum all implants used in Cardiac w/ Intervention and Surgery

• INCLUDES implant purchase cost, freight, standard distribution fees, sales tax MINUS rebates

Hospital 3

Surgery

Hospital 2

Cardiacw/out Inter

Surgery

Hospital 1

Cardiacw/ Inter

Surgery

Example: Pacemaker

Implants

Assign to

loca

tion

used

Issue #2 : Allocate unassigned supply expenses as a percentage of the directly traceable departmental supply costs

Example: Assume that the cost of unassigned general medical supplies is $200,000 and that $800,000 in total facility acquisition spend was directly traceable to the following four departments/service areas.

General/Medical Supplies Rate = $200,000 / $800,000 = 25% of Direct Supply Cost

Facility Level Unallocated Acquisition Spend Allocation Rate Total Facility Acquisition Spend=

Inpatient SurgeryAssignable = $ 400,000

x 25%Allocated G/M = $100,000

PharmacyAssignable = $120,000

x 25%Allocated G/M = $30,000

EmergencyAssignable = $200,000 x 25%

Allocated G/M = $50,000

All Other Depts.Direct Cost = $80,000 x 25%

Allocated G/M = $20,000

Include only acquisition spend in the assignable supply expenses. Exclude freight, distribution fees, sales tax, and rebates in the assignable calculations.

QuestionsQuestions

Continue to send your questions Continue to send your questions through the chat featurethrough the chat feature

Questions will be answered Questions will be answered throughout the webinarthroughout the webinar

ororResponses sent after the webinar Responses sent after the webinar

sessionsession

Take Aways and Going Forward

Learning Curve: Data CollectionLearning Curve: Data Collection

1st Half 2007

Significant UpfrontInvestment in

IdentifyingData Sources

2nd Half 2007

Incorporate Data

Validation Feedback

1st Half 2008

AnticipateGreater Dept/SL

participation

2nd Half 2008

ProcessesIn Place

Take Away 1: Multiple Information SourcesTake Away 1: Multiple Information Sources

Product CategorySupply Expense

Reports

Financial Statements

DRG Reports

Procedure Data

AHA Annual Survey

Rebate Reports

Department Managers

SCM Manager

Distributor Representative

Financial

Operational

Supply Chain Structure

HospitalProfile

Take Away 2: Use Missing ValuesTake Away 2: Use Missing Values

If you want to benchmark some departments but do not have all If you want to benchmark some departments but do not have all data availabledata available• FinancialFinancial

• VolumesVolumes

• Inventory Inventory

Use the missing value data fieldUse the missing value data field• 11 – 9’s11 – 9’s

If you do not have department procedure data, there is little If you do not have department procedure data, there is little value in benchmarking that department/service linevalue in benchmarking that department/service line• Do not select the department/service line in the Hospital ProfileDo not select the department/service line in the Hospital Profile

If you are benchmarking at Level 1 and do not have the required If you are benchmarking at Level 1 and do not have the required department datadepartment data• Insert the missing value data fieldInsert the missing value data field

Take Away 3: Use Estimation ProceduresTake Away 3: Use Estimation Procedures

Allocating facility total delivered cost components to departments/service lines• Freight• Standard distribution fees• Sales Tax

Take Away 4: Not Included ExpensesTake Away 4: Not Included Expenses

Review supply expenses not included in the AHRMM-Review supply expenses not included in the AHRMM-HFMA definitionHFMA definition

Going ForwardGoing Forward

Send unanswered questions toSend unanswered questions to• scmetrix@asu.edu

Record estimation procedures in toolkit and Record estimation procedures in toolkit and submit to submit to scmetrix@asu.edu