The Changing Role of Healthcare Executives

Kreg KofordDirector, Category Management

Intermountain Healthcare

Email: Kreg.Koford@imail.org

Phone: 801.442.3699

Kreg Koford, Director of Category Management for Intermountain Healthcare, leads contract management, strategic sourcing, program development and supplier collaboration. He is responsible to deliver strategies to manage $2B in spend across all non-labor categories. He is also responsible for managing Intermountain’s key customer and supplier relationships to develop new sources of value that extend beyond traditional price decrease and margin shifting activities.

Prior to joining Intermountain in 2003, Kreg worked in the high-tech sector providing consultation, implementation, and management of key customer relationships.

Kreg received a Bachelor of Science and MBA degree from Brigham Young University.

Intermountain in BriefA Large, Integrated Health System with a Tradition of Innovation

Hospitals

• 1975 Began

• 22 hospitals

• 2,800 licensed

beds

• 37% of Utah

hospitals

• 1983 Started

• SelectHealth

• 700,000

members

• 25% of Utah

market

Health Plans

Medical Group

• 1994 Started

• 1,200 employed

physicians

• 4,000 affiliated

physicians

• 185+ clinics

• 22% of Utah

physicians

35,600 employees

$2.0B non-labor spend

AA+ Standard & Poor’s

Aa1 Moody’s

Based in Salt

Lake City,

Utah

Charge: “Be a Model Health System”

Continuum Care

• TeleHealth

• Homecare

• Life Flight

• Central lab

• Central

pharmacy

Intalere

• 1986 Started

• 2015 Ownership

• Commercial platform

• $8B Spend GPO

The Changing Role of Healthcare Executives

• Where We’ve Been

• Where We Are

• Where We Need to Be

• What We Are Experiencing @ Intermountain

Agenda

Where We’ve Been

The “Old” Supply Chain

• The supply chain was viewed as just another necessary element of hospital operations. Supplies and materials were treated as a commodity, not managed as an asset.

• By and large, [supplies] were used as something that had to be there to carry out a procedure. The expectation from the physicians is they were there and what was there is what the clinician wanted.

• Hospitals reliance on GPOs slowed supply chain growth and development

Dr. Eugene Schneller - ASU

Current Environment

But, do we still need a burning platform?

Changing Healthcare Landscape

• Physicians start to feel the financial pinch of CMS’s regulations

• Technological advancements are transforming the entire healthcare industry

• Financial viability continues to be a significant concern for healthcare CEOs

• There is a new need to tolerate risk in a value-based purchasing world

• Interest in population health management will grow

• Outcomes will continue to improve

• Collaboration will increase

• Consolidation, everywhere

https://www.healthcatalyst.com/top-healthcare-trends-challenges

What the Analysts are Saying

• Summary• Supply chain leaders at healthcare providers must better align their objectives with the IDN’s

strategic goals, prioritize standardization and tackle pharmaceutical costs.

• Analysis• Supply chain leaders are expected to control total costs for all products and services.• Many are finding this hard to accomplish without improved alignment with clinical staff and

management, and more control of high-spend areas like purchased services and fast-rising pharmaceutical drug costs.

• Supply chain leaders also must get better at expanding their alignment to their IDN strategy, not just focus on narrow sourcing issues.

• Those who fail to address these challenges risk being boxed into price management.• Supply chain leaders need to make the case to IDN leadership for a wider span of control,

involvement in patient care and company strategies, and standardization of products and services by highlighting the benefits of these initiatives.

Healthcare Provider Supply Chain Outlook, 2016 By: Eric O’Daffer / Stephen Meyer

Trends in the Supply ChainProcurement “DECADE TO COME”

1 Procurement vision and purpose tied to business strategy and needs

2 Formalized collaborative network with stakeholders

3Control of Supply Chain – Spend Visibility, Spend Coverage, Leverage, Responsible Suppliers

4Category Management – Strategic Sourcing – Segmentation – (Big) Data Integration – Predictive Modeling/Analytics

5 Control over a technology and process platform

6 Progressive talent strategy – strong mix of technical and non-technical SMEs

7 Space for investment – creating agility

A Few Questions to Start the Checklist – Where are You Today?

Where We Need to Be

The Future of Healthcare Supply Chain will

• be a goldmine for data.

• be part of the C-suite and involved in strategic projects across the organization.• lead the standardization of care.

• be in lockstep with clinicians.

• be predictive

• be based on long-term, mutually beneficial relationships between trading partners.

• expand to wherever the patient goes.

• adapt to personalized medicine and the more-informed consumer.

What Is Required

www.gartner.com

Essential Skills

• Advanced Degree

• Six Sigma

• Communication

• Project Management

• Sourcing/Contract Management

• Common Sense

• Big Picture view

• Finance, operational, customer

• Talent development – net exporter of talent

Current P&LCost Management

InitiativeRevenue Initiative

Revenue

Cost

Profit

$500,000,000

$475,000,000 95%

$25,000,000 5%

$500,000,000

$50,000,000 10%

$450,000,000 90%

Reduce costs 5%

(or improve quality)

To increase profitability by

$25 Million, you could either…

$1,000,000,000

$50,000,000 5%

$950,000,000 95%

Increase revenue 100%,

which is 20 times the cost

reduction needed!

- OR -

Pathway to financial viabilityDr. James: “More leverage in waste elimination than in revenue”

Supply chain influence

Improvement Opportunities Abound!

Process Who Purchase Types Span of Control (in

millions)

Source Sourcing All Types

ContractContract

ManagementAll Types

Buy PurchasingMed/Surg Products

Capital

ReceiveMaterials

ManagementStoreroom Products

Only

Pay AP and P-Card All Types

$1,000

$750

$300

$50

$1,000

Supply Chain InfluenceImprovement Opportunities Abound!

Unlocking All Forms of Value

Price

Cost to Serve (inbound and internal) Process Cost Working Capital Consumption/Utilization Supplier’s Costs Risk Prevention Quality Improvement Service Improvement Innovation!

Did You Know?50% of P&G’s new product innovations originated from its suppliers?

US Healthcare R&D exceeds $140 billion/year –more than global automotive and aerospace…combined!

Example (INSERT)

Non Traditional supply chain engagement

3m Lean Engagement

What We are Experiencing at Intermountain

What We are Experiencing at Intermountain

• Move to the center (centralized decision making)

• Focus on outcomes/solutions

• Increased complexity

• Reliance on SCO as a business leader

• Expanding services (need to be nimble)

• Price (lowest appropriate) still matters but it is expected

• Standardization – reduction of variation

Optimizing the expense category will not optimize care

Source: Sg2 – Systems of CARE Model

Care Continuum Vs. Spectrum of Services Clarifying the difference

CV Clinical Program Org Chart

Foundations of Wellness

Heart Failure

Community Care Acute Care Post Acute CareSpectrum of Services

Shared Care Modules Pathway Specific Care Modules

Patient assigned to applicable Health Pathway

Supply chain leaders must work alongside executive leaders to find ways to keep their healthcare organizations profitable

without compromising on patient care.

Keith Lohkamp - Workday

Questions?Thank You