2. the value compendium is a product of hlc
For all Americans to enjoy the benefits of a high-quality, affordable, sustainable healthcare system,
innovation is vital. To conquer today’s health challenges, we need vibrant ideas and new ways of
thinking about healthcare delivery as well as the development of lifesaving and life-strengthening
medicines and technologies.
Fortunately, this type of innovation is happening every day all around us.
The Healthcare Leadership Council’s (HLC) Value Compendium is a compilation of private sector
initiatives that are generating improved care for patients while making our healthcare system more
cost-effective. The publication cites examples of important progress being made by members of
the HLC, a coalition of chief executive officers from all disciplines within American healthcare. In
these pages, you will learn of the breakthrough work being done by hospitals, integrated delivery
systems, pharmaceutical companies, medical device manufacturers, group purchasing organiza-
tions, insurers, distributors, and other key players in the healthcare continuum.
The HLC Value Compendium highlights new approaches to improving the quality, efficiency, and
safety of care. In these pages, you’ll discover successes with innovative payment methods, ben-
eficiary engagement models, visionary uses of technology, and new service delivery concepts. All
examples include quantifiable metrics to demonstrate the improved value they are generating.
And because improving American healthcare requires a collaborative effort by both the public
and private sector, we will be providing this volume to policymakers in the executive and legislative
branches of government. Leaders in Washington, D.C. are striving to improve the quality and value of
our healthcare system. The promising work outlined on these pages can serve as a catalyst, inspiring
nationwide progress in bringing accessible, innovative, top-quality healthcare to all of our citizens.
The members of the Healthcare Leadership Council are proud to share this publication with you,
offering a glimpse into the exciting and achievable future of American healthcare.
Mary R. Grealy Anthony R. Tersigni, EdD, FACHE
President President & CEO
Healthcare Leadership Council Ascension Health and
Chairman, Healthcare Leadership Council
3. Everyone agrees that the cost of healthcare in the United
States must be addressed. There is a consensus among
employers, government policymakers, and all sectors of the
healthcare system that the more than $2 trillion spent on
healthcare in this country could be directed more efficiently
and productively.
Simply cutting healthcare spending would be relatively easy.
The challenge comes in containing costs while still elevat-
ing healthcare quality, innovation, and accessibility. As 30
million newly-insured citizens enter the healthcare system in
the next few years, their utilization demands will make cost
containment more difficult—and more imperative.
The nation’s healthcare leaders believe this task is as achiev-
able as it is essential. Innovative reforms are taking place
right now, in venues throughout the country, to achieve
better outcomes, provide evidence-based care, and do so
at lower costs. For too long, the U.S. healthcare system has
been structured to reward a greater volume of services.
Now we have to switch gears to reward value. Getting
more bang for the buck isn’t just a slogan. It’s a healthcare
mandate for a time of unprecedented challenge.
4. 12 the value compendium is a product of hlc
Supply Chain Management Services
OVERVIEW
As the business behind healthcare, Cardinal Health is
committed to delivering inventive, cutting-edge solutions
to improve every aspect of supply chain management.
The modern hospital supply chain is designed to
maximize the quality of patient care, but there are often
inefficiencies that add to the cost of distributing medical/
surgical supplies.
Cardinal Health recognized these inefficiencies and
developed ValueLink®
Supply Management Services to
deliver products in a logical unit of measure, directly to
the points of care – reducing excessive touch points and
costs within the supply chain.
One of the numerous features within this service is
ValueLink®
Par Optimization, which further removes
excess supply chain activities and reduces the internal
cost of distribution by “right sizing” a customer’s
medical/surgical inventory levels and recommending
purchasing quantities at the point of care.
Utilizing a logical unit of measure distribution platform,
along with an optimized inventory level, Cardinal Health
has alleviated many of the inefficiencies in the modern
supply chain.
BACKGROUND
In 2007, Cardinal Health recognized the need for a
repeatable and sustainable data analysis process to help
customers manage the labor associated with servicing
their medical/surgical supply inventory.
As a response to this recognized need, the ValueLink®
Par
Optimization feature of ValueLink®
Services was created.
A suite of software tools was developed to help improve
a customer’s materials management staff efficiency, in-
crease product availability, and lower the cost of delivery
to points of care.
PROGRAM DESCRIPTION
Cardinal Health developed and consistently uses a series
of repeatable steps with every hospital that utilizes
ValueLink®
Par Optimization:
- Discovery and goal setting: Cardinal Health supply
chain experts work with hospital staff to understand
their short- and long-term goals. These goals provide
a roadmap to ensure the program qualifies to meet
the needs of the hospital and helps determine the
precise measurements needed to remedy supply
chain inefficiencies.
- Analysis and reporting: Demand data from each point
of care within the hospital drives the medical/surgical
supply chain. ValueLink®
Par Optimization analysis
begins with this demand data. Standard reports
arm each hospital with the tools needed to establish
rationale for their inventory stocking levels and reorder
process, plus the labor to support these functions.
- Implementation and tracking: With a hands-on
inventory management methodology, collaborative
approach to training, and report review with stake-
holders, Cardinal Health not only helps customers
control their newly improved supply chain, but offers
its expertise to teach inventory control practices.
Results are measured to ensure the hospital’s goals
are being met.
5. 13
SPOTLIGHT ON: MEMORIAL HERMANN
HEALTHCARE SYSTEM
Memorial Hermann Healthcare System is the largest
not-for-profit healthcare system in Texas. The Cardinal
Health and Memorial Hermann collaboration targeted
the supply chain to reduce costs and offset declining
reimbursement rates, while maintaining the health
system’s national reputation for quality initiatives.
Utilizing multiple solutions, including ValueLink®
Services,
Memorial Hermann experienced:
Nearly $20 million in savings on medical/surgical
purchases from 2005 to 2010.
99.5% orders filled correctly (contractually obligated to
98% fill rate).
99.9% accurate picking from more than 1.9 million
product lines and 28 million ‘eachs’ through the Cardinal
Health distribution network.
QUANTIFIABLE RESULTS
ValueLink®
Par Optimization affects the medical/surgical
supply chain in the following ways:
Average Central Supply inventory reduction of 20%.
Average reduction in supply purchasing activities (lines)
between 15-37%.
63% less likely to run out of product at the point of
patient care.
12% improvement in clinician satisfaction with the
supply chain.
The removal of non-moving supply inventory for better
space utilization.
Product availability at the point of use increased to 99.5%.
Improved materials management staff labor efficiency of
5.2 labor hours per day.
The removal of weekend supply deliveries to reduce staff
overtime.
THE VALUE-ADD
ValueLink®
Supply Management Services and
ValueLink®
Par Optimization deliver the most
efficient use of inventory and labor investment
dollars by aligning customer inventory levels and
the labor to manage the supply delivery schedule
with actual product demand. The improved impact
to product availability ultimately allows clinicians to
focus more on patient care instead of supply chain
maintenance. Furthermore, the long-term impact of
an optimized supply chain is an environmentally re-
sponsible approach to delivering the best in patient
care while minimizing our environmental footprint.
ValueLink®
Services and ValueLink®
Par Optimization
deliver the right amount of medical/surgical supplies
utilizing an optimal delivery schedule—resulting in
reduced shipments to the hospital.
1
2
3
customer
orders
Customer orders
products
electronically
departments
Products are
distributed to individual
departments
Inventory count
clinician
use
Optimized par
inventory levels through
Par Optimization
dynamic supply chain
Enabled by ValueLink® Services
and ValueLink® Par Optimization
