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Supply Chain Operations             Journey to Preeminence12/1/2011                             1
Indiana University Health  Indiana University Health is Indiana’s most comprehensive healthcare  system. A unique partners...
Mission, Vision and ValuesIndiana University Healths mission is to improve thehealth of our patients and community through...
Agenda• Current Environment/Challenges• Service Line Commitment Alignment   – Developing Metrics that Drive Change   – Man...
Current Environment/Challenges• Hospital payment reductions• Value-Based Purchasing• Accountable Care• Penalties for high ...
Creating a Patient Centered Model• Promoting value and quality for our patients• Improve quality and cost for delivery‐sys...
Service Line Alignment• Define system objectives, goals and formulate system  strategy• Review data, compare against natio...
Strategy   Total Value                   Components                 Price Decrease: Based on Benchmarking data, when we   ...
DEFINE12/1/2011            9
What is the role of Supply Chain  Quality Outcomes / Patient Care      •    Reduced Errors      •    Reliable, accurate, r...
What is the role of Supply Chain  •         Exceptional Service - Enhancing Patient Care  •         Reducing cost of produ...
Leadership Model  1.        Create a shared vision               •      Enlist your teammates in a shared vision for the f...
Leadership Model  6.        Ensure clear focus & process               •     Seek to hone your focus on what is most impor...
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      • Card...
What do our Customers want?  • The right products and services (Accuracy)  • When they are needed (Timeliness)  • With the...
Service Design, Management& Improvement Model
PLAN12/1/2011          18
What do we do with CustomerRequirements?  – Negotiate Contracts (Products, Equipment & Services)     • Involve physicians/...
Supply Chain Decision Making Factors12/1/2011                              20
Position Your Data for Success            –   Review and understand the data            –   Physician/clinician involvemen...
Transparency/Benchmarking12/1/2011                   22
DESIGN12/1/2011            23
Design and Strategy  •         All processes are explicitly mapped and evaluated for efficiency, and            effectiven...
Ortho Trauma Negotiation StrategyOverall                                                                       Impact Esti...
ASSESS12/1/2011            26
Opportunity Assessment  • IU Health Supply Chain Operations (SCO) prides its self    on being a data driven decision makin...
Stent Market Share
Ortho Total Joints              What if analysis
MEASURE12/1/2011             30
Manage & Control Your Supply Chain  •         Manage vendor compliance, market share to negotiate pricing terms  •        ...
What do we Measure?•       Diversity Report: Tracks Tier 1 & 2 performance by facility, department and        supplier•   ...
What do we do with Measures?•   We use it at a tool to evaluate performance against our established goals•   We look for t...
Supplier Diversity
Supplier Diversity Plan•   Tier 1 and Tier 2 business relationships with M/V/WBE suppliers who    provide quality, cost-co...
Financial Metric Tracking
Initiative Metric Tracking - PPU
Supplier Service Levels            – Supplier Service Levels               • Backorder and price integrity               •...
Order Efficiencies / Internal Controls            –   Maximize online order entry and reduce rework in Order Processing   ...
EDI Rejections by Type           End of year           contract expiration                          -                     ...
IMPROVETechnology Driven ERP Process        Improvement
Improving the Patient Experience       •    Improve clinical quality       •    Reduce adverse events and improve patient ...
E-Requisition    Custom built advanced online ordering portal built on top of Lawson ERP to    enhance user experience tha...
Preferredproductsare sortedto the top             Information display used to             link to replacement             ...
Click to Chat = Increase Service            Instant            service for            end users12/1/2011                  ...
Information Dissemination Through Ordering
Mobile Supply   ChainManagement    (MSCM)
Mobile Supply Chain Management (MSCM)       •    Has accelerated the delivery of purchase order (PO) and non-PO packages  ...
MSCM12/1/2011   49
MSCM: Receiving12/1/2011          50
MSCM: Delivery12/1/2011        51
MSCM: Tracking12/1/2011        52
FUTURE12/1/2011            53
Physician Variation
Success Criteria: Supplier• Work collaboratively with health system to capitalize  on system-wide agreements and throughpu...
Success Criteria: Physician• Physician participation and leadership is critical to  improving processes and efficiencies a...
Success Criteria: Administration• Develop clear system objectives and rules of  engagement• Transparency: Keep physicians ...
Thank You!12/1/2011                58
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Indiana University Health

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Indiana University Health

  1. 1. Supply Chain Operations Journey to Preeminence12/1/2011 1
  2. 2. 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
  3. 3. Mission, Vision and ValuesIndiana University Healths mission is to improve thehealth of our patients and community through innovationand 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
  4. 4. 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
  5. 5. Current Environment/Challenges• Hospital payment reductions• Value-Based Purchasing• Accountable Care• Penalties for high readmission rates• Promoting better quality, while avoiding unnecessary costs
  6. 6. 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
  7. 7. 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
  8. 8. Strategy Total Value Components 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 • Process Efficiencies • Evidence Based Product Review •Procedure supply waste reduction
  9. 9. DEFINE12/1/2011 9
  10. 10. What is the role of Supply Chain 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 care12/1/2011 10
  11. 11. 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!!12/1/2011 11
  12. 12. 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 underperformers12/1/2011 12
  13. 13. 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 fun12/1/2011 13
  14. 14. Who are our Customers? • Our patients • Our patient’s families • Our community • Those who care for and serve our patients
  15. 15. 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
  16. 16. 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)
  17. 17. Service Design, Management& Improvement Model
  18. 18. PLAN12/1/2011 18
  19. 19. What do we do with CustomerRequirements? – 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
  20. 20. Supply Chain Decision Making Factors12/1/2011 20
  21. 21. 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 Share12/1/2011 21
  22. 22. Transparency/Benchmarking12/1/2011 22
  23. 23. DESIGN12/1/2011 23
  24. 24. 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.12/1/2011 24
  25. 25. Ortho Trauma Negotiation StrategyOverall Impact Estimates and KeyStrategy_______________________________________________ Achieve cost savings on orthopedic trauma implants Assumptions_________________________ Goal: Addressed Spend: $10.81M Total Impact $2.27M Bloomington Spend: $ 1.37M Bloomington Goal: $ 315K Include all IU Health facilities in current initiative Compile savings opportunity data based upon market intelligence and Key Assumptions/calculated methodology: benchmarking • All IU-Health facilities to receive same pricing • No promise to shift market share 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 Key Challenges to creation of system-wide strategy Impact_____________________________________ • Vendor recognition of IU Health as a system • No promise of increased market share to vendors Notify vendors of Ortho Trauma Initiative and send RFP • Synthes dominates our market and might feel comfortable Prepare Cost Analysis based on vendor bids; collaborate with physicians • Owned vs. consigned inventory- will vendors partner for consignment? and nursing leadership to identify opportunity Negotiate with vendors to meet and/or exceed the identified savings target Mitigating Grant “Preferred Vendor” status to vendors with most competitive pricing • Resolve differences in contract terms and price structures across Actions____________________________________________ for the purpose of the e-Requisition tool the system Implement new 3-year agreements with participating vendors • 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-usersCurrent Topics forStatus______________________________________________ Completed Tasks: Discussion_____________________________________ • Market Share Analysis and VHA benchmarking • Physician preferences for product/vendors (internal and external • Savings Opportunities identified by category, vendor, and facility fixation) • Xcelsius Report to show savings opportunities • Strategy with vendors during RFP bid period Next Steps: • Communicate strategy to surgeons and OR management • Send RFP to vendors (bids due by 8am on 2/21/11) • Analyze RFP data 12/1/2011
  26. 26. ASSESS12/1/2011 26
  27. 27. 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.12/1/2011 27
  28. 28. Stent Market Share
  29. 29. Ortho Total Joints What if analysis
  30. 30. MEASURE12/1/2011 30
  31. 31. 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 results12/1/2011 31
  32. 32. 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).12/1/2011 32
  33. 33. 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
  34. 34. Supplier Diversity
  35. 35. 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
  36. 36. Financial Metric Tracking
  37. 37. Initiative Metric Tracking - PPU
  38. 38. 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 opportunities12/1/2011 38
  39. 39. 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 resolution12/1/2011 39
  40. 40. EDI Rejections by Type End of year contract expiration - - 44% U 55% B Arnett Cass Building IV Solution - -64% 68% U40 12/1/2011
  41. 41. IMPROVETechnology Driven ERP Process Improvement
  42. 42. Improving the Patient Experience • 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 care12/1/2011 42
  43. 43. 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
  44. 44. Preferredproductsare sortedto the top Information display used to link to replacement products. i.e.. Backorders, obsolete products, non preferred
  45. 45. Click to Chat = Increase Service Instant service for end users12/1/2011 45
  46. 46. Information Dissemination Through Ordering
  47. 47. Mobile Supply ChainManagement (MSCM)
  48. 48. Mobile Supply Chain Management (MSCM) • 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.12/1/2011 48
  49. 49. MSCM12/1/2011 49
  50. 50. MSCM: Receiving12/1/2011 50
  51. 51. MSCM: Delivery12/1/2011 51
  52. 52. MSCM: Tracking12/1/2011 52
  53. 53. FUTURE12/1/2011 53
  54. 54. Physician Variation
  55. 55. 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
  56. 56. 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
  57. 57. 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
  58. 58. Thank You!12/1/2011 58

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