The document discusses Tenet Supply Chain Management's efforts to reduce costs. It describes the Medication Use Management program which uses strategies like evaluation, standardization, and utilization review to address high pharmacy spending therapeutic categories like antimicrobials and cardiovascular drugs. It also details initiatives to reduce costs for anticoagulants and hematopoietics. The MUM program has helped decrease Tenet's annual pharmacy spend over the last 4 years. Additionally, the document outlines Tenet's approach to rising orthopedic implant costs which includes custom pricing and educating surgeons, resulting in anticipated cost reductions of over $4 million in 2008.

1. Supply Chain Management
Richard Yonker
Vice President, Corporate Sourcing

2. Tenet Supply Chain Management
• Daily purchasing and inventory management
• Integrated supply chain system support
• National contract negotiations and vendor
management
• Supply cost reduction efforts
• Capital equipment procurement
• Service and support costs
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3. Medication Use Management
The Medication Use Management (MUM) Program uses key cost saving
strategies to address areas of high pharmacy spend or utilization
STRATEGIES KEY
ADDRESSING THERAPEUTIC
UTILIZATION CATEGORIES
• Antimicrobial
The
• Evaluation MUM
• Cardiovascular
Program
• Standardization • Critical Care
• Internal Medicine
• Utilization • Oncology and Hematology
• Respiratory
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4. Major Initiative Implementation Occurred in
the Following Categories
• Anticoagulants
– Focus on appropriate use in an increasing number
of patients treated
– Increased utilization with the
National Patient Safety Goal 3E
• Hematopoietics
– Evolving clinical data
– Changes in patient
length of stay
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5. Pharmacy Spend Decrease
The MUM initiative has helped to keep Tenet’s annual pharmacy spend
showing a decrease over the last 4 years
$325,000,000
$300,000,000
$275,000,000
$250,000,000
2005 2006 2007 2008*
Total Annual Pharmaceutical Spend Linear (Total Annual Pharmaceutical Spend)
* 2008 Annual Pharmaceutical Spend based on annualization of purchases through April 2008
Comparison based on the same facilities 2005 - 2008
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6. Vendor Profitability Dramatically Rises while
Hospital Profitability Continues to Drop
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7. Tenet’s Approach to Rising Orthopedic
Implant Cost
• Orthopedic Management Program approach
– Utilizing a local approach – ‘hospital by hospital’
– Building a rigorous spend and utilization profile for each
hospital’s orthopedic implants
– Developing custom matrix pricing for implant procedures
– Educating our surgeons
– Empowering hospital leaders to manage the negotiations
with orthopedic implant vendors
– Ongoing orthopedic management reporting
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8. Ongoing Monthly Orthopedic
Management Reports
• Monitoring savings monthly
• Volume and savings opportunity by physician
• Physician trending compared to peer group and
baseline year
• Vendor pricing compliance
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9. Tenet Orthopedic Management Program
• Orthopedic implant expense exceeded $115 million in 2007
• 32 of our hospitals are actively involved in the process
including
– orthopedic spine implant program
– orthopedic total joint program
• Anticipate a 20% reduction of orthopedic implant costs
• Implant cost reductions start in 2nd quarter at 12 hospitals
• Currently 2008 orthopedic implant cost reductions expecting
more than $4 million
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10. Tenet Supply Chain Management
• Daily purchasing and inventory management
• Integrated supply chain system support
• National contract negotiations and vendor
management
• Supply cost reduction efforts
• Capital equipment procurement
• Service and support cost management
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