VHA Award 071206 rev
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Transcript of VHA Award 071206 rev
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Community Health NetworkEnhancing the Value of Value Analysis Using the
VHA Total Spend Analysis
Sheryl D. Joyner, M.S.W., M.B.A.
Network Director, Purchasing
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COMMUNITY HEALTH NETWORK• Five acute care hospitals.
• Seven surgery centers.
• Five urgent care centers.
• 165 family practice providers.
• 50 ancillaries.
• Largest expansion in the Network’s history.
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• Bring enhanced value to value analysis.
• Attain a reduction in supply expense by $3 million for FY 2006.
GOALS
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CHALLENGES• Single value analysis team creating a long cumbersome
review process that was often undocumented.
• Lack of formalized contracts management and administration to ensure contract compliance and best pricing for the same product throughout the Network.
• Manage our vendors instead of having our vendors manage us - too many “doors” for vendors to access our Network and circumvent Network Purchasing and value analysis.
• Physicians utilized technology that was unfamiliar to nursing staff thus affecting the quality of patient care.
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CHALLENGES cont’d
Old process:Vendor with new product/technology→Physician→Patient→
Clinical Staff→Value Analysis→ Buyer/Contracts
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IMPROVEMENT PROCESS• Network Purchasing reorganized to support Network’s
service line strategic approach.
• Contracts Manager was hired to oversee all contracts negotiations, contract language review and Vendor Certification program.
• Vendor Certification was initiated to include vendor education that focused on how to conduct business within the Network.
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IMPROVEMENT PROCESS• Policies were revised to include:
“All vendors bringing in supplies or equipment in the Community Health Network without the proper authorization from the Network Purchasing Department should consider such items as a CONTRIBUTION to the Network, and will not be reimbursed.”
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VALUE ANALYSIS• New Technology Analyst was hired to serve as the primary
point of contact for all new products and new technology.
• Established value analysis as the deciding body for the introduction of new products and technology into the Network.
• Teams identify product substitutions and deletions that would result in bottom line savings.
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VALUE ANALYSIS• 16 value analysis teams were established to support our
service lines.
• Service line value analysis teams were identified to include: • Behavioral Care Orthopaedics
• Interventional Radiology Cardiovascular/Pulmonary
• Rehabilitation/Wound Ostomy Family Practice Physician Groups
• Respiratory Medical-Surgical/ICU
• Surgery Bariatrics
• Women and Children
• Emergency Departments/Urgent Care
• Neurology
• Oncology
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RESULTS• Over 1,600 vendors have participated in Vendor Certification
education sessions.
• Our New Technology Analyst screens products before introduction to our clinical staff.
• Initiated strategic pricing in major procurement initiatives.
• Increased the involvement of physicians in the procurement of products and services.
• Enhanced data capture and measurements from our value analysis teams.
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RESULTS cont’d• Network Purchasing is now on the front-end of new product
and technology introductions.
New process:
Vendor with new product/technology→Vendor Certification→ New Technology Analyst→Buyer→ Clinical Staff→
Physician→Patient
• More effective utilization of VHA tools such as the Total Spend Analysis, Contracts Manager and LOP Manager.
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TOTAL SPEND ANALYSIS• Analytical tool to analyze our organization’s spend against
Novation contracts.
• Identifies where we have maximized our spend and as well as the areas for improvement.
• Provides an immediate visual breakdown of our data that is easy to comprehend.
• Aids in establishing a roadmap or action plan to attain financial goals.
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GROUP 4: UNMATCHED ITEMS• Items include products and services that could not be
matched to a Novation contract.
• Examples include local janitorial or cleaning services.
• We are doing nothing with these items at present.
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GROUP 3: PACKAGING/PRICING• Products may be a match but could not be compared due to
differences in Units of Measure.
• Pulled these items and have corrected UOM in our Item Master.
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GROUP 2: REALIZED SAVINGS• Represents those products or services where we have either
maximized Novation pricing or negotiated better than Novation.
• We are hoping to increase this group.
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GROUP 1: POTENTIAL SAVINGS• Two categories within Group 1: Matched Items and
Substitutions
• Matched items are those products that we purchased through Novation but did not receive the best price.
• Substitutions are those items that we purchased but did not utilize Novation contracts.
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Substitutions• Substitutions have been pulled and categorized by the
different Value Analysis Committees.
• Committees will review and determine whether or not we should switch to a similar product through Novation or keep our current product.
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Matched Items• There are usually two reasons why we are not receiving best
pricing:
1) We have not signed the Letter of Participation.
2) We have not met the requirements for penetration. We are only taking minimal action if #2 is the
reason.
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Letters of Participation• Visit Novation Contracts Manager to determine whether or not
we need to have an LOP.
• Utilized the online LOP feature and downloaded missing LOPs.
• Working with our VHA Account Manager to get these completed.
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FY 2006 ANTICIPATED SAVINGS• Annual savings of $840,000 in Total Joint Implants.
• Total Spend Analysis identified approximately $650,000 in immediate savings that we are attempting to realize.
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FUTURE ACTIVITIES• Awaiting our next spend analysis report. We will run the
report every 6 months.
• Meet bi-weekly with our VHA Account Manager to ensure that we are current with LOPs and contracts.
• Implemented GHX to facilitate EDI transactions. Continue to add vendors for increased transactions.
• We are in the initial stages of a pilot project to link our Item Master to our Charge Master.