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Supply Chain OperationsJourney to Preeminence

Indiana University Health

Indiana University Health is Indiana’s most comprehensive healthcare system. A unique partnership with Indiana University School of Medicine, one of the nation’s leading medical schools, gives patients access to innovative treatments and therapies. IU Health is comprised of hospitals, physicians and allied services dedicated to providing preeminent care throughout Indiana and beyond.

• Hospitals

– Total 20

• Patients

– Total Admissions 115,250

– Total Outpatient Visits 1,882,795

– Total Staffed Beds 2,889

• Staff

– Total Full-Time Employees 21,883

Mission, Vision and Values

Indiana University Health's mission is to improve the

health of our patients and community through innovation

and excellence in care, education, research and service.

We value:

• Total patient care, including mind, body and spirit

• Excellence in education for health care providers

• Quality of care and respect for life

• Charity, equality and justice in health care

• Leadership in health promotion and wellness

• Excellence in research

• An internal community of mutual trust and respect

Agenda

• Current Environment/Challenges

• Service Line Commitment Alignment

– Developing Metrics that Drive Change

– Managing External Factors/Communication

– Thinking and acting like a system

• Physician Council: Collaboration around the patient

– Aligning Incentives: Value = Patient

• Success Criteria

Current Environment/Challenges

• Hospital payment reductions

• Value-Based Purchasing

• Accountable Care

• Penalties for high readmission rates

• Promoting better quality, while avoiding unnecessary

costs

Creating a Patient Centered Model

• Promoting value and quality for our patients

• Improve quality and cost for delivery‐system

components

• Coordinate consistent care and services across the

system and reduce variation

• Assess and manage population health risk

• Reimbursed based on savings and quality = Value

Service Line Alignment

• Define system objectives, goals and formulate system

strategy

• Review data, compare against national benchmarks

and determine opportunity

• Establish Roles & communication plan

• Develop multidisciplinary team which includes

physicians, nurses, supply chain and system leaders

• Anticipate outside factors/ influences

– Identify conflicts of interest

– Relationships with manufacturers

Strategy

Price Decrease: Based on Benchmarking data, when we

consolidate and standardize as a system our buying power for

price reductions improves

Utilization/Best Practice:

• Patient Outcomes

• Evidence Based Product Review

• Process Efficiencies

•Procedure supply waste reduction

Total Value Components

DEFINE

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Quality Outcomes / Patient Care

• Reduced Errors

• Reliable, accurate, repeatable processes

• Build and track metrics

Responsiveness

• On-time every time

• Flexible to meet changing demands

• Rounding

Cost

• Reduced Variation

• Better information management

• Without sacrificing quality of care

What is the role of Supply Chain

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What is the role of Supply Chain

• Exceptional Service - Enhancing Patient Care

• Reducing cost of products, services & equipment

– Working with clinical staff and physicians

• Supporting the local community

– Partnering with local charter school

– Helping families and organizations in need

– Diversity Business Focus

• Communicate, developing tools & monitor progress

• Celebrate successes!!

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Leadership Model

1. Create a shared vision

• Enlist your teammates in a shared vision for the future

• Connect your goals and activities to that vision

2. Be explicit about values

• Be clear on the organizations values and your values

• Publicly connect behavior to those values

3. Set high standards

• Any game is worth playing is worth winning

• Bring your best to every project, meeting, call, etc

4. Take ownership for the whole

• Think and act as if you ran the whole company

• Be an active advocate on behalf of other departments and peers

5. Develop & Enable great teams

• Set high standards and actively coach and develop your teams to them

• Reward high performance and be candid with underperformers

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Leadership Model

6. Ensure clear focus & process

• Seek to hone your focus on what is most important (vs. only urgent)

• Ensure management processes support this focus

7. Take personal accountability

• Each commitment you make reflects your word and reputation

• Take public ownership when you fall short of a commitment

8. Execute relentlessly

• Habits shape culture - follow through on each commitment big and small

• Practice habits that drive execution - agendas, recap notes, follow-up

9. Communicate constantly & candidly

• Leadership requires consistent, regular communication

• 360 degree candor is vital to a performance culture

10. Celebrate success & have fun

• Positive recognition fuels performance and shapes cultures

• We all work too many hours to not enjoy each other and have some fun

Who are our Customers?

• Our patients

• Our patient’s families

• Our community

• Those who care for and serve our patients

Supplier Management System

• Who are our Partners?

– Distributors:

• Medline– Logistics/Medical Surgical

• Cardinal– Pharmacy Distribution

• Sysco– Food & Nutrition Distribution

• Fisher Scientific– Laboratory Distribution

• Guy Brown– Office Supply Distribution (Diversity)

• D2P – Furniture Distributor (Diversity)

– Manufacturers:

• Medtronic - Cardiovascular/Ortho Manufacturer

• Boston Scientific - Cardiovascular

What do our Customers want?

• The right products and services (Accuracy)

• When they are needed (Timeliness)

• With the best design to do what is needed (Quality)

• To do all of the above at the lowest cost (Cost)

• To be informative, helpful, and supportive (Customer Satisfaction)

Service Design, Management

& Improvement Model

PLAN

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What do we do with Customer

Requirements?

– Negotiate Contracts (Products, Equipment & Services)

• Involve physicians/clinicians in product evaluation process

• Work with facilities/divisions leadership to understand product/service needs

• System wide pricing

– Develops and maintains supplier relations and service levels

• Manage Sales Rep visits, behavior and ethics

• Manage Supplier Communications

• Evaluate Supplier Fill Rates, Deliveries, Invoicing Issues, Pricing, Contract Compliance

– Purchase Supplies and Services

– Support Inventory Control, Equipment, Crash Carts, Mail, Laundry Services

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Supply Chain Decision Making Factors

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Position Your Data for Success

– Review and understand the data

– Physician/clinician involvement in product decisions

• Guide decision making process

• Soliciting input on alternative products balancing quality, price & outcomes

• Begin to formulate product strategy

– Identifying savings & compare against national benchmarks

– Develop reports to track results. E.g. Price per unit, Buy Right, Supplier Market Share

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Transparency/Benchmarking

DESIGN

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Design and Strategy• All processes are explicitly mapped and evaluated for efficiency, and

effectiveness.

• Initiative Negotiation Strategies are created with the input from physician/clinicians before negotiations with vendors.

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Ortho Trauma Negotiation StrategyOverall

Strategy_______________________________________________

Impact Estimates and Key

Assumptions_________________________

Key Challenges to

Impact_____________________________________

Mitigating

Actions____________________________________________

Current

Status______________________________________________

Topics for

Discussion_____________________________________

Addressed Spend: $10.81M Total Impact Goal: $2.27M

Bloomington Spend: $ 1.37M Bloomington Goal: $ 315K

Key Assumptions/calculated methodology:

• All IU-Health facilities to receive same pricing

• No promise to shift market share

• Vendor recognition of IU Health as a system

• No promise of increased market share to vendors

• Synthes dominates our market and might feel comfortable

• Owned vs. consigned inventory- will vendors partner for consignment?

• Resolve differences in contract terms and price structures across

the system

• Identify key stakeholders and involve in decision-making process

• Grant “preferred vendor” status on e-Req to provide visibility of most

competitive pricing in the IU Health system to end-users

Completed Tasks:

• Market Share Analysis and VHA benchmarking

• Savings Opportunities identified by category, vendor, and facility

• Xcelsius Report to show savings opportunities

Next Steps:

• Communicate strategy to surgeons and OR management

• Send RFP to vendors (bids due by 8am on 2/21/11)

• Analyze RFP data

• Physician preferences for product/vendors (internal and external

fixation)

• Strategy with vendors during RFP bid period

Achieve cost savings on orthopedic trauma implants

Include all IU Health facilities in current initiative

Compile savings opportunity data based upon market intelligence and

benchmarking

Present cost-savings opportunity to administrators at each IU Health

facility to garner support for initiative

Present cost-savings opportunity to physicians in order to collaborate for

creation of system-wide strategy

Notify vendors of Ortho Trauma Initiative and send RFP

Prepare Cost Analysis based on vendor bids; collaborate with physicians

and nursing leadership to identify opportunity

Negotiate with vendors to meet and/or exceed the identified savings

target

Grant “Preferred Vendor” status to vendors with most competitive pricing

for the purpose of the e-Requisition tool

Implement new 3-year agreements with participating vendors

ASSESS

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Opportunity Assessment

• IU Health Supply Chain Operations (SCO) prides its self on being a data driven decision making organization, and it shows in the advanced, interactive tools that are created for the decision makers.

• Interactive What-if analysis are created for savings initiatives so that SCO decision makers, and clinical stakeholders, can assess the impact of different scenarios on the savings opportunity.

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Stent Market Share

What if analysis

Ortho Total Joints

MEASURE

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Manage & Control Your Supply Chain

• Manage vendor compliance, market share to negotiate pricing terms

• Manage end user compliance to preferred item lists

• Identify contract vs. non-contract items at point of purchase

• Capture all spend through off catalog ordering function

• Track spend by:

– Department

– UNSPSC

– On and off-contracted spend

– Vendor

– Diversity

• Establish a Cost Management/Margin Enhancement program to support achieving a increase on cost savings/cost avoidance results

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What do we Measure?• Diversity Report: Tracks Tier 1 & 2 performance by facility, department and

supplier

• Supply Chain Ratio: Total Supply Expense/Total Net Revenue.

• Price Per Unit: Total Supply Expense/Number of Units. (Illustrates realized savings by product category)

• Hospital Price Index: External price benchmarking tool

• Buy Right: Measures percentage of purchases made on preferred products. (Tracks performance to preferred products and or suppliers)

• Inventory Efficiency Metric: Compares inventory usage against current inventory levels. (Measures how well we manage the inventory levels against utilization).

What do we do with Measures?

• We use it at a tool to evaluate performance against our established goals

• We look for trends, both positive and negative

• We communicate and work with those leaders and entities where improvement and focus is needed

• We use the Plan, Assess, Design, Measure model to identify opportunities and improve processes

Supplier Diversity

Supplier Diversity Plan• Tier 1 and Tier 2 business relationships with M/V/WBE suppliers who

provide quality, cost-competitive products and services

• Leadership Team Meetings:

– Review monthly Supplier Diversity reports and communicate opportunities

– Encourage making Diversity spending the 1st thought instead of last

• Conduct Targeted Outreach Sessions

– Creates “small group” atmosphere for individual departments to communicate with vendors that provide specific goods and services for them

• Design and Construction

– Raising the bar on an already successful initiative. Seeking 18% MBE and 5% WBE participation

Financial Metric Tracking

Initiative Metric Tracking - PPU

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Supplier Service Levels

– Supplier Service Levels

• Backorder and price integrity

• Product recall

• Help Desk established to collect and trend service level activity

– Market Share Reports

• Established process for tracking product conversions

• Shows supplier commitment to program and leads to lower price points

• Strengthens partnership and opens additional opportunities

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Order Efficiencies / Internal Controls

– Maximize online order entry and reduce rework in Order Processing and Payment

• EDI - Ensure correct products are available for online ordering

• Accurate real-time product and pricing information- Item File

• Price/Product discrepancy resolution prior to invoice

• Backorder / Product Recall resolution

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EDI Rejections by Type

End of year

contract expiration

-

44%-

55%

-

68%

Arnett Cass

Building IV

Solution

-64%

U

B

U

IMPROVE

Technology Driven ERP Process Improvement

Improving the Patient Experience

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• Improve clinical quality

• Reduce adverse events and improve patient safety,

• Encourage more patient-centered care by rounding

• Avoid unnecessary costs in the delivery of care

• Stimulate investments in structural components or systems-such as IT

capability and care management tools and processes that have been

proven effective in improving quality and/or efficiency

• Make performance results transparent and comprehensible so that

consumers can be empowered to make value-based decisions about their

health care and to encourage hospitals and clinicians to improve the quality

of care

E-Requisition

Custom built advanced online ordering portal built on top of Lawson ERP to enhance user experience that pushes valuable purchasing information to departments and helps drive product compliance.

• Acts as a communication tool for Supply Chain to disseminate key information to end users.

– Material Safety Data Sheets (MSDS)

– Equipment Specification Documents

– Products substitutes

• Drives standardization by linking non preferred products to the product standard thereby driving compliance and savings.

– Communicates preferred products

Preferred

products

are sorted

to the top

Information display used to

link to replacement

products. i.e.. Backorders,

obsolete products, non

preferred

Click to Chat = Increase Service

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Instant

service for

end users

Information Dissemination Through Ordering

Mobile Supply

Chain

Management

(MSCM)

Mobile Supply Chain Management (MSCM)

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• Has accelerated the delivery of purchase order (PO) and non-PO packages

to their final destination.

• Streamlining the entry and management of data through bar-coding and

coordination with other Lawson Procurement applications.

• Decreasing the number of lost packages and thereby lowering the costs

associated with staff searches, unnecessary reorders, and excessive

inventory levels.

• Reducing the time and effort needed to conduct issues and returns, while

lowering the potential for errors versus manual entry.

• Eliminating or decreasing staff overtime.

• Enabling requesters to track their deliveries from their computers, using a

web browser.

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MSCM

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MSCM: Receiving

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MSCM: Delivery

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MSCM: Tracking

FUTURE

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Physician Variation

Success Criteria: Supplier

• Work collaboratively with health system to capitalize

on system-wide agreements and throughput.

• Focus product development on evidence based

outcomes for the patient versus focusing on nice to

have features and increasing volume

• Work collaborative with health system to prove out

value statement to patients

Success Criteria: Physician

• Physician participation and leadership is critical to

improving processes and efficiencies as we move

toward an accountable care model

• Partner with physicians by sharing data and jointly

developing strategy and engagement

• Develop organizing regional redesign teams to help

implement improvement processes

• Developing measures and analysis of quality and

patient satisfaction data

Success Criteria: Administration

• Develop clear system objectives and rules of

engagement

• Transparency: Keep physicians and facilities engaged

throughout process in order to control messaging and

direction

• Physician, Facility and System alignment is a key

success criteria

• Spend time with Physicians to understand needs and

value points to patients. E.g. Operating Room, EP

• Hosting ongoing summits to help educate and engage

physicians and quality teams in the process

Thank You!

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