Highlights of 2012 Supply Chain of Excellence Award Applications
McLeod Health sought to reduce lost revenue by 50 percent and cut in half the time and motion nurses spend finding and gathering supplies. A Value Stream Analysis approach was used to develop a plan to be used throughout the IDN. By staying the course, McLeod Health has been able to surpass its goals and transform its supply chain.
How did they do it? The endeavor was a multi-step, multi-year process, beginning with the launch of an initiative to transform its supply chain into a more automated, service-oriented department. McLeod next gained C-Suite support and created a multi-disciplinary team consisting of supply chain, nursing clinicians, information systems and finance representatives with the goal of leveraging technology to build efficiency. Today, not only has McLeod Health surpassed its goals, it did so without terminations, allowing personnel to be reassigned to better opportunities.
Parkview Health sought to transform a very transactional materials management department into an organization that embraced end-to-end management of the entire acquisition pipeline.
Complicating this goal was the need to simultaneously undertake a major capital construction to create a Centralized Distribution Center as well as support two additional capital hospital construction projects and a major CFO cost initiative, all within an 18-month window.
The process involved a transformation to an “end-to-end” supply chain, in contrast to a more traditional transactional materials group. This necessitated a major organizational shift with purchasing and contracting functions being folded into the supplier relationship management department, along with products or consumable goods, capital medical and purchase service elements. Savings of $13M were among the many positive results of the transformation and capital construction projects.
St. Anthony’s Medical Center
Located in a highly competitive suburban environment, St. Anthony’s set out to become a Top 10 Cardiology Center of Excellence. But in addition to enhancing outcomes, St. Anthony’s sought to address the high cost of care by supporting relationship building between medical center physicians and supply chain.
The driving force behind the success of the initiative was the Cardiology Supply and Contracting Committee. Physician representatives from cardiology, interventional radiology, electrophysiology and peripheral vascular, along with the director supply chain, business director of cardiology and key clinicians helped ensure the committee’s ability to gain organization-wide support. The reward for the effort was an initiative that utilizes a true partnership between physicians and facility to drive down supply chain costs.
UCSF Medical Center
Deepening the relationship between supply chain and nursing and support services was at the heart of the initiative undertaken by UCSF Medical Center. In addition, UCSF hoped to update its purchase order submission process, eliminating inefficiencies and introducing standardization, in order to reduce soaring costs and inconsistent customer service.
A very important step in the process was to listen to nurses and support staff that have direct patient contact, and are able to help prioritize areas of concern. This exercise spurred UCSF to take a tiered approach, tackling highest priorities first. In addition, the initiative was successful in streamlining areas such as procurement and shipping. Due to the initiative’s success in relationship building and its ability to generate excitement, supply chain is now respected and throughout the organization.
University of Mississippi Health CareUMHC set out to become the provider of choice in the state of Mississippi while also providing the highest quality of care at the lowest total delivered cost. Its supply chain was tasked with developing an innovative solution to address the need for cost savings and efficiency. The process began by identifying key stakeholders.
One of the most important undertakings of the initiative was to create processes and guidelines, engaging senior leadership throughout the organization and ensuring buy-in from front line clinical managers. UMHC’s initiative resulted in over $2.1M in savings, as well as stronger strategic partnerships, improved communication and a streamlined value analysis process.
Putting the emphasis back on the patient experience and the end users of the supplies, equipment and services necessary for patient care was the catalyst behind a two-year process to improve supply chain operations at Indiana University Health. The system undertook a major overhaul cutting across all divisions of supply chain operations and necessitating renewed relationships with other departments, as well as outside supply partners, distributors and GPOs.
The effort involved the combined energies of a number of initiatives stretching across all supply chain operations divisions. Changes and development in areas as diverse as technologies to process improvements to staff education provided the backdrop for mapping a new approach to supply chain operations that put the patient first. Improvements in areas like data management, metrics development and expanded reporting processes has help to assure that despite the strong focus on enhancing patient care, supply chain operations continue to reduce costs, improve customer service and build new supplier partnerships.
Doing more with less was the rallying cry for Johns Hopkins Health System as it sought to meet the demands of reduced spending, expanded affiliation responsibilities, staff loss and the largest construction project to be undertaken by a healthcare system. Out of such challenges came innovation. As a self-contracting procurement department, supply chain operations at Johns Hopkins engaged a third party internet-based bidding forum in an effort to stay competitive in the marketplace.
Incorporating new technology into its process brought with it some unique challenges, including a great deal of skepticism among stakeholders. Positive outcomes, such as savings yielding an average of 23 percent, have been helpful in maintaining necessary buy-in.
Thinking outside traditional boundaries is the hallmark of the supply chain innovation undertaken by Northwestern Memorial HealthCare. When it appeared the healthcare industry might be lacking in the technology solutions Northwestern Memorial needed, the system expanded its search, ultimately identifying a new partner from outside the healthcare industry.
Northwestern Memorial created a project in 2010 designed to address costs in the distribution channel. The chief goals of the project were to optimize inventory levels, eliminate waste, maximize charge capture, minimize nursing time spent on supply management, and automate inventory processes. In addition, to financial gains, the initiative launched a stronger multi-disciplinary approach to supply chain delivery, assures appropriate inventory is always available and has allowed nurses more time for patient care.
Orlando Health Inc. sought to develop a successful inventory planning methodology that supported its key performance metrics for its new self-distribution model.
Making use of its demand forecasting tool allowed Orlando Health to not only meet its clinical goals, but also its financial objectives, both internally and externally. The ability to utilize meaningful data, based on true consumptions and effective projections, has helped to balance the needs of clinical teams and vendors alike. The tool also is an asset in building partnerships within the industry, offering vendors valuable information and helping to establish trust. Orlando Health supply chain operations more clearly identifies itself as having a core competency in managing inventory. This initiative has helped clinical teams spend less time on supply inventory and more time caring for patients.
Eliminating utilization variances and engaging physicians were just a couple of the goals when Banner Health incorporated supply utilization into the system’s strategic initiatives in 2010. The transformation was not focused wholly on the supply chain division, but is working toward whole cultural transformation.
The initiative fostered greater collaboration between physicians and supply chain to decrease supply utilization per procedure by reducing physician-sensitive procedurally related supplies. The initiative surpassed its 2011 base target of $2M and stretch target of $2.8M in supply savings in the cath lab or supply expense. As it continued to engage leadership, three regional VP CFOs were added as core team members and a 2 percent supply reduction was removed from the 2012 budget.
Like many healthcare providers, increasing financial challenges are having a negative impact on Memorial Hermann’s operating income. Memorial Hermann’s supply chain management department set out to make itself even more instrumental in creating greater accountability and improving the sustainability of processes as they related to supply spend.
Partnering with VHA, Memorial Hermann took a cross collaborative approach to reduce its supply expenses with a target of $30 million in identified savings guaranteed to be achieved within a 24-month period and with the risk shared by both organizations if the goal was not achieved. About 11 months into the effort, the goal had been exceeded. The team currently has identified savings of over $45 million.
Save money, live better. That’s Walmart Corporation’s theme and may not have been far from what Mercy/ROi had in mind when it took a page out of the big box discount store’s playbook. When the changing healthcare environment caused Mercy to impose a system-wide mandate to reduce operating expenses by $400 million and increase margin by 3 percent over the next five years, ROi, Mercy’s supply chain division, was ready to look far and wide for solutions.
It was WalMart’s innovative use of scanning technologies in all areas of its business that stood out. The practice forced product data synchronization with all its trading partners. It was this process that provided the framework for Mercy’s GS1 standards-enabled perfect order project. Among the positive results? A 73 percent reduction in purchase order discrepancy.
New York City Health and Hospitals Corporation faces severe financial deficits, with more than a $1 billion shortfall annually beginning in 2011. The situation necessitated a new way of operating its facilities and caring for patients.
The Road Ahead is HHC’s restructuring initiative designed to help the organization become a more cost-effective, more efficient, and strong organization. The initiative engages staff from all departments. The effort has surpassed expectations with $8M in savings and the expectations it will hit $21M by June 2010.
Sisters of St. Joseph of Orange (St. Joseph Health System) needed to reduce overall costs over the next five years and reduce supply cost by $27.4M in the first three years. The supply chain value imperative initiative transforms a traditional model to a clinically driven model, increasing effectiveness, ensuring appropriate production utilization and creating standardization. The initiative focuses on executive buy-in and physician engagement, as well as collective buying power to drive down pricing of physician preference, clinical and commodity prices.
SJHS is now on track to surpass its savings goal of $27.4M in three years. I addition, it has established a process that engages physicians, clinicians, materials management staff and executive members of the ministry at the system level to continue to drive savings while improving clinical outcomes. SJGS characterizes its process as an alternative to full vertical integration.
UPMC needed to address significant challenges related to managing and controlling its services-based spend. With half a million dollars spent on services, there was enormous opportunity for improved compliance. Invoice activity was not automated for the most part, leaving either paper-based invoicing or none at all.
To address the situation, UPMC first customized, then implemented the PeopleSoft Services Procurement module. In addition, UPMC developed necessary related business processes and deployed an externally facing supplier portal to increase control over services spend and meet other objectives of the transformation. The result has been automated invoice processes for both UPMC and supplier. UPMC predict that for every 50 suppliers onboarded, UPMC can expect $3.5M in annualized hard dollar savings.
Cooperative Services of Florida saw the potential for improving efficiencies and reducing costs of purchasing cardiac rhythm management (CRM) implants. A logistical reengineering of the CRM process got officially under way with an initial $10M stocking order on October 2, 2009. CSF was able to negotiate dual source manufacturers that allowed it to secure pricing that was better able to contribute to future efficiencies and collective benefits.
Though faced with the additional challenge of establishing and implementing a distribution policy and procedures to obtain high quality service and program sustainability, CSF has been able to report major and minor savings have added to a value creation of over $10 million in its first year.
The Texas Purchasing Coalition identified five historically difficult supply categories as holding potential for cost reduction: suture, endomechanicals, trocars, mesh and topical skin adhesives. However, pricing had traditionally been controlled by suppliers with nearly automatic yearly price increases.
Contract strategies were developed in collaboration with TPC's supply chain partners, followed by collaborative implementation across the TPC membership. Once the best value opportunity was identified, it became the standard across TPC. Savings across the system on this $14M spend is approximately 20 percent on a recurring basis.
Leaders from seven IDNs came together back in 2007 with the VHA Upper Midwest office to discuss the creation of a regional purchasing model, the Upper Midwest Consolidated Services Center. The goal was to address some of the issues faced by providers and their GPOs in gaining stronger contract value, and addressing the need for supplier and product standardization.
The results have exceeded member expectations with UMCSC negotiating and approving over 200 product agreements and savings have surpassed $75M. Members have averaged 12 percent savings per agreement. UMCSC's geographical reach has grown from eight states to 18 states since its creation.
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