New Supply Chain Technologies Jack Colletti 9.30.09

Quotes of the Day…

How do we the Healthcare Supply Chain? -ize

The Healthcare Supply Chain: The Good, the Bad & the Ugly

How Healthcare Purchasing Really Works Suppliers - Not Approved Purchasing Dept. AP Paper Requisitions Paper Disbursement Requests Location Purchasing ERP system Approved Suppliers Healthcare purchasing organizations struggle with waste and inefficiency and are slow to adopt enabling technology. Opportunity ERP system Manual Invoices & Payments Manual P.O. Manual Invoices & Payments

Typical Environment Internet Item Master ~85% of Transactions ~15% of Transactions Supplier Connections

Data Management / Standards

Resources

Punchout Projects? Lack of IT resources is stalling (or has killed) many punchout projects.

GPOs…

Special Requests volume is high = significant opportunity area. Specials Non-Catalog Ad Hoc Write-Ins Non File

Invoice Automation

User Experience…

Strategic Sourcing?

Best Practices?

Clients Solutions

$7.9 billion in assets $7.0 billion in revenue Leading integrated health care system in Pennsylvania; one of the largest and most diverse in the nation 48,000 employees; second largest employer in Pennsylvania; major force in local economy ▪ Hospital – 20 tertiary, community, and specialty hospitals ▪ Physician – more than 4,000 physicians with privileges at UPMC hospitals including about 2,300 employed ▪ Community Provider Services – extensive network of rehabilitation, home care and senior services ▪ Insurance – products covering commercial, Medicare and Medicaid segments, EAP, Behavioral Health (1.3 million covered lives in Health Plan) ▪ International and Commercial Services Division – commercial and international ventures that leverage UPMC’s core competencies, intellectual capital, and management expertise On a typical day at UPMC 2,600 patients 1,000 people use emergency departments 8,000 are treated in outpatient facilities 1,200 receive services through home health programs Annual patient activity at UPMC More than 3,350 licensed beds More than 182,000 admissions More than 3 million outpatient visits More than 400,000 emergency visits More than 130,000 surgeries More than 1 million home care visits Our Lab…

$7.9 billion in assets

$7.0 billion in revenue

Leading integrated health care system in Pennsylvania; one of the largest and most diverse in the nation

48,000 employees; second largest employer in Pennsylvania; major force in local economy

▪ Hospital – 20 tertiary, community, and specialty hospitals

▪ Physician – more than 4,000 physicians with privileges at UPMC hospitals including about 2,300 employed

▪ Community Provider Services – extensive network of rehabilitation, home care and senior services

▪ Insurance – products covering commercial, Medicare and Medicaid segments, EAP, Behavioral Health (1.3 million covered lives in Health Plan)

▪ International and Commercial Services Division – commercial and international ventures that leverage UPMC’s core competencies, intellectual capital, and management expertise

On a typical day at UPMC

2,600 patients

1,000 people use emergency departments

8,000 are treated in outpatient facilities

1,200 receive services through home health programs

Annual patient activity at UPMC

More than 3,350 licensed beds

More than 182,000 admissions

More than 3 million outpatient visits

More than 400,000 emergency visits

More than 130,000 surgeries

More than 1 million home care visits

Opportunities for Cost Reduction

Web Based Requisitioning

Web Based Requisitioning Key Components: Purchasing (Req to Pay) Request for Quote Inventory Barcode Activity Tracking Document Sharing Reports / KPI / Matrix / Analysis

Key Components:

Purchasing (Req to Pay)

Request for Quote

Inventory

Barcode

Activity Tracking

Document Sharing

Reports / KPI / Matrix / Analysis

Web Requisitioning Platform – Process Flow User Creates RFQ Selecting Predefined or New data Qualify Internally Review/Approve through a Flexible internal Process Send for Quote(s) Recipients are auto-notified and capable to review Request Recipient Quotes Recipient provides detailed breakdown and additional files. Allowed to updated information anytime till cutoff date. Request For Quote Quote Analysis and Approval Quotes Received Selecting and Pre-Qualifying Quotes. Includes asking Recipient for more information. Requisition History Every Users Action, Messages and Files are tracked and visibly logged. Approval Process Free Flowing or Predefined Processes for Channeling a Requisition to finalization Convert to PO Quote is finalized (all participants are notified) and converted to PO(s) 90 Purchase Order PO Sent to Supplier Sent via Web Portal, e-mail, fax, SMS or Electronic Interchange Service Acknowledgement System Recognizes and records exactly when the Supplier received the PO Confirmation w/Changes Supplier Reviews PO details. Allows for Supplier to update necessary changes. ASN w/Changes Shipment Notice. Allows for Supplier to insert exact details. Receive Desktop Receive via web portal or Electronic Data Interchange Service. 3 point Matching occurs. Purchase Order Supplier Interaction Payment Posting a Payment File closing PO. Invoice Supplier generated from PO and ASN details. Release point controlled. Reporting, KPI, Matrix and Analysis Real-time Graphical Data

Supplier Portal Web based supplier portal View pending orders Execute Confirmations Initiate invoices Send ASNs

Web based supplier portal

View pending orders

Execute Confirmations

Initiate invoices

Send ASNs

Telecom Expense Management Services

Robust Content Management

Content is King June 2007: UPMC implementation 2008: UPMC grew significant supplier connections 2009: Ecosystem of content keeps growing, driving automation and compliance Print Shop

A Platform for Automation How the UPMC Marketplace Drives Efficiency GPO Catalogs eCommerce Capable Sites Internal Services / Specialized Processes Item Master Data Item master Item master Cancer Center Pharmacy Ops Drive UNSPSC or GS1 standards Built-in punchout price audit Local Hosted Catalogs

Drive UNSPSC or GS1 standards

Built-in punchout price audit

ROI Driver: User Adoption Users access ALL catalogs (including punchouts) from a single user interface: SIMPLE …intuitive, “consumer-like” FULL FUNCTIONALITY…federated search, item compare, etc. CONFIGURABLE views (categories, catalogs, fields, etc.) Content is king, but without users that are delighted and engaged, the project will fail. It’s critical that users be able to search, find the right item(s) quickly, transact, and get back to care delivery. ROI Drivers: See for yourself - Test drive the solution at ProdigoSolutions.com

Users access ALL catalogs (including punchouts) from a single user interface:

SIMPLE …intuitive, “consumer-like”

FULL FUNCTIONALITY…federated search, item compare, etc.

CONFIGURABLE views (categories, catalogs, fields, etc.)

Content is king, but without users that are delighted and engaged, the project will fail.

It’s critical that users be able to search, find the right item(s) quickly, transact, and get back to care delivery.

ROI Driver: Tools for Driving Compliance Once content is ramping and users are transacting, it’s critical to have tools to drive and maintain compliance, or ROI will erode. We empower the purchasing / materials management professional with the ability to: ROI Driver Audit Punchout pricing ROI Driver Control (via workflow) changes to hosted catalog content ROI Driver Disable catalogs or specific content in a recall or other scenario.

ROI Driver: Flexibility with Control Support REAL business conditions… FAST and EASY “change-out” (new source / new contract = new catalog) MORE suppliers go “online” every day In today’s healthcare environment, business requirements change, so you need a platform to be able to respond quickly and efficiently.

Support REAL business conditions…

FAST and EASY “change-out” (new source / new contract = new catalog)

MORE suppliers go “online” every day

In today’s healthcare environment, business requirements change, so you need a platform to be able to respond quickly and efficiently.

ROI Driver: Rapid Implementation Implementations average 4-6 weeks. Clients benefit from the roster of suppliers that have been enabled for UPMC and several Fortune 1000 clients.

ROI Driver: Low TCO/Predictable Costs Fixed Annual subscription fee Fixed Agent Fee No hardware costs No support costs No IT/Implementation costs Clients fund this game-changing solution from operations , not capital. Low Total Cost of Ownership : A fixed, predictable annual cost for managing content and supplier enablement allows internal resources to be redeployed for more strategic aspects of your mission.

Fixed Annual subscription fee

Fixed Agent Fee

No hardware costs

No support costs

No IT/Implementation costs

Thank you! Jack Colletti Direct: 205.225.9191 [email_address]