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Transforming operations
- 1. Transformational value based clinically integrated supply chain management Atiq Rehman, MD Chairman Medical Economics Committee Trinity CV Board Member to Health Trust Group Director Minimally Invasive CV Surgery Co-Director Transcatheter Valve Therapy Director Performance & Improvement
- 2. Healthcare Challenge Financial Pressures Advances in Technology Drive for Standardization Minimal Transparency Lack of Data
- 4. Why talk about Supply Chain Supply chain is the fastest growing sector in healthcare #2 cost is product and supplies (35-40% of HS budgets ) Next 5-7yrs it will be the #1 cost to hospital systems
- 5. Levels of SCM Functional SC Optimizational SC Transformational SC
- 6. • SC viewed as product pipeline • Aim: supply hospital with required products • Focus: Operations Functional Level • Hospital wide approach • Utilize spend analysis and standardization to support procurement • Characterized by close collaboration between health & non- health professionals • Focus: Cost & Efficiency Optimizational Level • Patient-centric approach • Implement lean materials management • Judge products based on their contribution to organizational & clinical goals • Focus: Cost, Efficiency & Quality Clinical Outcomes Transformational Level
- 8. Lack of Physician Engagement
- 10. Neo Value Analysis (S2V) Value= Patient Efficacy Cost Societal Benefit Safety Quality Experience
- 11. Balancing New Technology Emerging Technology Expense Management Financial Impact Inventory Automation Contract Negotiation & Management Standardization, Product Selection Clinical Outcome Efficacy Safety Evidence based
- 12. Challenges for the Current System SC • Lack of Standardization & Physician Preference Items – Surgical Valves, Joint prosthesis, hernia meshes • Excess and expiring inventory – Requiring a rigorous review and automation • Contract Compliance & Maximization Contract Compliance: Cardiac DES, Cardiac Balloons; dual source Abbott and Medtronic Contract Maximization: Heart Valves, ICDs and pacemakers, Vascular grafts
- 13. Opportunity Loss Past 6 months annualized non-compliant spend Total spend Non Compliant Spend Drug Eluting Stents $ 14,524,610 $ 181,510 (1.24%) Bare Metal Stents $ 1,308, 400 $ 13,500 (1.03%) Coronary Balloons $ 3,104,484 $ 370, 054 (11.91%) Total Spend $ 18,937,494 Compliant Spend -$ 18,372,430 Opportunity Loss (Non-compliant spend) $ 565,064 (2.98%)
- 14. SC Chaos without Automation
- 15. IT & Automated Systems • Critical for hospital SCM organizations to invest in comprehensive IT systems. • SAP and Oracle
- 16. Dell SCM
- 18. Consequences of Lack of Automation • Inaccurate catalogue and pricing data • Complex & manual usage capture • Multiple usage records • Economic Consequences – 7% revenue leakage – 12% invoice discrepancies – 12% overpayment
- 19. Medical Economics Team (MET)) (A collaboration between Clinical, Finance & Supply Chain) MET Clinical Product Users Supply Chain (Vendor management, operations & contracting knowledge) Finance (Cost benefit knowledge)
- 20. Composition of MET Physician Chair Physician Subspecialty Expert Hospital SCM member Finance Representative Director Strategy Supply Chain
- 21. New Technology/Products Process • Physician Champion to provide info himself or designated person • Vendor to provide info • 1 month lead time for committee to review • 2 weeks prior committee to virtually start exchanging notes • 1 week prior ask more info as needed • Date of meeting decision (yes, more info, no)
- 22. Five critical factors for building a successful MET Executive Support Accountability Clinical Champion Process Communication
- 25. Corporate MET Role • Evaluation of all new products • Evaluation of capital items • Standardization of products across system • Coordination with RHM- MET/ Regional- MET • Coordination with HPG- MET • Education & engagement of RHM physicians
- 26. Pitfalls & Challenges • Lack of executive leadership support • Supply Chain specific challenges: – Credibility among physicians – Gaining and maintaining C-Suite support – Implementation standardization – Measuring success outcome – Adherence to standard operating procedures – Consensus among MET members – Maintaining flexibility in contracts to adopt innovative solutions
- 28. Physician specific challenges – Decision based on preference and not evidence based (PPI) – Apathy; multiple hospitals – Lack of alignment & interest – Time – Changing perceptions since MD oblivious of cost issues
- 29. Proposed Steps for SCM • Establish MET at all RHMs • Set up meeting schedule for each individual RHMs (perhaps initially once a month and then every other month) • Establish Regional (Mid Atlantic)MET (meeting quarterly); These could be either be held virtually or on a rotational basis on site between each RHM • Local MET will correspond with Regional MET which may further correspond with Corporate MET, as needed
- 30. Further Steps • Local RHM MET to review any new product (including a new generation of an existing product) • Regional MET to review products $1000 and above or any lower dollar high volume product which a local RHM wants to be reviewed at a regional level • All ‘Capital’ purchases need to be referred to Regional RHM for either review, comment, Group S2 contracts or guidance from Corporate RHM
- 33. 3Ps of Trinity ONE Population Health Management Partnership with Corporate Consumers Trinity ONE Partnership with Payers
- 34. Change , before you have to ! Jack Welch
- 35. Execution • Two-thirds of transformation programs fall short of their objectives • Senior executives understand intellectually what needs to change to improve performance, and clever consultants design a future operating model that looks foolproof on paper; still they fail • Where change fails is in the Execution! • Strategy& Change Management Survey, April 2008
- 36. Shinkansen