The Ottawa Hospital Supply Chain

Transformation

November 2008

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The Ottawa Hospital and the Champlain Region Profile

The Ottawa Hospital• Three Campuses (Civic, General and Riverside)• 12,000 staff, 2000 physicians, 1000+ volunteers• Budget of approximately $950 M

Champlain Region• 1.5 Million Residents • 16,000 Square Kilometers• 17 Hospitals in the Region

– 1 Pediatric Centre (CHEO)– 1 Chronic Care Centre (SCO)– 1 Mental Health Centre (ROH)– 14 Acute Care Centres

• TOH represents 80-85% of region• Ottawa Hospitals represent 90-95% of region.

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AlmonteGeneral Hospital

St. Frances MemorialHospital

Renfrew Victoria Hospital

L’Hôpital Montfort(misc. clinics*)

Queensway-Carleton Hospital(CPH, KDH, Geriatric Day Hospital, ADMH)

Royal Ottawa HospitalSCO Health Service

(St. Vincent, EBHC, St. Louis Res.)The Ottawa Hospitals

(Civic, General, Riverside, HI)

Pembroke General Hospital

Winchester District Memorial Hospital

(partial HDGH)

KemptvilleDistrict

Hospital(QCH)

Hawkesbury& District

General Hospital

GlengarryMemorial Hospital

Deep River &District Hospital

(Pembroke)

CornwallCommunity

Hospital

Carleton Place & District Memorial Hospital

(QCH)

Arnprior & DistrictMemorial Hospital

(partial QCH)

54 km45 min

95 km90 min

57 km49 min

32 km 30 min

30 km30 min

6 km8 min

48 km46 min

417

416

401

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Ottawa:106 km78 min

59 km46 min

Ottawa:100 km

73 min

Ottawa:205 km170 min

Ottawa:199 km150 min

Ottawa:153 km115 min

Ottawa:102 km

74 min

Ottawa:55 km45 min

Ottawa:73 km54 min

Ottawa:100 km79 min

MAIN HOSPITAL (Self Replenishment)HOSPITAL (Satellite Replenishment)OTHER (LHM Cite Collegiale, University of Ottawa plus other Satellite Locations as indicated)

Centre deRockland

(LHM) Centre deCasselman

(LHM)

PortobelloOrleans (LHM)

Second Street SiteMcConnell Avenue Site

Grove Nursing Home

4 Seasons Lodge

Sante Mental PR - LHM

Santé Montfort Health de Vanier

TOH - Cornwall Dialysis Unit, Hawkesbury Dialysis Unit, SCO Dialysis Unit, Winchester Dialysis Unit

310 Kms

130

Km

s

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17

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Geographic Profile

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TOH Supply Chain Transformation Master Plan

Objectives:

• Assess, Re-design and Improve the Supply Chain at The Ottawa Hospital

• Increase Inventory Turns and Improve Service Levels to End Users

• Reduce Costs and become benchmark service provider

• Implement “Smart” Handheld Technology and systems to enable and support

improved service levels and monitor efficiency

• Upgrade supply chain infrastructure as part of Capital Development plan (i.e.

expanded warehouse, replace carousels and develop new processing suite)

• Implement Call Centre For Inventory Inquiries, Consolidate Inventory

Management

• Implement business intelligence tools

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TOH Supply Chain Transformation Master Plan

Transformation Projects

1) Electronic Commerce Project (OntarioBuys)

2) End User/Supply Cart Project (OntarioBuys)

3) OR Supply Management Project (OntarioBuys)

4) Central Warehouse Project (Regional) (OntarioBuys)

5) Non-Surgical Procedure Trays Project

6) Sterile Processing Consolidation

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e-Commerce ProjectLeading Practices

Electronic Catalogue: receipt of supplier catalogue with contract detail.

Punch Out” to Supplier Catalogue: source directly from a supplier web catalogue or via e-Commerce Gateway and add to end user requisition.

Electronic Web Requisitioning: automate manually processed requisitions with approval workflow and auto routing for inventory and non-stock items.

Electronic Purchase Order / Auto PO & Scheduling : Legal commerce transaction sent from a buyer to a seller.

Electronic Order Acknowledgement: ability to receive order acknowledgment from supplier and auto update purchase order system.

Electronic Invoice and Credit Memo: Ability to transmit/receive electronic invoicing transactions directly to and from suppliers/vendors.

EFT Payment and Notification: Ability to transmit and receive electronic payment transactions directly to and from suppliers and vendors bank accounts.

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e-Commerce ProjectProgress to Date

700 suppliers on Electronic Funds Transfer with email/EDI notification.

eCommerce PO integration is completed with 32 of TOH’s Medical/Surgical Suppliers.

Out of the 32 suppliers ,12 are integrated with electronic invoice transactions.

Represents approximately 3,000 SKUs with an annualized spend of $55M.

Over 80% of our total Medical & Surgical budget is being transacted through EDI.

Represents approximately 2,000 PO’s - 6,500 lines processed per month.

Electronic requisitioning and approvals done by over 315 staff across 15+ departments (clinical and support)

Automate the requisitioning process including approval process.

On-line view of the Procure to Pay transactions, Purchase Orders, Receipts and Invoices.

Exception applies to Capital Purchase and Minor Equipment.

Paperless environment.

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e-Commerce ProjectBenefits

Business practices and technology aligned with Leading Practices

Purchasing moving from Transactional to strategic service

Transformation achieved annual savings of approximately $550 K

Service levels and satisfaction levels of end users have improved.

Enhanced toolset to better manage vendor partnerships.

Strategically moving towards a touchless/paperless environment.

OntarioBuys project - alliances with other organizations

Strategic procurement and standardization processes

Conflict of interest Policy

Provincial Capital buying initiative etc.

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Supply Management Project

End User/Supply Cart– Storage systems– Par analysis– Replenishment Cycles– System Implementation

OR Supply– OR Cores/Suites– Case Carts – OR Sub Inventory– System Implementation

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Supply Management Project

IS System Plan:

• Expansion of Order Management and Inventory Management Modules

– Add Warehouse Management Module

– Add Consignment Module

– Add Mobile Supply Chain Module

– iSupplier Module

– Business Intelligence

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End User/Supply Cart Replenishment Project

Challenges:• Carts not well maintained, not well labeled

• Disorganized, over-stocked (cupboards, floor, shelves)

• Excessive replenishment cycles (7 days a week in some areas)

• High cost, low productivity and customer complaints

Plan:• Adjust par levels - usage and # days of stock between replenishment cycles

• Reorganize replenishment cycles – 5-7 days/week to 3-5 days/week

• Implement supply storage systems with effective labeling and locator information

• Re-align warehouse stocking/order picking based on replenishment demand

• Implement a system that supports management of replenishment cycles and provides reporting tools

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OR Supply Management Project

Challenges:– Overstocking of supplies: suites, cores, case carts, supplemented by phone requests

even though supplies are in OR

– A mixture of stock and non-stock items on supply carts

– Some items being scanned, some are not

– Instruments are being stored in suite cupboards

– Role confusion on in replenishment process (nurses, supply tech’s etc)

– Carts are not well labeled or maintained

– Non-stocks not being managed

– Consignment items manually managed

– Reporting tools minimal

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OR Supply Management Project

Plan:– Development of Critical Care Wing

– Storage and supply access model within OR - location optimization

– Review case cart preference lists – goal 95% utilization

– Reduce OR Sub Inventory: utilization, forecasting, demand planning

– Par Analysis – determine # days of stock

– Non-Stock Management- electronic method to manage items, i.e. usage,

history, contract management, replenishment

– Collaborative Demand Planning - possible vendor managed inventory

– Consignment Management – tracking, scanning at point of use, generate

replenishment order, provide utilization information to surgical system

– Business Intelligence Tools – reporting and measurement

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Supply Management ProjectBenefits

• Reduction current replenishment cycles by 30%

• Reduction in labour cost = $ 775 K annually

• Reduction in inventory = 25% =$600 K plus carrying costs

• Reduce product wastage and obsolescence 10% =$40 K annually

• Redirect clinical time currently being spent on supply management, back to

patient care

• Opportunity to collaboratively design supply with end users

• Facilitates an efficient warehouse process regardless of warehouse model

• Oracle integration of the business suite provides reporting, measurement and

visibility benefits for MM and end user

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Central Warehouse Project

TOH Master PlanDevelopment of a Central Warehouse at the General Campus of TOH

Consolidates warehousing to General Campus

Integrated into capital development planNew addition currently out to tender

OntarioBuys supported project. TPA currently being finalized with OB.

Project to be initiated in March/April 2009.

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Non-Surgical Disposable Tray Project and Sterile Processing Consolidation

Last two components of Supply Chain Transformation Master Plan

Non-surgical disposable tray project is to standardize non-surgical procedure

trays and reduce and unique procedure trays by two thirds

Convert reusable trays to disposable ( 75%)

Reduce labor costs associated with in-house manufacturing of trays

Implementation to begin in late fiscal 2009/10

Sterile Processing consolidation involves relocating processing activity from

Riverside to General Campus

Critical Care Wing project developed infrastructure

Riverside currently operates 6 main OR’s and 4 Eye Care OR’s

Planning to be initiated for this in April 2010.

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Regional Planning

Supply ChainRegional committee established that conducted two studies on regional model

Recommended two hub model and phased approach:

Development of General Campus for TOH (80%)

Development of QCH for 4 sites (10%)

Integration of 3 other hospitals into General Campus (Business Case Dependent)

Consolidation of TOH and QCH.

ProcurementRegional Sourcing framework and plan

Central Governance Structure

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Successes to Date…..TOH

– Phased in plan for TOH across manageable distinct transformation projects has achieved great success

– Organization has been able to accept and embrace new models.

– Efficiencies have been achieved.

– IS platform is very effective and efficient.

– New management tools.

Regionally– History of regional collaboration (HLS and HFS)

– Strong working relationships with regional partners

– Regionally agreed on model for future for both sourcing and supply management.

– Future – Regionally integrated supply chain.

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Lesson’s LearnedTOH

– Implementation plan needs to be organized in distinct manageablephases/projects

– Leave time for phases to work through growing pains before moving forward– Flexibility is key – be ready for tweaks and changes (Clinical Models)– Communication and inclusion of staff and management team is essential

Regionally– Get the “big bang for the buck” first (Phased approach)

• Streamline risk management and accountability

• Build credibility through implementation instead of planning

– Business Cases - Capital/operating dollar investments are a challenge

• True savings and paybacks can be challenging for smaller organizations

• Flexibility to determine where savings are invested.

– Governance models that are flexible and inclusive; not exclusionary