Indiana University Health is a large healthcare system comprised of 20 hospitals and over 21,000 employees across Indiana. As the largest healthcare system in the state, it has a unique partnership with Indiana University School of Medicine. The system is focused on improving patient care, education, research, and community service. It aims to create a patient-centered model that promotes value-based care and coordinates services across its hospitals and physicians. To achieve this, it works on aligning incentives between clinical staff and administrators, standardizing products and processes, and reducing unnecessary costs and variation in care delivery.

1. Supply Chain Operations
Journey to Preeminence
12/1/2011 1

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. Mission, Vision and Values
Indiana University Health's mission is to improve the
health of our patients and community through innovation
and 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. 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. Current Environment/Challenges
• Hospital payment reductions
• Value-Based Purchasing
• Accountable Care
• Penalties for high readmission rates
• Promoting better quality, while avoiding unnecessary
costs

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. 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. 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. DEFINE
12/1/2011 9

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 care
12/1/2011 10

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. 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 underperformers
12/1/2011 12

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 fun
12/1/2011 13

14. Who are our Customers?
• Our patients
• Our patient’s families
• Our community
• Those who care for and serve our patients

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. 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. Service Design, Management
& Improvement Model

18. PLAN
12/1/2011 18

19. What do we do with Customer
Requirements?
– 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. Supply Chain Decision Making Factors
12/1/2011 20

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 Share
12/1/2011 21

22. Transparency/Benchmarking
12/1/2011 22

23. DESIGN
12/1/2011 23

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. Ortho Trauma Negotiation Strategy
Overall Impact Estimates and Key
Strategy_______________________________________________
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-users
Current Topics for
Status______________________________________________
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. ASSESS
12/1/2011 26

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. Stent Market Share

29. Ortho Total Joints
What if analysis

30. MEASURE
12/1/2011 30

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 results
12/1/2011 31

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. 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. Supplier Diversity

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. Financial Metric Tracking

37. Initiative Metric Tracking - PPU

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 opportunities
12/1/2011 38

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 resolution
12/1/2011 39

40. EDI Rejections by Type
End of year
contract expiration
- -
44% U 55%
B
Arnett Cass
Building IV
Solution
- -64%
68% U
40 12/1/2011

41. IMPROVE
Technology Driven ERP Process
Improvement

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 care
12/1/2011 42

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. Preferred
products
are sorted
to the top
Information display used to
link to replacement
products. i.e.. Backorders,
obsolete products, non
preferred

45. Click to Chat = Increase Service
Instant
service for
end users
12/1/2011 45

46. Information Dissemination Through Ordering

47. Mobile Supply
Chain
Management
(MSCM)

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. MSCM
12/1/2011 49

50. MSCM: Receiving
12/1/2011 50

51. MSCM: Delivery
12/1/2011 51

52. MSCM: Tracking
12/1/2011 52

53. FUTURE
12/1/2011 53

54. Physician Variation

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. 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. 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. Thank You!
12/1/2011 58