Terry Cox, most recently served as the Director of Supply Chain Management at Texas Children's Hospital, Houston, TX the largest Pediatric institution in the United States. He reduced supply expense in thirty nine months by over $31M, while reducing FTEs by over 10%.
IDN: What will be the impact of the recent healthcare reform legislation on the supply chain of healthcare systems over the next 12 months?
Terry Cox (TC): Everyone has been asking that question, yet I believe the focus for supply chain leaders will not change. We will still be tasked to have the most efficient organizations from an FTE and process perspective, plus we will have to constantly bring value to our organizations.Value means not only savings it also means better and more services with less staff. Supply Chainers are interested in the right product, at the right place, in the right condition at the right price. Those imperatives will not change with healthcare reform. If anything healthcare reform will intensify the need for savings and efficient supply chain operations. I have said during the recent economic downturn it’s a great time to be a "Supply Chainer!" I believe healthcare reform means guaranteed employment for healthcare supply chain professionals, at least for those who demonstrate their value every day in their respective institutions.
IDN: What's the impact by the end of 2014?
TC: Again I believe the impact of healthcare reform will intensify the importance of supply chainers as demonstrated by Wal-Mart. Those healthcare institutions with world class supply chains will thrive under the new healthcare reforms. Those who continue to look backwards will continue to be backwards. Those that look at healthcare reform as an opportunity to move forward will grow and succeed.
IDN: With healthcare supply chains becoming increasingly complex (hospitals combining with clinics, medical practices under umbrella organizations), what are the major challenges faced by supply chain leaders?
TC: Complex organizations and the associated major challenges require supply chain professionals who can connect the dots. For example when I got to Texas Children’s we had a distributor for our practices, a different distributor for the hospital, a different distributor for pharmacy, a different distributor for lab, a distributor for.....three years later it’s still the same. We were able to save $31M in a little over three years in other areas, yet we were not able to simplify our distribution channels due to the different complexities in each entity at Texas Children’s. There are healthcare organizations that have done really well with complex organizations and distribution models such as Sisters of Mercy supply chain, ROi. From the beginning they received the necessary support and I believe they would even tell you supply chain processes are not complex, you just need some emphasis on supply chain processes and you will be able to serve your complex organizations in a much better way.
IDN: There is so much talk about Business Intelligence, data integration, and transparency; will there be a time when inventory levels, supply-demand, and utilization will be completely visible through the supply chain continuum?
TC: This is a great question especially if you think about the recent Washington Post article about the "intelligence community" in the United States. Read article here. The article talks about the growth of the intelligence community since 9/11. There is so much intelligence, data, etc, yet there is no integration and little to no transparency. Even unsophisticated healthcare supply chains have business intelligence and data. The problem is not much different than our own country, we have lots of information yet it is not integrated. I am amazed how Wal-Mart integrates their data and business intelligence. If we could integrate our data we would be so much more successful. There are some systems that have made great strides in data integration. I remember when I was at HCA, a particular vendor lost their HPG contract and the next day I was being asked by item by hospital why certain items were bought off contract. Now that's the start of data integration and I long for that type of information.
IDN: Thank you for taking some time with us today Terry, what is next for you?
TC: I heard a term a few years back called the "Sandwich" generation. Due to most of us having kids later in life, plus kids staying at home longer and parents living longer, my generation is the first to experience being squeezed by kids and parents. My wife is Polynesian and her parents live in Hawaii. Her father is doing dialysis three days a week and her mother needs assistance. We are moving to Hawaii to help them out. So what's next for me is to find an opportunity. For the first time in my life I am without a job. Hopefully in the coming days and weeks that will change. I ship my car tomorrow and fly to Hawaii on Wednesday if all goes well. I Hope to be able to participate in the IDN summits again soon, they are really great events.
Full Bio:
After graduating Cum Laude with a Bachelor of Science Degree in History with teacher certification, Terry started his professional career as a high school teacher and coach. After earning his Master of Arts plus 30 semester hours in Education (Administration & Supervision concentration), he entered the United States Army Medical Department. After graduation from the Army Medical Department officer basic leadership course he immediately attended the Medical Logistics Management course and started his career as a medical logistician. As a young ‘supply-chainer’ he served as the Chief, Division Medical Supply office, which was recognized as the best in Europe. He then went to Berlin, to become the Chief, Capital Equipment Branch. His branch placed third in the US Army European Material Management competition and was first in the Medical Command. He returned to the United States after being abroad for four years and attended the Army Medical Department’s Officer Advanced Leadership Course.
As the Installation Medical Material Manager, Fort Stewart, Georgia; his office was the first military treatment facility to implement automated contracting, reducing procurement administrative lead-time. He also was the first facility to implement the use of a credit card for purchasing. His next assignment was as Chief, Medical Material Division, Medical Operations Center. He ensured all critical medical items were on hand for 89 hours of sustained ground combat operations and follow on defensive and humanitarian operations during Operation Desert Storm. He earned the Bronze Star for achievement. He moved to a Combat Support hospital and was personally responsible for redistribution of over $1,000,000 of excess medical supplies to other facilities and to the former Soviet states. His organization was also responsible for the initial support to a Mobile Army Surgical Hospital into Bosnia. He served as the Chief Operating officer of the Army’s only Medical Logistics distribution center in Korea. He was then sent to the Florida Institute of Technology to do graduate studies in Logistics Management. Upon completion of his studies he moved to the Office of the Army Surgeon General where he was the Program Manger for $400 million in Logistics Readiness funds. He also served as the Chief, Consultant Affairs, assisting over 400 Army medical logisticians in their assignments and educational needs.
He served as the Chief of Logistics, Evans Army Community hospital. He led the region in medical material standardization, prompt payment and secured over $2.5 million in funding for critical facility projects. He ended his career in the United States Army as the Corporate Director of Education and Training, Supply Chain Management. He recently served as a board member to the American Hospital Association Healthcare Resource and Material Managers Professional Membership Group. He was the first American Hospital Association certified material and resource professional in the military. He also obtained his federal contracting professional certificate. He was also selected as the top medical logistician in Federal Healthcare and earned the coveted 9A designation, one of a handful out of a total of 400 Army Supply Chain leaders.
He most served as the Director of Supply Chain Management at Texas Children's Hospital, Houston, Texas the largest Pediatric institution in the United States. They are currently undergoing a $1.5B expansion. He has reduced supply expense in twenty four months by over $10M, while reducing FTEs by over 10%. Prior to serving with Texas Children’s Hospital, he served as the Corporate Assistant Vice President for Supply Chain Pharmacy Operations for the largest for profit healthcare system in the country. He was responsible for a $1 billion corporate wide supply chain initiative for over 180 hospitals. The initiative included enterprise wide; automation standardization, centralized purchasing, centralized warehousing, centralized distribution, centralized physician order entry, industry setting vendor relationships and overall optimization of the pharmacy supply chain. Savings estimates were projected at $30 million per year.
Prior to that position, he served as the Regional Vice President of Material and Contract Management for a six facility healthcare system in the fifth largest city in the country. In less than one year he saved over $3M (primarily thru contract negotiations and maximization, standardization, optimization and system leveraged volumes) to include:
Hard savings
Blood palette savings: $380K
Dade lab contract savings: $250K
LabCorp (Top 100) savings: $100K
McKesson standardization savings: $60K
PHP LabCorp savings: $324K
Baxter IV pump savings: $400K
Cordis stents, 200 units X 445 x 12 months $1,068K
Hill-Rom specialty beds optimization $40K
Hill-Rom Supplemental specialty credit: $88K
AGFA radiology film standardization $100K
Standard Register forms standardization $200K
Cardinal Lab Standardization $30K
Soft savings
Facility storeroom standardization
Med-surg formulary initiatives
Healthtrust Purchasing Group Supply Expense initiatives
Developed Supply Management Action Teams at the facilities and in functional areas to include Lab, Rad, Forms, Food Service, Pharmacy
Prior to the regional VP position he served as a Regional Supply Chain Officer for one of the twelve divisions of the largest for profit healthcare system in the United States. He was responsible for Division (Market) Based Procurement, Division Clinical Standardization, Consolidated Service Center Operations, and 14 facilities Supply Chain Operations. In this capacity he had overall responsibility for a $290 million annual supply budget for 14 hospitals representing some 2800 plus beds that had approximately $1.5 billion in annual revenue and responsible for Bio-Terrorism readiness.
As a Regional Supply Chain Officer he managed approximately 150 employees. As the Divisional Supply Chain Officer he had complete responsibility for all regional supply contracts and contract compliance for all national agreements. He was also responsible for hundreds of ongoing standardization and cost reduction projects. Each of the 14 hospitals in the system sets its own supply budget, the Division Supply Chain Officer worked in tandem with the facility Supply Chain Director to set targets based on past performances and current standards. Monthly reports were analyzed from each hospital and supply chain benchmarks were established.
Division Supply Chain Officers are responsible for bringing value to the Supply Chain, supply costs historically averages 20-25% of each facility’s supply budget. Supply cost per adjusted admission is the standard most often applied, but due to Technology and overall growth in all divisions, rate and volume were equally evaluated. That number is broken down by category (technology, pharmacy, blood, commodities and rebates) and by total supplies. Annually supply cost management initiatives saved over $14 million.
He has been married to his lovely spouse, Valen, an accomplished writer for the past 29 years. They have five adopted children and one dog. They are active in their church, Boy Scouts, school and youth activities.
