NYC Health and Hospitals CorporationSupply Chain Management TransformationJoseph QuinonesFranco Sagliocca, MBA, FACHERichard Olah, CMRP
2About HHC• $6.7 billion integrated healthcare delivery system• Largest municipal healthcare organization in the country• MetroPlus is HHC’s own 400,000 member health plan• Serves 1.3 million New Yorkers / year (475,000+ are uninsured)• Provides medical, mental health and substance abuse services through: ▫ 11 acute care hospitals ▫ 4 four skilled nursing facilities ▫ 6 large diagnostic and treatment centers ▫ 70+ community based clinics• HHC Health and Home Care also provides in-home services for New Yorkers• 2008 recipient of the National Quality Forum• 2008 recipient of The Joint Commission’s John M. Eisenberg Award for Innovation in Patient Safety and Quality
4 Grappling with the Magnitude of the Problem $1,000,000 At a Million dollars the questions and trade-offs are important but focused $1,000,000,000 At a Billion dollarsthe questions and trade-offs involve thousands of NYC residents and entire communities The imperative for change was very clear for everyone
5Supply Chain Management is Accountablefor Sustaining Financial Stability• Hospitals are the central focus of our modern healthcare system, where the most advanced scientific knowledge and technology meet the vulnerability of patients in need of care. They rival the busiest hotel or the most bustling airport in the logistics of admitting and caring for patients 24/7, and often serve as research labs and teaching institutions as well. These complex enterprises are as challenging to manage as a global business, but most hospitals struggle because they aren’t run enough like businesses, says John Hammergren in his book, ―Skin in the Game.‖ (Part 2 of 5)
6 Total Cost of Ownership… is a philosophy for really understanding all supply chain related costs of doing business with a particular supplier for a particular good or service -World Class Supply Management, 2003 Price Paid for a Product or Service Acquisition Costs Logistics Cost Quality Equation Inventory Costs Inventory Risk Cost to Serve6
12At the end of the day it’s all about…EXCELLENT Patient Care• The history of our healthcare system is an incredible story of scientific and technological innovation, but its evolution is incomplete. The gaps and disconnections can be addressed by technologies already in existence, but they need to be widely and consistently adopted. When advances in the following areas are put into practice — transparency, connectivity, productivity and efficiency, best practices, diagnostics, robotics, retail healthcare and personalized medicine — we’ll be able to fulfill the promise of putting the patient back into the center of care, says John Hammergren in his book, ―Skin in the Game.‖ (Part 4 of 5)
13 Savings FY 2012 Savings Savings Supply Savings (as of June 2011) Employee Redirection $ 2,240,000 Vendor Amount Cardinal New Opportunities $ 2,000,000NY blood & Service $ 3,422,631.00 Total $ 4,240,000Braun IV Solutions and Sets $ 969,523.00GE Savings on Preventive $ 715,963.00Maintenance Contract Physician Preference Items SavingsCardinal Products $ 921,000.00 Orthopedics $ 2,000,000Cardinal Growth Rebate $ 264,981.00 Surgical Solutions Scopes* $ 5,000,000Citi Storage $ 650,000.00 US Surgical - Sutures Endomechanicals Conversion** $ 2,000,000HWS Waste Amendment $ 215,000.00 Total $ 9,000,000Braun Pump Savings Woodhull $ 115,750.00Braun Pump Savings Coney $ 111,130.00 *Currently some use at Bellevue **Currently some use at Bellevue and 100% use at Coney IslandConey Second Year Warranty $ 75,000.00Braun Second Year Warrnty $ 78,000.00Met pumps savings $ 73,450.00 Projected Savings =Met second Year Warrnty $ 48,750.00 $21.46MCentral Poly Savings Plastic $ 281,782.003 M SAVINGS $ 21,000.00ARJO HUNTLEIGH $ 65,000.00Contracts Media $ 192,384.89 Total: $ $8,221,344.89
16Overview: Project Description• The Road Ahead is a restructuring initiative that HHC is undergoing to become a more cost-effective, more efficient, and stronger organization. To meet new economic demands, to rise to the challenges of delivering healthcare today, and to plan for the future, HHC must act now.• What are the goals of The Road Ahead? ▫ To streamline care delivery for greater efficiency ▫ To restructure and combine some services to lower costs while maintaining needed capacity ▫ To ensure that changes are as fair as possible to our patients, communities and staff ▫ To preserve our essential mission of affording broad access to the uninsured• If HHC is to continue to fulfill our mission to all New Yorkers, we must reduce our costs of providing care and we must become the healthcare provider that New Yorkers will choose. There will be difficult choices ahead. While every step is not yet clear, The Road Ahead begins now.
17Overview: Challenges• HHC is facing extraordinary financial deficits. Specifically, we will have a budget shortfall of more than $1 billion in fiscal year 2011 (which begins July 1, 2010) and in the following years thereafter. What does this mean to us as an organization? It will mean that there is not enough money in the budget to continue to work the way we do. This will require us to re-think the way that we operate our facilities and provide much of our care. We are facing this dire financial future for several reasons, among them: ▫ Reduced funding from state Medicaid reimbursement • Reduced funding from the Federal Government • Growing numbers of patients without health insurance • Increased healthcare equipment costs ▫ Higher costs for pensions and other benefits• In addition, it is clear that HHC has important operational challenges as well as financial ones. We need to do better to leverage the size of our system through collaboration and greater standardization of best practices. And we need to design our delivery of care process so that it is consistently as efficient and patient-centered as possible. Beyond our own budget challenges, the intense competition in our healthcare world means that we must earn patient loyalty every day. To do that, we must: ▫ Make sure that the services offered meet the needs of today’s HHC patient ▫ More effectively deliver a continuum of care across HHC services to serve patients responsively at all stages of their lives and ▫ Work together better across work areas, teams, and facilities to improve patient safety and satisfaction Given our significant budget constraints, we expect that there will be reductions and consolidations in programs and staff. Making these changes will be difficult but necessary if HHC is to be able to sustain our mission. We must keep our morale up and remember that HHC has successfully navigated tough times before. We will do it again.
18Overview: Purpose• As part of The Road Ahead, one of the goals is for every HHC facility to become more productive and more effective. We are already doing good work toward these goals, using other HHC resources that rely on the ingenuity and support of employees to succeed. Our efforts in support of Breakthrough are an important demonstration of how HHC employees can work together to identify and implement process improvements. These efforts are already yielding positive results, new revenue, and cost savings.• The continuing commitment to Patient Safety is another good example of how HHC employees have taken personal responsibility for doing the right thing.• By supporting our staff and serving our patients better, well also meet another important goal: We will see satisfaction increase and our hospitals, clinics, and long-term care facilities become the healthcare choice that all New Yorkers will make.
19Overview: Moving Forward• In 2009, the Restructuring Steering Committee – leaders from across HHC – began analyzing, planning, and working to identify options to be considered as part of The Road Ahead – HHC’s restructuring strategy. The Restructuring Steering Committee met often, consulted with outside experts, and established a broad agenda for change. In the spring of 2010, the Restructuring Steering Committee deliberated, reviewed, and evaluated a range of very specific options, some of which have been selected, some of which were rejected. The decision-making process balanced the need for deep cost-containment actions with concern and consideration for HHC employees, targeted opportunities for growth, and the importance of preserving HHC’s historic mission to care for all.• Most of the options that are finally chosen will become part of The Road Ahead and will be implemented over the next four fiscal years, beginning with fiscal year 2011 (which starts on July 1). They will all be discussed in detail in the weeks to come, as the City’s budget gets worked out, but they reflect the hard realities of NYC in 2010. Some changes will happen quickly; others will take longer to develop and implement.• We have already brought staffing down by 1,000 full-time jobs through attrition – not filling every job when employees have retired or voluntarily left HHC – but we will not be able to solely rely on attrition in the future and, as programs are consolidated, staffing levels will need to be reduced. Planned workforce reductions will occur after discussions with labor representatives and their implementation will be consistent with our collective bargaining agreements and our Personnel Rules and Regulations. These painful steps have been carefully considered by our Restructuring Steering Committee — which includes representation from all of our networks. The Restructuring Steering Committee thoroughly weighed proposed actions and recommendations from Deloitte and made decisions that are as fair as possible to all of our facilities, communities, patients and staff. All employees should know that HHC is still advocating strongly for fair and supportive treatment from all government funding sources. On a positive note, our collective work through Breakthrough and other major operational improvement efforts are projected to close more than $200 million of our budget gap in the next fiscal year.