Providing Insight, Understanding and Community
December 2018 | Vol.14 No.6
Change Management: The Key to Navigating a New World Leaders from some of the nation’s top health systems discuss change and the supply chain executive
Lowering total cost of ownership together. Learn how we worked with one medical center to:
Increase efficiencies
Reduce freight costs
Lower packaging costs
Reduce shipping weight
Read the full case study:
cookmedical.com/tcotogether
cookmedical.com Š COOK 01/2017 HBS-D33288-EN
CONTENTS »» DECEMBER 2018 The Journal of Healthcare Contracting is published bi-monthly by Share Moving Media 1735 N. Brown Rd. Ste. 140 Lawrenceville, GA 30043-8153 Phone: 770/263-5262 FAX: 770/236-8023 e-mail: info@jhconline.com www.jhconline.com
Editorial Staff
Editor Mark Thill mthill@sharemovingmedia.com Managing Editor Graham Garrison ggarrison@sharemovingmedia.com Art Director Brent Cashman bcashman@sharemovingmedia.com
Change Management: The Key to Navigating a New World
Publisher John Pritchard jpritchard@sharemovingmedia.com Vice President of Sales Jessica McKeever jmckeever@sharemovingmedia.com Director of Business Development Alicia O’Donnell aodonnell@sharemovingmedia.com Sales Executive Lizette Anthonijs Lizette@sharemovingmedia.com Circulation Wai Bun Cheung wcheung@sharemovingmedia.com
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4 Editor’s Note
26 HSCA
6 Diverse Companies Find Doors Opening
27 Making the Case for Quality Products
2018
The Journal of Healthcare Contracting (ISSN 1548-4165) is published monthly by Share Moving Media, 1735 N. Brown Rd. Ste. 140, Lawrenceville, GA 30043-8153. Copyright 2018 by Share Moving Media. All rights reserved. Subscriptions: $48 per year. If you would like to subscribe or notify us of address changes, please contact us at the above numbers or address. POSTMASTER: Send address changes to Share Moving Media, 1735 N. Brown Rd. Ste. 140, Lawrenceville, GA 30043-8153. Please note: The acceptance of advertising or products mentioned by contributing authors does not constitute endorsement by the publisher. Publisher cannot accept responsibility for the correctness of an opinion expressed by contributing authors.
But the rules of the game are the same as those for all suppliers
10 Regional, local alliances playing a bigger role
Study shows that most are affiliates of national GPOs
GPOs: Providing value in a constantly changing healthcare industry
28 Change Management: The Key to Navigating a New World
Leaders from some of the nation’s top health systems discuss change and the supply chain executive
34 The Consumer-Centric Supply Chain An update on THR’s Business Transformation Project
Women Leaders in Supply Chain
41 Be the Leader they Want 42 Bigger IDNs, bigger likelihood of CSCs 45 Health systems continue to rely on distribution 46 Seat at the Table
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The Journal of Healthcare Contracting | December 2018
48 Calendar of Events Jocelyn Bradshaw
49 Industry News 3
EDITOR’S NOTE
2018 My picks for the top supply chain stories of 2018: Continued involvement of supply chain in non-acute settings. For supply chain veterans, it’s a matter of teaching old dogs new tricks. For the young people, it’ll be business as usual. Health systems channel their clinical knowledge and expertise (and money) to develop innovative technologies and to commercialize them. Big question: What is supply chain’s role? Mark Thill
The supply chain management degree. Here’s how we began our story on the topic: “It’s 10 years hence. 2028. You’ve got an opening in supply chain, and you’ve narrowed it down to two candidates. One has a degree in business, the other in supply chain management. Which one do you choose?”
The newest headache: Cybersecurity. Some believe that bad actors may begin targeting electronic medical devices. How will we fight that? And what is supply chain’s role? H3N2. This influenza strain affected many in 2017-2018, and treating them proved to be a challenge for supply chain departments and their suppliers. Progress in healthcare-acquired conditions. Good news for a change: The Agency for Healthcare Research and Quality reports that overall harms decreased in several categories, such as infections and adverse drug events, from 2014 to 2016. Good people… like these: Contracting Professional of the Year • Chris Torres, Main Line Health Ten People to Watch in Healthcare Contracting: • Lynn Cook, HealthTrust Supply Chain • Mark French, Ochsner Health • Carl Gustafson, Marshfield Clinic • Chris Johnson, Wellforce • Jonathan Kepley, Wake Forest • Jennifer McPherren, Northwestern • Dennis Mullins, Indiana University • Steve Pohlman, Cleveland Clinic • Kate Polczynski, Geisinger • Lisa Thakur, Scripps Health
Future Supply Chain Leaders • Sterling Borders, Med Center Health • Derek Havens, HonorHealth • Tyler Loeb, Jefferson Health • Matt McGraw, OSF • Josh Plauny, VCU Health • Bruce Radcliff, Advocate Aurora • Matt Roberts, HealthTrust Women Leaders in Supply Chain • Jocelyn Bradshaw, HealthTrust • Daria Byrne, Intalere • Lisa Fohey, Advocate Aurora • Tracy Griffin, Cone Health • Cecile Hozouri, Scripps Health • Neeta Moonka, Virginia Mason • Brenda Peterson, Vizient • Elaine Prince, Encompass Health • Lisa Scannell, Partners Happy new year.
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December 2018 | The Journal of Healthcare Contracting
Rx Only ©2016 B. Braun Medical Inc. Bethlehem, PA. All rights reserved. 16-5430_JHC_5/16_RTS3
EXECUTIVE INTERVIEW
Diverse Companies Find Doors Opening But the rules of the game are the same as those for all suppliers
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There are plenty of opportunities in the healthcare supply chain for diverse suppliers these days. “Doors continue to open like we’ve never seen in the past,” says Millie Maddocks, founder and CEO of MAC Medical Supply Co. in Chicago. But business is business. “Diversity may open some doors, but it won’t keep you in the game,” she says. Certified as a Women’s Business Enterprise by the Women’s Business Enterprise National Council, Chicagobased MAC Medical Supply is a supplier of a broad variety of products, including recording media and chart paper, batteries, biodegradable patient bedside products, electrodes, echo gels, blood pressure cuffs and more. Maddocks is a long-time advocate for diversity among healthcare suppliers. For several years, she was a protégé in Owens & Minor’s Department of Defense Mentor/Protégé program, gaining experience and knowledge about the healthcare supply chain she otherwise would not have had access to, she says. Through that experience, she learned the importance of expanding her business, which today includes private labeling, master distribution, third-party logistics, and more. She conducts business with the major GPOs and med/surg distributors, as well as the Department of Defense and Department of Veterans Affairs. “I had to come up with innovative, new products to diversify my company,” she says. And just like “the big players,” she has obtained exclusive rights to many different product lines to do so.
December 2018 | The Journal of Healthcare Contracting
Rules are the same When supplier diversity initiatives were in their infancy, some companies mistakenly believed that their diversity was an opportunity to charge more for their products, she says. That’s no longer the case, nor was it ever. “Just like any company, you have to add value, offer great products and services, and offer something innovative for patients and providers,” says Maddocks. “And you have to offer competitive pricing.” Being a diverse company offers one set of challenges and opportunities. Being a small company – as many diverse companies are – introduces a whole other set. “There’s always so much change in the healthcare industry – mergers, acquisitions, hospitals switching from one GPO to another, then from one prime vendor to another,” she says. “As a supplier, you think you are secure in an account, then a change takes place and you have to demonstrate your value proposition all over again. You may have known a buyer for years; then she leaves and a new person comes in.” A small supplier, which lacks the name recognition of big national firms, has to start from scratch, familiarize decision-makers with their products and services, and then get them to trust them. And as any supplier knows, the wheels of healthcare decision-making can turn slowly, she adds. Introducing and implementing a new product in a health system can take forever, and it calls for persistence and patience on the part of the supplier. “Yes, there are people in charge of supplier diversity who can help you get in the door. They
Millie Maddocks
definitely are your champions, but they are not necessarily the decision-makers.” “The biggest way any of this works in any GPO, prime vendor or healthcare system is through leadership from the senior team of the organization,” says Maddocks. “If they don’t emphasize diversity, it won’t happen.” Some CEOs do just that, and appoint someone to focus full-time on the initiative.
“ Just like any company, you have to add value, offer great products and services, and offer something innovative for patients and providers.” For their part, supply chain executives should make an effort to understand the favorable economic impact that small, diverse suppliers can have on their health systems, says Maddocks. In most diverse companies, the CEO is close to the customer, is fully engaged in the business, and can make important decisions immediately. “We are more flexible and agile, and we can turn things around much more quickly than big companies.” And beside all that, supporting diverse suppliers is the right thing to do, she says.
Editor’s note: Learn more about working with diverse suppliers from: • The Women’s Business Enterprise National Council, www.wbenc.org • Women’s Business Development Center, www.wbdc.org
The Journal of Healthcare Contracting | December 2018
• Healthcare Supplier Diversity Alliance, www.hsdafordiversity.org • National Minority Supplier Development Council, www.nmsdc.org
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SPONSORED: SWISSLOG
Looking ahead? Look at a consolidated service center. CSCs are no longer just for the mega-systems, but rather, for IDNs of all sizes In July 2018, Swisslog Healthcare surveyed hospital supply chain executives about consolidated service centers. Those currently operating CSCs reported seeing significant savings, and many others expressed their interest in implementing a CSC of their own. Swisslog Healthcare Director of Solutions Management Beth Riggio offers some perspectives on the survey and its implications for Journal of Healthcare Contracting readers. Riggio was part of the team to develop Swisslog’s consolidated service center capabilities, bringing together automation solutions for both med/surg and pharmacy services.
Q. Consolidated Service Centers (CSCs) have been around for some time. What’s different today? Beth Riggio: It’s true, consolidated service centers aren’t a new concept—they were the invention of large, progressive health systems. But as standalone hospitals struggle to maintain their independence, the growth of integrated delivery networks creates an environment ripe for centralization. In a July 2018 survey of hospital supply chain executives, 43 percent of respondents report currently distributing from a CSC and another 43 percent are conBeth Riggio sidering it. And it’s no longer just a
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model for the mega health systems of the world. From five hospitals to 20, IDNs of all sizes are finding value in the control and visibility of centralized distribution. Q. Most Consolidated Service Centers start by self-distributing med/ surg supplies. What type of service line expansion are you seeing in the market? Riggio: As hospital executives see significant savings from the CSC model, that good work is rewarded with more work. Supply Chain’s responsibility continues to expand, driving a higher
December 2018 | The Journal of Healthcare Contracting
degree of systemness across hospital networks. In addition to med/ surg supplies, IDNs have centralized laboratory, print and mail services, equipment repair, sterile processing and more. One of the departments with the greatest interest in the CSC model is pharmacy. Today 50 percent of CSCs have centralized pharmacy services, and 42 percent are considering adding it to their operations.
“It’s really about designing a forwardlooking operation with significant room for growth.”
Q. What is it about pharmacy that makes it such a compelling case for consolidation? Riggio: Pharmacy experiences many of the same challenges as supply chain in a decentralized model, including redundant inventory, formulary control, expiration management, process variation and waste. Add to that, pharmacy’s pain is exacerbated by med availability issues and rising drug costs. Our clients find the greatest case for consolidation through inventory optimization, including sharing slow-moving, highcost drugs amongst facilities to reduce waste and minimize inventory overhead. And much like a well-managed MMIS and warehouse management software is critical to supply chain, a consolidated pharmacy distribution model is only possible with an enterprise inventory management software. Pharmacy is seeing immediate savings in this model too. In a recent survey of pharmacy executives, Visante, Inc. found that 75 percent of those health systems currently utilizing a CSC model reported an ROI in less than 12 months. When pharmacy can share an existing warehouse space with supply chain, it
significantly reduces the investment required to centralize operations and strengthens the case for consolidation.
Q. On the topic of ROI, what type of financial impact are consolidated service centers having for health systems? Riggio: I once heard a supply chain leader say that a CSC isn’t a building, it’s a business model. And it’s a cost-disruptive one at that. According to the most recent research on CSCs, 75 percent of supply chain executives experienced an ROI in less than two years. The figure most frequently reported by these respondents was $2M in savings annually, although this varies greatly by health system. This is driven through activities like direct purchasing, standardization, streamlined procurement, and general inventory visibility and control. On top of that, there are additional benefits, like increased charge capture and reallocation of hospital space for revenue-generating activities. While there certainly are opportunities for labor reallocation, it’s typically not a driver for this type of transformational change. Q. What should health systems know before implementing a Consolidated Service Center? Riggio: One of the things I’ve heard most frequently from health systems with a CSC is that they wish they had started with a larger facility. Given accelerated M&A and the addition of other service lines like pharmacy and lab, these teams are outgrowing their space faster than ever anticipated. And with more facilities to support comes greater throughput, which is why many supply chain leaders wish they had invested in higher levels of automation at the start. Even with the rise of robotic and automated storage and retrieval systems, only 17 percent report using basic pick-to-voice technology today. So, it’s really about designing a forward-looking operation with significant room for growth. If you’re thinking about transitioning to a centralized model, visit as many CSCs as you can to help you know what you don’t know.
Unless otherwise noted, the data in this interview is sourced from a survey conducted by the Journal of Healthcare Contracting and sponsored by Swisslog Healthcare in July 2018. For more information on Swisslog Healthcare’s CSC capabilities, visit www.swisslog.com/CSC
The Journal of Healthcare Contracting | December 2018
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RPC PROFILE
Regional, local alliances playing a bigger role Study shows that most are affiliates of national GPOs Purchasing through national alliances has somewhat diminished, according to the authors of a study published this summer in Health Care Management Review. Over 10 years, hospitals have diversified GPO memberships to include regional/local alliances (many affiliated with their national GPO) and engaged in self-contracting. At the same time, hospitals have increased purchases of many categories of supplies/services through national GPOs and endorsed their value-added functions and increasingly important role. The study, “Hospital purchasing alliance: Ten years after,” examines purchasing alliances at two points in time – 2004 vs. 2014 – using surveys of hospital materials managers. It was prepared by Lawton R. Burns, PhD, MBA, the James Joo-Jin Kim Professor, Department of Health Care Management, The Wharton School, Philadelphia, Pennsylvania; and Allison D. Briggs, BA, BSPH, a doctoral student, Department of Health Care Management, The Wharton School. Supported by a grant from the American Hospital Association, the report addresses hospitals’ usage of national GPOs, their use of regional/local GPOs (as well as self-contracting), the ability of GPOs to provide cost-savings and value-added services, and the assessment by materials management executives of GPO business practices. Some highlights: • In 2004, 71 percent of spending went through national alliances. But in 2014, hospitals reported only 55 percent of purchases through the national alliances, routing some spending through regional (10 percent) and local (5 percent) alliances. • Most of the regional/local alliances used were affiliates of the national GPOs. • Overall, 62 percent of 2014 purchases went through national alliances and their affiliates; 5 percent and 3 percent, respectively, went through nonaffiliated regional and local groups. • Most materials management respondents believe their national alliance achieves demonstrable cost savings and margin improvement (mean = 4.10 out of 5.00). But the level of agreement has fallen slightly over time (4.19 in 2004). • Materials managers report significantly lower satisfaction with GPOs’ ability to get excellent prices on physician preference items, falling from 3.47 in 2004 to 3.33 in 2014. • Unchanged is materials managers’ evaluation of their alliances’ ability to obtain cost-savings through lower prices overall (4.19 in 2004 vs. 4.14 in 2014).
aterials managers report signifi•M cantly greater satisfaction with the ability of GPOs to achieve cost-savings through contract administration fees shared with the hospital (from 3.57 to 3.71); information technology (from 3.26 to 3.67); and centralized staffing (from 2.74 to 3.60). According to the authors, this suggests a shift in cost-savings from price to nonprice sources. •T he findings reflect growing use of national GPO prices as market ceilings and use of regional/local alliances to leverage such contracts to extract more discounts. aterials management report •M significantly greater satisfaction with their national alliances in the areas of: clinical improvement (3.43 in 2004 vs. 3.65 in 2014), consulting services (3.46 vs. 3.58), clinical expertise and data support for value analysis (3.46 vs. 3.69), direct input into product and service selection (3.45 vs. 3.59), auditing for implant procurement (3.00 vs. 3.19), assisting with contract conversion for PPIs (3.01 vs. 3.21), and item master maintenance (2.88 vs. 3.08). • On the other hand, they report significantly lower satisfaction in three other areas – their national alliance’s safety improvement initiatives (3.57 vs. 3.45), ability to bring innovative products to their attention (3.64 vs. 3.50), and impeded access to innovative devices and manufacturers (2.29 vs. 2.40).
For more information on the report, go to Health Care Management Review at https://journals.lww.com/hcmrjournal/ Abstract/publishahead/Hospital_purchasing_alliances___Ten_years_after.99698.aspx
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December 2018 | The Journal of Healthcare Contracting
A consolidated service center is not just a building—
It’s a business model.
CONCEPT & BUSINESS CASE
DESIGN & LAYOUT
COLLABORATION & DEVELOPMENT
LAUNCH
It means control. It means quality. It means long-term financial viability. For many integrated delivery networks, centralizing distribution of supplies and medications is driving waste out of the healthcare supply chain. At Swisslog Healthcare, our business is designing your ideal distribution model. From warehouse solutions like facility design and inventory automation to chain-of-custody integration through delivery tracking, we help you create connections across the healthcare continuum. Discover your best distribution model at swisslog.com/csc.
swisslog.com/csc | healthcare.us@swisslog.com
Women Leaders in Supply Chain Editor’s note: Some good stories among this year’s Women Leaders in Supply Chain. You’ll read about one senior vice president whose hard-working dad was – and is – her role model. Another started a pharmacy technician certification program in high school, so she could get a job in college to help make tuition payments. A third spent a year volunteering with AmeriCorps, where she recognized her calling to improve the lives of others in healthcare. A fourth learned how to be sensitive to the needs of other through her years as a physician. And a fifth experienced the strengths and weaknesses of our healthcare system growing up with a mom with multiple sclerosis. Like we said, some good stories.
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December 2018 | The Journal of Healthcare Contracting
WOMEN LEADERS IN SUPPLY CHAIN
Jocelyn Bradshaw Senior Vice President, Strategic Sourcing HealthTrust Nashville, Tennessee
Comments from nominator Michael Berryhill, COO of HealthTrust: Jocelyn Bradshaw leads the sourcing teams responsible for negotiating contracts across the entire care continuum, which includes nursing, surgery, lab, radiology, pharmacy and capital equipment, as well as the HealthTrust global sourcing team in Shanghai, China. She oversees the HealthTrust Supply Chain Board and clinical advisory boards, and directs the supplier diversity program and environmental sustainability efforts. Jocelyn has held executive level roles in the GPO marketplace for 15 years. As a leader of negotiators, she is a great role model, demonstrating skills at setting strategic direction for the core GPO portfolio. Her unflappable demeanor creates a steadfast presence that suppliers and providers have come to rely on through many challenging situations. She is a popular mentor in the HealthTrust Leadership Development Program, which is a critical component of the company’s talent management and succession planning strategy. Her work ethic, intelligence, professionalism and focus on the patient are key attributes to our success. We at HealthTrust could not be more pleased to have her as part of the Senior Leadership Team. HealthTrust at a glance: HealthTrust provides group purchasing, consulting and clinical integration assistance to more than 1,500 hospitals and 3,200 non-hospital sites. Year joined HealthTrust: 2013 Born/raised: Born in Amarillo, Texas; raised in Fort Worth area. Degree(s): Bachelors of Science in Information Systems, University of Texas, Arlington First “real job out of school: Started working for Johnson & Johnson in a vocational education program during my junior/senior years of high school. After graduating
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high school, I continued my employment at J&J, total of about 10 years. Some prior work highlights: 1. My time at J&J was invaluable. Having the opportunity at a young age to work in a Fortune 100 company provided me many learning opportunities that I otherwise may not have experienced, or at least certainly not as quickly. Being young, I really did not know what I truly wanted to do in my career. The team at J&J helped me explore various business roles (IT, finance, marketing, sales administration, contracting). It was here that I developed a passion for working in healthcare. 2. The division of J&J I worked for ended up closing, and I took a position outside healthcare (LSG Sky Chefs/ Lufthansa). I quickly realized I wanted to remain in healthcare and fortunately had the opportunity to take a position at Broadlane. I spent 8+ years at Broadlane. Again, a phenomenal team of people that allowed me a great opportunity to continue to grow/develop/learn. A key mentor or event in your life: I have had the pleasure of working for/with some great bosses and leaders during my career. While I could certainly highlight a number of individuals who played a key role in my development, the individual who played the strongest role in setting my character and values is my father. My father did not have the opportunity for higher education and spent his working life trying very hard to take care of our family. My father believed that every job mattered and was worth doing well – big or small. He had a strong work ethic, never gave up, and always tried to be honest and strive to do what is right. I have tried to emulate those attributes as much as possible throughout my life.
December 2018 | The Journal of Healthcare Contracting
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WOMEN LEADERS IN SUPPLY CHAIN
Daria Byrne Vice President, Clinical and MedSurg Solutions Consulting Intalere Overland Park, Kansas
Comments from nominator Julius Heil, president and CEO, Intalere: “Daria Byrne leads Intalere in the development and implementation of sales strategies to extend consulting services within the clinical and medical surgical realm to healthcare providers throughout the United States. She has extensive clinical, informatics, value analysis, leadership and educational experience in conceptualizing, developing and implementing key strategies in improving operations, and analyzing processes and healthcare trends. She is a member of the American Nursing Informatics Association, National League for Nursing and Sigma Theta Tau Nursing Honor Society. She is an International Review Peer Panel Member for Nurse Education in Practice, a sought-after speaker and contributing author for a multitude of published articles on nursing best practices. She also received the Distinguished Faculty Award from Excelsior College in 2017.” Intalere at a glance: St. Louis-based GPO, substantially owned by Intermountain, servicing 3,800 acute care hospitals; almost 43,000 clinics; more than 13,000 long-term-care hospitals; 3,750 ambulatory surgery centers, and more. Year joined Intalere: 2018 Born/raised: Overland Park, Kansas Degrees: Bachelor’s and master’s degrees in nursing from the University of Central Missouri. Doctorate degree from the University of Missouri-Columbia with a focus on Educational Leadership and Policy Analysis First “real” job: Circulating nurse at a non-profit county medical center working in the operating room, gastroenterology and endoscopy lab. Some prior work highlights: 1. My bedside nursing career culminated as a night shift house supervisor for a non-profit health system. I
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represented the organizational leadership across disciplines and made decisions on behalf of the nursing leadership team. Served as a mentor to novice nurses, and assisted tenured, experienced clinicians run rapid response and code blue events. 2. Served as the lead consultant on a greenfield project. The team scrutinized the healthcare market to identify areas of opportunity and, from an idea list of more than 200, narrowed down the opportunities. The No. 1 opportunity leveraged evolving interoperability standards (Fast Healthcare Interoperability Resources, or FHIR) and focused on the early detection of acute kidney injury (AKI), a serious, yet detectable condition. 3. At Intalere, I am a member of a team of healthcare professionals who believe that the healthcare industry needs to transform to meet the needs of patients, not the other way around. My position at Intalere may be the highlight of my professional career, as through supply chain, I am able to impact the daily lives of clinicians, healthcare team members, and most important, the patients we serve. Key mentor or event in your life: I have had several mentors who have played a key role in my professional development, however one specific leader – Meredith Cage, my senior vice president at PeraHealth – comes to mind immediately. She showed immense interest in my career development and in me as a person. She was vested in my professional satisfaction and career growth. She recognized the value I brought to the organization, yet was more interested in empowering me as a professional than treating me as a subordinate. She instilled a people-first philosophy in me, regardless of the scenario. I will forever be indebted to her.
December 2018 | The Journal of Healthcare Contracting
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WOMEN LEADERS IN SUPPLY CHAIN
Lisa Fohey Supply Chain Director of Deployment Readiness Advocate Aurora Health Milwaukee, Wisconsin
Comments from Carl Meyer, executive vice president, The Wetrich Group: Lisa Fohey brings a positive attitude and an inquisitive mind to the job every day. She works proactively to identify opportunities for savings and or improvements that will benefit the patients, outcomes, staff, supply chain and bottom line. She is highly skilled at bringing people together, can be tactical when needed, and has a very strategic outlook on what she and the department she leads are working to accomplish. Advocate Aurora Health at a glance: Formed in April 2018 by the merger of Advocate Health Care and Aurora Health Care, the system serves nearly 3 million patients annually in Illinois and Wisconsin at more than 500 sites of care. Year joined Advocate Aurora: 2018 Born/raised: Milwaukee, Wisconsin Degree(s): BS in business, Mount Mary College, Milwaukee; MBA from University of Wisconsin-Milwaukee First “real” job out of school: Ward clerk (now known as health unit coordinator) at what was then called Milwaukee Children’s Hospital, and phlebotomist at the adult hospital across the street. Some prior work highlights: 1. We launched a new MMIS just two months prior to Y2K. The pressure to deliver on time and to adapt to new technology created a team bond that has stood the test of time. 2. I t’s incredibly rewarding to collaborate with clinical teams to deliver the best and safest care for the kids of Wisconsin at Milwaukee Children’s Hospital/Children’s Hospital of Wisconsin. Supply Chain has helped achieve the CHW vision that “Wisconsin kids will be the healthiest in the nation” with tactics including the
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launch of a value analysis program, consistent communications regarding substitute items and conversions, and our drive to keep the clinicians at the bedside. 3. I am so grateful to have been active in the supply chain group of Children’s Hospital Association. The members bring a level of supply chain expertise and innovation that has been inspiring! A key mentor or event in your life: 1. The director when I started in supply chain, Dick Dooley, was a pioneer in bringing supply chain support to the bedside. Even as far back as 2002, we were ahead of other hospitals in terms of taking on the movement of supplies at the nursing unit level in order to keep the nurses at the bedside. 2. Joni Rittler, vice president of supply chain at Children’s Hospital of Philadelphia, has led by example, sharing her successes and learnings generously with me and others. She is an innovator, and an amazing team builder. 3. Gary Colpaert, now the vice president of clinical and support services at Froedtert Hospital, inspired me to think of supply chain in a broader sense. I’ve always felt connected to those who do clinical work, thanks in part to the six years I spent on a clinical unit. Gary helped me take that empathy and turn it into productive conversations with the clinical staff. He taught me to fully understand my customer’s workflow to design solutions that deliver what they need. This is particularly effective when what they thought they needed (and asked for) wasn’t the best solution. 4. I am thankful to all of my AHRMM (Association for Health Care Resource & Materials Management) colleagues who share their knowledge at the annual conferences and in forums.
December 2018 | The Journal of Healthcare Contracting
Better, faster. It’s what we want for patients.
What about your clinicians?
Connecting vital signs monitors to the EMR has been shown to: Y
Reduce errors caused by manual processes1
Y
Save clinicians time by removing manual documentation steps2
Y
Increase clinical time spent on value-added care3
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1
Reduction in minutes of vital signs data latency in the EMR after connecting vital signs4
Welch Allyn partners with leading EMRs to send data from the Connex® family of vital signs devices directly to the patient’s record. Our goal is simple: help your clinicians work better, faster so they can focus on getting patients better, faster.
Start today at www.welchallyn.com. 1 CIN: Computers, Informatics, Nursing: Eliminating Errors in Vital Signs Documentation, FIELER, VICKIE K. PhD, RN, AOCN; JAGLOWSKI, THOMAS BSN, RN; RICHARDS, KAREN DNP, RN, NE-BC, 2013. The paper vital signs recording had an error rate of 18.75%. 2 JHIM FALL 2010 Volume 24:Number 4, Vital Time Savings: Evaluating the Use of an Automated Vital Signs Documentation System on a Medical/Surgical Unit 3 Going One Step Further at Scott & White Medical Center—Temple: Eliminating manual vital signs documentation to prioritize value-added care. 2017 Welch Allyn. www.welchallyn.com 4 CareAware® VitalsLink: Eliminating Data Latency & Manual Documentation at Naples Hospital. Prepared by Cerner, 2013. © 2017 Welch Allyn
MC14605
WOMEN LEADERS IN SUPPLY CHAIN
Tracy Griffin Senior Systemwide Director of Supply Chain and Strategic Sourcing Cone Health Greensboro, North Carolina
Comments from nominator Tim Nedley, vice president, materials management, UPMC: “Tracy and I worked together at Owens & Minor from 2000 to 2005, and she was later one of my customers when she moved to Cone. She is quietly one of the most forwardthinking supply chain leaders I know. Currently, Tracy has responsibility for all strategic sourcing and logistics, including a 53,000-square-foot distribution center that supplies the six Cone hospitals, several surgery centers, three urgent care centers and over 150 physician practices.”
“ He called me into his office one day and said, ‘You are very smart and could really excel, but you need to get out of your own way. You need to show up believing in yourself and the capabilities you have.’” Cone Health at a glance: Six hospitals, several surgery centers, three urgent care centers, more than 150 physician practices Year joined Cone Health: October 2005 Born/raised: Henderson, North Carolina Degree(s): Business/eBusiness degree, University of Phoenix First “real” job out of school: Receptionist for human resources and purchasing for Maria Parham Hospital in Henderson, North Carolina, out of high school while attending Vance Granville Community College at night.
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Some prior work highlights: 1. Worked for a cardiologist practice learning about coding, billing and reimbursement, and fostered interaction with physicians and surgeons. 2. Created vision for an offsite distribution center to support not only five acute care hospitals, but also 150 physician practices, urgent care centers and other facilities. This allowed for cost savings and bulk purchases. 3. Created a Leadership Team focused on quality outcomes and looking at savings through a different lens. Example: First in the nation to implement a therapeutic linen as part of daily inpatient care, lowering length of stay, reducing wound ulcers, and resulting in savings. A key mentor or event in your life: There are a couple of key events/mentors that shaped my focus on quality healthcare products, processes and cost. The first was my personal experience growing up with my mom, having multiple sclerosis, and seeing the lack of standardized products and processes of care – as well as the wide variation in cost. At age 11, I knew I would be in some field of healthcare. I had a knack for numbers, and analytics, so I began learning and exploring as much as I could about data programs, optimization and efficiency. One of my bosses – Barry Cunningham – had a huge impact on me. He called me into his office one day and said, “You are very smart and could really excel, but you need to get out of your own way. You need to show up believing in yourself and the capabilities you have. Set yourself apart. Come in dressed and ready for the position you desire.” So I began to interact as an operations manager over the distribution and office functions, which was a springboard into an ever-growing role in healthcare.
December 2018 | The Journal of Healthcare Contracting
Cecile Hozouri Assistant Vice President, Supply Chain Management Scripps Health San Diego, California
Comments by nominator Craig Dabbs, HealthTrust account director: Cecile has built a high-performing team of supply chain professionals who drive the contracting efforts at Scripps Health. She is a master at developing and communicating strategy while empowering her team to achieve results. Cecile has also had great success integrating clinical input into supply chain decision-making. Her approach blends analytics, operations and clinician support to drive the best patient outcomes possible while protecting the bottom line. Scripps Health at a glance: Scripps Health is a private, nonprofit, integrated health system in San Diego, California, comprising five acute-care hospital campuses, home health care services, 27 outpatient centers and clinics and hundreds of affiliated physician offices throughout the region. Year joined Scripps Health: 2003 Born/raised: Minnesota Degree(s): BS, management information systems, Metropolitan State University, St. Paul, Minnesota. MBA, Capella University. Lean Six Sigma certified. First “real” job out of school: Certified pharmacy technician at St. John’s Health East inpatient pharmacy and Target Pharmacy in Roseville Minnesota. Some prior work highlights: 1. I began my healthcare career as a certified pharmacy technician for multiple inpatient hospital pharmacies while attending college, which gave me over eight years’ experience working directly with pharmacists and physicians understanding oncology, dosing and the importance of centering care around the patient. 2. While working in hospital pharmacies, I was involved in care processes and utilizing multiple IT systems, which
The Journal of Healthcare Contracting | December 2018
advanced my career into healthcare consulting. Throughout my consulting career I was involved in a variety of projects, such as implementation of patient care and financial IT systems, redesigning departmental workflows and staffing based on new management systems. 3. Scripps Health has leveraged my talents and involved me with leading significant change for the organization. Supporting and leading Scripps Health’s strategic objectives has been the most rewarding in my career.
“ I’ve been very fortunate to have leaders who allowed me to lead areas of improvements that have changed our supply chain from a traditional model to one that supports patient delivery systems, provides value at the point of use, and encourages real-time health system concepts.” A key mentor or event in your life: 1. Working with nurses, physicians and staff has been the most influential experience in my career and personal growth. Their feedback has improved who I am as a leader and has had a profound impact on my work, and on my supply chain team’s relationships and results. 2. I ’ve been very fortunate to have leaders who allowed me to lead areas of improvements that have changed our supply chain from a traditional model to one that supports patient delivery systems, provides value at the point of use, and encourages real-time health system concepts. 3. One leader in particular – Scripps Health Corporate Senior Vice President Lisa Thakur – has been very supportive in giving me autonomy to assess, redesign, improve, lead and encourage teams to think differently and out of the norm. Her confidence and counsel have inspired me to be innovative and expand my skills to lead transformation and change.
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WOMEN LEADERS IN SUPPLY CHAIN
Neeta Moonka, M.D. Physician Advisor, Supply Chain Virginia Mason Medical Center Seattle, Washington
Comments by nominator Ken Freeman, vice president, Virginia Mason Medical Center: For the past six-plus years, Dr. Moonka has served as clinical supply chain liaison working in medical products and physician preference item value analysis and GPO utilization. After practicing medicine for over 25 years within the hospital and surgery center environments, she joined Virginia Mason as the supply chain physician advisor in 2012. Dr. Moonka currently provides expertise and experience in the following areas: • Physician engagement to implement PPI (physician preference item) supply standardization. • Supplier PPI negotiations. • I mplementing and maintaining a value analysis process as well as new technology analysis. •U nderstanding of system-based thinking as well as the Virginia Mason Production System (VMPS); the Toyota Production System-based process improvement program.
“ Healthcare is the business of caring for people, and I try to extend that to my relationships with the supply chain, with my clinical partners and with my supplier partners.” Virginia Mason Medical Center at a glance: Includes 336-bed Virginia Mason Hospital; a primary and specialty care group practice of more than 500 physicians; nine regional medical centers; and Bailey-Boushay House, a skilled-nursing and outpatient chronic care management program for people with HIV/AIDS.
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Year joined Virginia Mason: 2012 Born/raised: Born in India, raised outside of Philadelphia; lived most of my life in New York and New Jersey. Degrees: BS, major in biology, Juniata College, Huntingdon, Pennsylvania; medical degree from Temple University; residencies in anesthesia and pediatrics at New York University Medical Center. First “real” job: Attending anesthesiologist at NYU Medical Center Some prior work highlights: I have had many jobs in my life, from being a short order cook to establishing a pre-operative clinic in a large community hospital, and now working in supply chain. I am an analyst at heart, so I like to increase efficiency and improve quality in whatever work I am involved in. I am also a lifelong learner and enjoy learning about the healthcare supply chain and understanding how supply chain impacts both the clinical and financial aspects of healthcare. A key mentor or event in your life: The single most impactful event in my life was going to medical school, especially Temple University, in north Philadelphia. In medical school, I met people from all backgrounds – social and economic. Being a physician meant asking questions and listening to people talk about the most personal aspects of their lives with openness and without judgment. I have heard many stories during my time in medicine and have developed an understanding that almost everyone in life has struggles and needs help and support. That learning has been strengthened throughout my life by mentors, a high school teacher, my children’s pediatrician, and now the leader of our group purchasing company. Healthcare is the business of caring for people, and I try to extend that to my relationships with the supply chain, with my clinical partners and with my supplier partners.
December 2018 | The Journal of Healthcare Contracting
Brenda Peterson Vice President/General Manager Vizient Member Business Ventures/Captis Minneapolis, Minnesota
Comments by nominator Chris McDown, senior vice president, Member Business Ventures, Vizient: “As the vice president and general manager of Captis, Brenda draws on her nursing, consulting and financial expertise to manage Captis operations. In 2017 alone, network contracts yielded $125M in savings for over 80 Vizient members. She is committed to helping Captis and Vizient members work together on initiatives that result in improving performance indicators (economic, clinical, and operational).” Captis at a glance: Captis (formerly Upper Midwest Consolidated Services Center) includes 85 health systems across the country, whose member/owners act as a single entity for contracting and other programs. Year joined Vizient: 1998 Born/raised: Born in Belle Fouche, S.D., moved to Minnesota at an early age. Raised in Chanhassen, Minn. Degree(s): Attended Normandale Community College and received an AA in Nursing, but quickly learned that advancement opportunities were limited without a bachelor’s degree. Received bachelor’s in nursing from the St. Catherine University. Following my bachelor’s, I was unsure of which journey to take: nurse practitioner and remain in direct patient care, or shift to business to assist nurses in understanding the finance side of healthcare. I chose to attend the University of St. Thomas and received an MBA (healthcare) in 1995. First “real” job: Upon graduating from my AA program, the Twin Cities (Minnesota) was experiencing a nursing strike that impacted the availability of nursing positions at the majority of the local hospitals. This meant taking a position in a long-term-care facility. Within one year I advanced to assistant director of nursing. After two years, I accepted a position in oncology at a local hospital.
The Journal of Healthcare Contracting | December 2018
Some prior work highlights: 1. Managed the start-up of a home infusion therapy service line for a national DME company in the Twin Cities metro area. This position opened the door to learning about logistics and supply chain processes. I not only managed the start-up, I provided nursing care, served as the billing staff and did anything and everything needed for successful day-to-day operation. 2. S ince embarking on my supply chain career path with Vizient, I have had the privilege to support yet another start-up. This one was founded by ten “like-minded” healthcare systems who wanted to speak with one voice to the healthcare market by committing volume for products and services. This company is now known as Captis (formerly Upper Midwest Consolidated Services Center). 3. One of my most important career experiences was with my local community hospital. It was here that I experienced healthcare through my own eyes as a patient and the eyes of my family and friends as patients, and through my appointment as a member of the Board of Trustees for three terms over nine years. I held positions including Board Chair and Vice Chair, I led the Finance and Strategic committees and navigated a very political environment during my tenure. I facilitated the board through a strategic planning and visioning process that led to integration with a larger health system and sustainable healthcare for the community. A key mentor or event in your life: I had the great fortune to work for a wonderful manager and mentor – Paula Welford – early in my nursing career. She taught me two core life lessons that have shaped my leadership and management style as well as my approach to work/life balance: 1) Love what you do, and when you don’t, it’s time to do something new; and 2) “It’s not my job” should not exist in your vocabulary.
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WOMEN LEADERS IN SUPPLY CHAIN
Elaine Prince Vice President Operations Support Encompass Health Birmingham, Alabama
Comments from nominator Eric Daluga, director national accounts, acute care sales, Medline Industries: “Elaine has the incredibly difficult job of coordinating and supporting the supply chains of over 130 acute care rehab hospitals. Being on the supplier side and having worked with Elaine for 6+ years now, she takes the time to understand all facets of a project before making a decision. And she does all this while having the difficult job of balancing life with two young children – and never missing a beat.”
“ I had the opportunity to help lowincome people maximize their tax returns, work with Habitat for Humanity, deconstruct homes in New Orleans after Katrina, and teach at-risk middle schoolers.” Encompass Health at a glance: 130 rehabilitation hospitals, 272 home health and hospice locations in 36 states and Puerto Rico. Encompass Health is the result of the union of HealthSouth Corp. and Encompass Home Health & Hospice. Year joined Encompass Health: 2009 Born/raised: Born in St. Louis, Missouri; spent formative years in Pittsburgh, Pennsylvania; relocated to Auburn, Alabama. Degree(s): Bachelor’s in industrial and systems engineering with a minor in business engineering technology, Auburn University. Masters in health systems, Georgia Tech. First “real” job: Implemented an electronic medical record system for a large home health and hospice nonprofit in the Atlanta area.
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Some prior work highlights: 1. D eveloped our Beacon reporting tools to aggregate spend from our 125+ hospitals to be able to trend, benchmark and analyze supply, food, and drug data, which has led to improved contracts, increased adoption to standards and identification of opportunities. 2. Implemented a food procurement application to better manage, report, and automate our food standards, purchasing, and invoicing. 3. Rolled out programs to improve patient satisfaction and care, including video remote interpretation, mobile radiology service, local produce vendor, and remote temperature monitoring software. A key mentor or event in your life: After graduating college with an engineering degree and interning with an oil company, I was seeking direction on how to best use my education. So instead of starting a goodpaying job in a production facility, like many friends, I took one year “off ” to volunteer with AmeriCorps. In the AmeriCorps NCCC [National Civilian Community Corps] program, 18-24-year-olds travel around the country to work with non-profits for four 6-to-8week stints. I had the opportunity to help low-income people maximize their tax returns, work with Habitat for Humanity, deconstruct homes in New Orleans after Katrina, and teach at-risk middle schoolers. I also lived with 10 diverse peers in different environments (including a school, a warehouse, and an army tent on the beach of Biloxi, Mississippi) where we ate, played and worked together. That one year helped me realize I wanted to devote my work to directly improving the lives of others, which led me to pursue a masters and career in healthcare.
December 2018 | The Journal of Healthcare Contracting
Lisa Scannell Corporate Director, Supply Chain Management Partners HealthCare Boston, Massachusetts
Comments from nominator Nancy Swierczyski, vice president of sales and client management, Vizient: Lisa Scannell has provided strong leadership to a very large supply chain team in the Boston market. Lisa and her team are focused on contracting excellence, ethical compliance and supplier diversity. Year after year, she has been instrumental in leading her team to successful savings targets for her organization. Under Lisa’s leadership, the supply chain team has had a positive contribution to Partner’s mission of enhancing patient care, teaching and research.
A key mentor or event in your life: 1. Looking back over my career, I have had numerous mentors who have been integral to my success in Partners HealthCare. These individuals have undoubtedly shaped my career by simply listening, providing candid feedback, and guidance. My first director in supply chain – Pat Jordan, COO at Dartmouth-Hitchcock – imparted to me the concept that cohesive teams open the door to innovation and collective success. As I have grown within Partners HealthCare, I have carried these lessons with me.
Partners HealthCare at a glance: Partners HealthCare is an integrated health system founded by Brigham and Women’s Hospital and Massachusetts General Hospital. In addition to its two academic medical centers, the Partners system includes community and specialty hospitals, a managed care organization, community health centers, a physician network, home health and long-term care services, and other health-related entities. Year joined Partners: 1995 Born/raised: Medford, Massachusetts Degree: Bachelor’s in management/marketing, Northeastern University, Boston First “real” job out of school: Corporate marketing department, Star Market Some prior work highlights: The past year has been very exciting for Partners Supply Chain. Supply Chain is one of 13 teams engaged in Partners 2.0 – a multi-year, system-wide initiative to take advantage of opportunities to optimize efficiency across Partners HealthCare and our institutions. Collaborating with our physicians to create value and improve the healthcare supply chain has been instrumental in our goal of ensuring high quality, cost effective care.
“ Walking side by side with patients and family members humbled me; this experience truly communicated the purpose of the organization and solidified I was in the right place.”
The Journal of Healthcare Contracting | December 2018
2. I believe that the most momentous period of my career was my first year at Massachusetts General Hospital (MGH). It was within the walls of MGH that I experienced the integral role supply chain plays in the delivery of quality, cost-effective care. Walking side by side with patients and family members humbled me; this experience truly communicated the purpose of the organization and solidified I was in the right place.
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HSCA
GPOs: Providing value in a constantly changing healthcare industry An overwhelming amount of research and realworld evidence has repeatedly affirmed what I’ve known to be true over my nearly 40-year career in healthcare: GPOs deliver cost savings, promote competition and transparency, advocate for innovative and common-sense policy solutions, and help their customers anticipate and respond to an ever-evolving healthcare landscape. While the challenges faced by providers are continuously changing, one By Todd Ebert thing has remained constant – the critical role GPOs play in helping providers care for their patients. GPOs deliver cost-savings to the healthcare system. This is a settled matter, having been repeatedly studied by economists, industry, and in independent academic settings. GPOs save hospitals, Medicare and Medicaid, and taxpayers up to $55 billion annually. A 2018 study by the Wharton School and American Hospital Association found that hospitals are overwhelmingly satisfied with their GPO cost-savings. GPOs promote competition in the procurement services market. In 2017, former U.S. Federal Trade Commission Chairman Jon Leibowitz examined the GPO market and determined that GPOs improve efficiency and reduce costs in the supply chain for healthcare providers, patients and taxpayers by negotiating lower prices and lowering transaction costs. Providers voluntarily decide whether to join a GPO; they can choose from multiple GPOs; and they commonly use multiple GPOs simultaneously. Providers often own their GPOs, and they can also procure supplies directly from vendors. As a result, the supply procurement market is highly competitive. GPOs are the most transparent industry in healthcare. GPOs disclose all administrative fees in writing to members at least annually; any GPO fee above 3 percent must be included in the contract agreement; GPOs make all fee information available at the request of the Secretary of Health and Human Services; and hospitals must report GPO fee distributions as part of their Medicare cost reports.
Providers often own their GPOs, and they can also procure supplies directly from vendors.
The GPO industry has been a positive advocacy force, promoting common-sense, innovative, marketbased solutions to help providers confront the myriad challenges facing the healthcare supply chain. GPOs have joined other leading healthcare organizations in supporting the CREATES Act, legislation that will help increase competition in the generic drug market by eliminating a loophole that allows brand-name drug makers to engage in unfair delay tactics. GPOs successfully advocated for expedited FDA review and approval of abbreviated new drug applications (ANDAs) for products where there were three or fewer manufacturers, and provided feedback to the DEA regarding a proposed rule on annual opioid production limits. GPOs’ line of sight across the healthcare system means they are unparalleled in their ability to help their customers anticipate and respond to evolving challenges. While cost-savings and delivering the best products at the best value remain central to the GPO core mission, hospitals and healthcare providers are increasingly relying on GPOs for a broad range of services integral to cost-effective patient outcomes, including, but not limited to, emergency preparedness and disaster response, drug utilization and healthcare cybersecurity. As I retire after nearly 40 years in healthcare, I leave proud to have worked in an industry dedicated to problem-solving for America’s healthcare providers so they can focus on their mission of delivering high-quality, cost-effective care.
Todd Ebert, R.Ph., is president and CEO of the Healthcare Supply Chain Association (HSCA).
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December 2018 | The Journal of Healthcare Contracting
By Jeff Girardi, HIDA Getting the Most from Your Most Important Supplier
Making the Case for Quality Products I frequently hear from distributors and manufacturers that one way providers can get more value from their supplier relationships is to align product decisions to quality and outcomes metrics. That sounds like a smart idea in theory, especially given the current reimbursement climate. But what does that actually look like in practice? If you ask 50 supply chain executives, you might get 50 different answers. Fortunately, I had the opportunity to hear three such experts share their product opinions at HIDA’s Streamlining Healthcare Expo & Business Exchange. During a “Making the Case for Quality Products” panel, Eric Tritch, UChicago Medicine Vice President of Supply Chain, Tom Lubotsky, former Advocate Health Care Chief Supply Chain Officer, and Michael Prokopis, Steward Health Care Vice President of Supply Chain, provided several unique insights on the topic.
Cost is king Despite a growing emphasis on outcomes, supply chain leaders still focus primarily on cost and the measures that contribute to costs. “Besides price, total cost of ownership is crucial when evaluating products,” Tom Lubotsky explained. “Recalls, backorders, and the reliability of having available product on hand can significantly affect costs.” Clinical outcomes studies are helpful when making product decisions, especially if a potential switch carries more upfront costs. “If it’s an incremental cost, but the benefits are clearly evident, it’s an easy decision,” commented Eric Tritch. “If it’s a significant cost, we want the data beforehand to prove it, and it needs to be legitimate.”
The Journal of Healthcare Contracting | December 2018
HIDA PRIME VENDOR:
Panelists mentioned their teams use dashboards and scorecards to measure performance, but they also value suppliers with good process controls in place that are tied to product quality and help enhance outcomes. “There’s no single, universal measure for all providers to rally behind,” said Tritch, “but length of stayrelated ones are very important.” Providers are also willing to help their vendor partners with product evaluations. “If I have a product or safety decision to make, I have 36 possible hospitals that can conduct a trial for me in real-time,” shared Michael Prokopis.
It’s patients and people One factor that can get lost among data and product discussions is the human component, both for patients and care providers. “Ease of use and staff training factor into product decisions,” said Tom Lubotsky. “If there are real efficiencies to be gained, that’s something that resonates with providers.” Patient satisfaction absolutely plays a role in supply chain decisions, as evidenced by a story Michael Prokopis shared. When evaluating beverage contracts for his organization, he received the directive, “We don’t care which you choose, just don’t negatively impact patient satisfaction scores.” Panelists closed by stressing that suppliers and providers alike would be wise to remember that patients are the ones who need to be best served by quality products. “Work with us beyond the point of sale,” said Eric Tritch. “If I know your products are aligned with our patient goals and sales reps are incentivized beyond sales volume, that goes a long way.”
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Change Management: The Key to Navigating a New World Leaders from some of the nation’s top health systems discuss change and the supply chain executive
“You can never underestimate the effort that goes into change management,” says Gary Fennessy, vice president and chief supply chain executive for Northwestern Memorial HealthCare in Chicago. He knows. After all, Northwestern – like many health systems around the country – has seen its share of change and growth in the recent past. Much of that effort falls on the shoulders of supply chain executives. “Success for the supply chain leader of the future will have less to do with being a subject matter expert, and more to do with the ability to manage change in people,”
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adds Donna Van Vlerah, senior vice president of support division, Parkview Health, Fort Wayne, Indiana. The willingness and ability to tap into the talents and knowledge of others will be key in a complex world. Fennessy, Van Vlerah and executives from Indiana University Health (Jennifer Alvey, Pharm D, executive director, strategic sourcing, supply chain operations) and UChicago Medicine (Eric Tritch, vice president supply chain and logistics) recently participated in a panel discussion about change and the supply chain executive. They agreed the ingredients for success are communication, collaboration and leadership. The event was sponsored by Suture Express.
December 2018 | The Journal of Healthcare Contracting
Change is about people Due to mergers and acquisitions, Northwestern has grown from 6,000 employees and $1.3B in revenue to more than 20,000 employees and $5B in just a few years. In September 2018, the system completed its most recent merger, this with Centegra Health System. With growth comes additional complexity, said Fennessy. Rapid growth tests your systems and support structures. It may take a while, but you can work through those Donna Van Vlerah thorny logistics and business issues, he said. “But at the end of the day, the real complexity revolves around people and change management.” Northwestern merged with Cadence Health three and a half years ago, and only recently has it felt that supply chain services have been fully transformed. “If you try to rush it, you’re in a world of hurt, and it can actually delay the integration efforts,” said Fennessy. And that goes both ways. That is to say, not only have the former Cadence Health hospitals been called to adapt to the Northwestern way of doing things, but Northwestern has had to adapt to new ways as well. “We can’t jump to the assumption that historical practices were always best practices. During every integration, there have been best practices adopted within supply chain from the acquired facility. It is a two-way integration. Every integration effort results in a ‘better Northwestern.’” Eric Tritch In a system undergoing rapid change, direct conversations with employees are a necessity. And those conversations are, at least initially, quite personal. “The most frequent questions are: ‘Who’s my boss?’ ‘Where will I be located and do I have to move?’ ‘Will my role change?’ ‘Will my compensation and benefits change?’”
said Fennessy. Only after those questions have been honestly and succinctly answered can the supply chain team take its customers to the next level of integration. Employees want to know what disruption will occur to them personally as part of the merger and integration. Further, the existing management team may be assuming new areas of responsibility, and those same questions need to be answered. Never assume, and let the dialogue continue. Every month, Fennessy and his team travel to meet with management
“ We’re focusing on value proposition, that is, thinking about the dollars that flow from all these various logistical activities in the health system.”
The Journal of Healthcare Contracting | December 2018
– Donna Van Vlerah
and the executives of the facilities that have become part of the Northwestern system. “It calls for lots of traveling, lots of face-to-face time,” he said. “But you can’t get the same results through Webex and conference calls. “My experience, and what we hear back from the customer, is that a personalized approach with faceto-face contact makes all the difference in terms of how well integration is accepted.” Some departments continue to hold on to their supply chain duties, but that’s changing. “We identify those areas that are willing to move forward with us, and we build on their successes,” said Fennessy. “Now we’ve gotten to the point where we’re asking ourselves, ‘Do we need a customer service person on our team?’
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SUPPLY CHAIN ROUNDTABLE “We are shifting from a supply chain to a value chain support structure, and driving customer satisfaction as a key outcome for success”
The mission is changing On Chicago’s South Side, UC Medicine is undergoing its own metamorphosis, said Eric Tritch. “We’re early in our development as a system, but the shift has been dramatic.” Acquiring a community hospital, physician practices and a myriad of ambulatory care facilities, including family care centers, has forced the academic medical center to think differently about its mission. Supply chain has followed suit. “We realized non-acute care was coming at us quickly,” said Tritch. So supply chain installed someone who focuses solely on nonacute-care supply chain management. “It’s an evolution in management. But it leads to a consistent approach to supply chain management, one that we hope we can replicate as we continue to grow.” With growth comes more business transactions – RFPs, contracts, purchase orders, invoices, returns, etc. That calls for integration of data systems throughout the health system. That in turn calls for implementing industry 1. Engage in honest, open dialogue standards for identifying products with key stakeholders. Answer and ship-to locations, Tritch said. the tough questions. Regarding newly acquired 2. Build on your successes. The non-hospital sites, supply chain results are contagious. executives quickly learn that pur3. Ask trading partners for help chasing and managing supplies is in effecting change, including often a part-time job for someone product conversions. in those locations – a nurse or of4. Keep the service aspect of supply fice manager. Supply chain’s job chain front and center among the is to automate the process, so the entire team. people at those facilities can focus 5. Focus less on being a subjecton their primary responsibilities, matter expert, and more on including patient care. learning how to tap into the skills Supply chain teams can use of others. all the help they can get when
“ During every integration, there have been best practices adopted within supply chain from the acquired facility. It is a two-way integration.” – Gary Fennessy
Building blocks to managing change
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managing conversions of products, distributors or GPOs, he added. “We are asking our manufacturer partners, ‘Can you help us through that change? Can you ‘live’ with us as we go through a conversion?’ “I’m optimistic there are still big opportunities for costsavings, particularly in physician preference items, the lab, pharmacy, etc.,” Tritch said. “And there are still opportunities for us in improved utilization.”
A holistic approach Since joining Parkview Health eight years ago, Donna Van Vlerah has been a change champion. As such, she has adopted a broad perspective on supply chain management – one that extends far beyond supplies.
December 2018 | The Journal of Healthcare Contracting
“I’m not focused on med/surg only; I’m focused on facilities, environmental services, nutrition, pharmacy and more,” she said. In fact, Van Vlerah doesn’t think in terms of “supply chain,” but rather, “logistics.” Having that broader focus is critical if health systems are to achieve the cost-savings they’re looking for, she believes. “We’re focusing on value proposition, that is, thinking about the dollars that flow from all these various logistical activities in the health system,” she said. “We have to get people to start thinking about what’s critical.” Parkview Health’s supply chain pushes products to its customers, freeing them from the burden of acquisition and inventory management, she said. “Our goal is to be proactive, not reactive. We want to help free up people to do what they’re supposed to do – provide patient care. Savings are a natural consequence, because you have practices that are consistently managed in every sector of your business.” Keeping tight control of product movement with a point-of-use system has improved charge capture and inventory turns, as well as product availability, at Parkview. “Departments have jumped onto our bandwagon because of our high fill rate,” she said. Van Vlerah thinks about and manages her department as a support division, not simply a supply chain division. “We are constantly asking ourselves, “‘Who are our stakeholders?’
“ We’re looking at more of a partner relationship with our vendors, where we share data, including clinical outcomes.”
– Jennifer Alvey
‘How can we influence them to get the outcomes we’re after?’ “You have to constantly re-evaluate your practices, and that means creating a culture that people can challenge. It’s a holistic approach. And our leaders are empowered to run their book of business as they see fit.”
Self-distribution When Jennifer Alvey joined Indiana University 17 years ago, the system comprised four hospitals. Now IU has 17.
The Journal of Healthcare Contracting | December 2018
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SUPPLY CHAIN ROUNDTABLE To service all those facilities, the health system opened a self-distribution center in July 2018, bringing it up in phases – first servicing four acute-care sites, then another three. Next will be the academic health center. “It has been an adventure,” said Alvey. By reviewing product usage at each of the facilities and then stocking the center with inventory, supply chain uncovered a plethora of products and vendors throughout the system. “Cleaning that up has allowed us to optimize the service center and leverage key partners,” she said. Although a hand“We’re ful of bigger vendors early in our balked at shipping to development the health system’s disas a system, tribution center, most of the smaller ones but the shift were happy to do so. has been “I think that vendors dramatic.” that don’t sell exclu– Eric Tritch sively to the healthcare market don’t see the financial benefit of working with us on our center; they just like working with their distributors. But vendors that are solely in healthcare seem to be more open to it.” Technology makes the whole operation efficient, she added. “There is significant cost saving, when you consider distribution fees and other factors, and we’re looking at expanding services.” Alvey’s team is looking at things like backorders and – working with IU’s Office of Clinical Effectiveness – is moving business to more reliable partners. “I think it helps to give a wakeup call to vendors every so often.” In the next couple of years, IU supply chain will focus on optimization and standardization. And it will do so in conjunction with clinicians. “We have more people at the table,” said Alvey. At the same time, the “traditional” salesperson will be forced to change his or her approach. “We’re looking at more of a partner relationship with our vendors, where we share data, including clinical outcomes.”
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December 2018 | The Journal of Healthcare Contracting
Meet the disruptors Wayne, Indiana. Some already are, she says, pointing Change is characterized by disruption. In fact, change to concierge medicine among physicians as an exis disruption. Successful leaders embrace it. That was ample. (In concierge medicine relationships, the pathe opinion of four supply chain leaders who particitient pays the physician an annual fee or retainer for pated in the recent Suture Express-sponsored roundhealthcare on demand.) table discussion in Chicago. In response to inexorably rising costs, hospitals The “Amazon experience” may be the Holy Grail for and health systems will take matters into their own healthcare purchasing, according to the supply chain hands and dabble in manufacturing and distribuexecutives. It is quick, easy, and user-friendly. But can tion, said Jennifer Alvey, Pharm D, executive director, the online shopping experience that consumers enstrategic sourcing, Indiana University Health Supply joy at home be transferred to B2B purchasing, particChain Operations. Case in point: Civica Rx, the nonularly one as complex as healthcare? Not easily. Amazon-style “shopping” and health system formularies don’t The “Amazon experience” may be the Holy Grail for mix well, said Gary Fennessy, vice healthcare purchasing, according to the supply chain president and chief supply chain executives. It is quick, easy, and user-friendly. But can executive for Northwestern Memorial HealthCare in Chicago. the online shopping experience that consumers Nor does the Amazon experience enjoy at home be transferred to B2B purchasing, encourage users to grasp the particularly one as complex as healthcare? complexity and full cost of transactions within healthcare. profit manufacturer of generic medicines, formed “However, we would be foolish to ignore the role recently by Intermountain Healthcare and four Amazon plays in the healthcare market,” he said. “At a other health systems. minimum, they are forcing us to re-examine the way Tritch believes the fact that some payers are bewe think about our customers, the way we do busicoming providers has the potential to disrupt healthness, and our current business relationships. From my care delivery in ways that are still not understood. perspective, those are positive and productive discusUnitedHealth’s Optum, for example, already has sions. The market over time will dictate how this all 30,000 physicians (employed and affiliated), and if its plays out, and from my perspective it will be imporproposed acquisition of DaVita Medical Group is contant to watch closely and adapt when necessary.” summated, it will add an additional 17,000 physicians Added Eric Tritch, vice president supply chain and and other care providers. logistics, UChicago Medicine, “We want our team to Fennessy believes that the way hospitals are be thoughtful and critical thinkers. Amazon-like tools reimbursed may be the ultimate disruptor. Highdon’t necessarily encourage that.” deductible health plans have already changed the But technology isn’t the only disruptor that way consumers view healthcare and purchasing dehealthcare executives are likely to encounter in the cisions, he pointed out. “Just imagine what would next few years. happen if there was a movement to a single-payer Healthcare providers will start thinking like resystem or a significant shift to direct contracting tail businesses, says Donna Van Vlerah, senior vice with large employers,” he said. president of support division, Parkview Health, Fort
The Journal of Healthcare Contracting | December 2018
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MODEL OF THE FUTURE
enough to meet the needs of the organization. We decided that, if we were going to reorganize to optimize the system, we should take the opportunity to meet the strategic needs of the enterprise.
The ConsumerCentric Supply Chain An update on THR’s Business Transformation Project In the summer of 2017, Shaun Clinton, senior vice president of supply chain management for Texas Health Resources, embarked on a business transformation project that was to coincide with the organization’s migration to a more consumer-centric way of operating. “The team and I are extremely excited to begin to build what a future-state, cutting-edge supply chain organization will look like over the next few years,” he said at the time. “For me, it comes down to, ‘How are we going to address the needs of our customers, and what products will we produce for them so they can do their jobs well and see value?’” Clinton recently brought the Journal of Healthcare Contracting up to date on the project. JHC : Why did you undertake the business transformation project? Shaun Clinton: I saw a need to use the new tools to align Supply Chain in such a way that the enterprise would view us as a strategic business partner. We had to become “userfriendly,” that is, transparent and nimble
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Shaun Clinton
JHC: What were your initial expectations or vision for the project? Clinton: First and foremost, I wanted to build clearly defined career paths for those employees who chose to make supply chain their lifelong vocation. I wanted a way for people to understand the skills, education, and experience needed to advance, and how best to get those things. Career path should be something that people talk to their managers about regularly. Along with that, we wanted to create a source-to-settle organization aligned around categories, so we would be modular enough to respond to whatever the organization was going to take to the market in the future. Today, a category might be “hip implants.” But we need to be ready to respond to different or broader categories across the continuum, like “sports medicine.” The idea is to build subject matter expertise across the care continuum, so we can come to know the true cost of care. Today, that knowledge is stored in different systems, under the direction of different people (e.g., sourcing, contracting, procurement, etc.). Our organization’s long-range strategic plan is to become more focused on the consumer. How do we build value for the consumer? What role can Supply Chain play? How do we build brand loyalty? What skill sets in Supply Chain can help advance that long-range strategic plan?
December 2018 | The Journal of Healthcare Contracting
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MODEL OF THE FUTURE
JHC: Over the past year and a half, what have been the two or three biggest challenges you have encountered in implementing the business transformation project? Clinton: The biggest challenge – and this shouldn’t be a surprise – is making sure everyone knows we aren’t changing just to change. Every new leader brings in their own vision, but this time, not only did I have my vision, but we as an organization were embarking on a long-range strategic plan – and we were installing new ERP and clinical systems too. The platform was going to change with or without me in the role. That highlights the second biggest challenge: change fatigue. A lot of things are changing in healthcare. It’s easy to lose sight of the fact that not everyone has the stamina to keep up.
Clinton: The overall vision hasn’t changed, but you find little things that need to be tweaked in order to enable the vision. I’m a firm believer that if you believe in the vision, you move forward, knowing that you may have to rethink some of the tactics to achieve it. For example, I slightly modified my initial thoughts on how to organize the department due to system limitations. It didn’t change the spirit of what I wanted to do, but I couldn’t fit a square peg in a round hole, as it were. I’ve also had to rethink how much I can ask technology to do in certain areas. I don’t have unlimited funds! JHC: What remains to be done? Clinton: Over the next few months, I’ll be tying the pieces together for the Supply Chain team and presenting the unified vision. Everyone has seen much of it, but a few things still need to be put in place. Then we’ll begin the heavy training and roll into the new organizational structure and ERP in January 2019. The rollout will continue for a couple of years, but the foundation will soon be in place. Finally, I’ll be “unveiling” the new Supply Chain to the organization. Again – many folks have seen parts of this, but it will be nice to connect the dots.
“ We wanted to create a source-tosettle organization aligned around categories, so we would be modular enough to respond to whatever the organization was going to take to the market in the future.” And third, we have found it challenging to balance everyday operations with our transformational efforts. I still have to make sure product shows up at the right place at the right time. JHC: What have you learned thus far as you have progressed through the project? Clinton: I have learned that I have the greatest team anyone could ask for. It takes a great deal of patience to go through something like this, to wait for everything to come together – and not get frustrated. This project has been underway for a year, and only now are we getting ready to roll out our vision for the different groups. JHC : Has your vision or initial expectations changed since you began the project?
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JHC : And when the dots have been connected, what will the rest of the Texas Health Resources team see? Clinton: They will see what Supply Chain has done to help meet the strategic needs of the enterprise, and they will recognize that Supply Chain is easier to deal with, much more user-friendly. JHC: If you were to start the process over again, what would you do differently? Clinton: Start with a long vacation! In all seriousness, I would make sure to share the full vision with my leadership team a bit earlier than I did. I certainly wasn’t trying to be opaque, but it did take an outside party to remind me that uncertainty can cause angst, and to help me realize I wasn’t sharing enough information quickly enough. To their credit, my team has bought in to the course I charted. It has been a great source of accomplishment to see the light bulbs go off with everyone.
December 2018 | The Journal of Healthcare Contracting
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Taking control
Take Control Your health system’s non-acute sites are multiplying. Is supply chain’s effectiveness keeping up? You may ask yourself, “Why should I waste my time and energy on just 2 percent of my total supply chain spend? After all, that’s about how much my non-acute facilities spend in total!” Good question. That 2 percent will account for a much larger percentage of your headaches if you don’t get non-acute spending under control. Chances are, you’re going to need help in taking control. “Already, 95 percent of patient visits occur outside the hospital”, said Greg Colizzi, Vice President That percentage will no doubt grow in the years to come.” of Marketing, Health Systems, for McKesson, addressing a recent Supply Chain Leadership Forum in Chicago for small and midsize IDNs. “ “It’s a whole new world outside the hospital,” he said. “You’re dealing with people who are used to practicing independently. They take care of patients the way they feel is best, and they use the resources that they believe will help them do that.” Needless to say, efficient supply chain management isn’t always top of mind. Consider this: If an IDN supplies 100 doctors in 25 facilities, supply chain has to manage an average: • 25 central stocking locations. • 25 labs. • 25 pharmaceutical stocking locations. • 3.5 exam rooms per doctor. That’s 25 micro-supply chains, 425 stocking locations, and a lot of people placing orders – none of whom are trained on supply chain. So how can the supply chain executive lead change across all those facilities?
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Gaining control of the non-acute continuum begins not with dictates, but rather, with buy-in, trust and, most of all, communication. It calls for stakeholder alignment across numerous functions, including pharmacy, lab, clinical and practice operations. “You have to manage [non-acute buyers and users] as you manage internal customers,” said one supply chain executive at the Leadership Forum. “You have to be the steward of the contracts and help them with their complexity.” For example, to supply chain professionals, the merits of product standardization are obvious: It brings about efficiency, financial benefits and buying leverage. But the office managers and doctors who practice in the non-acute facilities may see it as something that supply chain is mandating in order to cut costs, with no regard for patient care. The challenge for supply chain is to demonstrate that standardization can help those non-acute sites reduce clinical variation, clinical staff training time, inefficient ordering processes, and time spent hunting for the right supply or piece of equipment. That means greater patient convenience and satisfaction, improved throughput, and more time on patient care. Managing the financial performance of multiple sites across the non-acute care continuum can be challenging. Several executives at the Leadership Forum pointed to the difficulty of gathering purchasing and usage data from multiple sites, with multiple information systems. Another noted the difficulty of managing backorders.
December 2018 | The Journal of Healthcare Contracting
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“How can we make this process less complicated?” asked one executive. “How can we streamline the delivery of products and services” to non-acute-care sites? “To succeed in the growing non-acute supply chain, professionals will have to rely on usable, intelligently presented reports on fill rates, order sources, formulary compliance, product variation and more”, said Colizzi. Armed with these reports, supply chain and the clinical/operational team
together may identify opportunities for savings, improved productivity and revenue enhancement. For more information on tools to help supply chain executives take control of the non-acute-care continuum, visit mckesson.com/takecontrol.
What will it take? said Pritchard. Today, it is not uncommon for leadThe profile of supply chain executives is growing in ers to earn a master’s degree in business, healthcare today’s expanding health system. But with a higher management, and even supply chain management. profile come more responsibility and expectations, After completing their degree work, they may pursue including control of an expanding non-acute-care training in Lean principles, Six supply chain. Sigma or quality improvement. How will tomorrow’s leader “AHRMM and SMI Successful supply chain leadexcel? With solid qualifications, pointed out that ers will cultivate their ability to competencies, experience and aspiring supply chain communicate with administrastrong personal traits, said tors, clinicians, large and small Journal of Healthcare Contractleaders must possess of people, vendors and ing Publisher John Pritchard, qualifications that show groups others. They will learn to despeaking to supply chain prothey are capable of cipher data and demonstrate fessionals at the recent Supply its significance to internal and Chain Leadership Forum hosted leading a supply external customers. by McKesson. chain program.” AHRMM and SMI believe Pritchard referenced a 2017 – John Pritchard future supply chain leaders report by the Association for should build their professional Healthcare Resource & Matebody of knowledge from their rials Management (AHRMM) own experiences, whether that and the Strategic Marketplace experience is gained outside Initiative (SMI), in which they the healthcare setting or within defined a vision of the healthit. They should regard every excare supply chain leader of the perience as one more way to future and constructed a guide build their body of knowledge. for career development. Finally, aspiring supply chain AHRMM and SMI pointed out leaders must display the positive that aspiring supply chain leadpersonal traits of a leader. “Leaders must possess qualifications ership as a qualification permethat show they are capable of ates everything,” said Pritchard. leading a supply chain program,
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December 2018 | The Journal of Healthcare Contracting
By Lisa Earle McLeod
LEADERSHIP
Be the Leader they Want A recent Forbes article revealed that 65 percent of people would rather have a different boss than a raise. Take that in for a moment: People would trade money for a better boss
Words of leadership wisdom When I was 25 years old, my father shared something with me that forever altered my perspective on leadership. I had just been promoted to my first manager position at Procter & Gamble. I called my father to give him the good news. “Congratulations,” he said, “You’ve just become the second most important person in the life of your employees.” “What do you mean?” I asked. He explained, “Next to your spouse, your boss has the power to make your life wonderful or miserable.” At the time, his comment petrified me. At the ripe old age of 25, half my team was twice my age. I was scared to death because I knew my father was right.
Your leadership makes an impact Think about your bosses and the impact they’ve had on you. Your boss is a presence at the family dinner table, in conversations with your friends, with your parents. When I was a kid we talked about my Dad’s boss, Mr. Keck, almost every night. I knew when he was in a good mood or bad mood. I knew about his family. My mother was a schoolteacher. I knew about her principals – the good and the bad. I even knew about the time one of them had a breakdown when she was getting divorced. If you’re the boss, you’re a looming presence in the lives of your people, whether you like it or not. You have the power to create happiness, or misery.
How to be a great leader After working with thousands of employees and leaders, I can tell you, the one mantra that will make you a better boss: Be all in. People want a boss who cares and who isn’t shy about showing it. Great leaders don’t shy away from emotion. They love their job, they love their customers,
The Journal of Healthcare Contracting | December 2018
and they love their team. And they’re not afraid to let everyone know it. For them, business is personal. They don’t shy away from difficult conversations. They care enough to address the tough stuff, head on. They give direct feedback. Great leaders are attuned to the emotional undercurrents of their organization. They’re not perfect, but their team knows their passion comes from their belief in a cause bigger than themselves. As a leader, you’re the one who tells your people whether this is just a job, or if their work actually matters. For great leaders, work is more than just a transaction – it’s a chance to make a difference in the lives of other people. They build a tribe of True Believers because they’re all in.
What will your team say about you? I wrote Leading with Noble Purpose to help leaders emotionally engage with their people. It’s a call for today’s managers to become the kind of leaders a team wants to follow. As the late Maya Angelou said, “I’ve learned that people will forget what you said. People will forget what you did. But people will never forget the way you made them feel.” Your team is going to talk about you at their dinner tables whether you like it or not. You can be the leader whose team experienced their work as just a grind. Or you can be the leader whose people say, “She really cares.” The choice is yours. What steps do you have to take to be the kind of leader your people want?
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CONSOLIDATED SERVICE CENTERS
Bigger IDNs, bigger likelihood of CSCs Consolidated service centers are growing in number and in size. So are the services they offer. But supply chain executives contemplating a CSC should proceed with caution. They’re not for everybody. Jamie C. Kowalski Consulting, LLC, and PerformanSC Supply Chain Ltd, released the 2018 edition of their research on CSCs, based on input from healthcare supply chain professionals that use a CSC model for their supply chain and other support services. It is the fourth such report published by Kowalski and PerformanSC since 2012. TECSYS Healthcare, a supply chain software company, sponsored the 2018 edition of the survey. In 2012, 24 CSCs were invited to complete the survey. For the 2018 survey, the invitees numbered 70. Much has changed since 2012, says Kowalski. Many older CSCs were developed by IDNs with fewer than eight (or so) facilities in a single metropolitan area, with the sites being close together. Today they are being developed for 30, 40, 70-plus hospitals, plus ambulatory surgery centers, long-term-care facilities and other primary care venues, which might cover a dozen or more states.
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Preparing for growth IDNs that have operated CSCs for a number of years remain focused on continuous improvement in terms of financial performance and quality of service, says Kowalski. Many are preparing for growth, that is, adding new providers to their customer network as a result of IDN mergers and acquisitions. They are also adding more support services. The survey team counted more than 20 unique services offered by the country’s CSCs. “If IDN mergers and acquisitions continue the rapid pace they are on
December 2018 | The Journal of Healthcare Contracting
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CONSOLIDATED SERVICE CENTERS
today, I believe there will be continued growth in CSCs,” says Kowalski. But supply chain executives should note that the time from start (strategy, feasibility study and design) to opening a CSC can be 20-30 months. Warehousing and distribution of supplies remain the foundation of most CSCs, says Kowalski. But many have decided to take advantage of relatively cheap (compared to hospital) real estate and add square footage for such activities as records storage, linen processing, and even office space. Pharmaceutical distribution is growing as CSCs learn the do’s and don’ts of licensing and other regulations, including IV mixing and unit dose packaging. Lab products, on the other hand, are frequently carved out for a lab specialty distributor, rather than handled by the CSCs, he adds.
CSCs: consolidation, standardization (of products, suppliers), some degree of centralization, and integration. Plus they have to be run like a business.”
Stay away That said, an IDN should resist building a CSC if any of the following are true: • The corporate culture of the IDN is risk-averse, or is incapable of driving product and process standardization. • Supply chain lacks a solid strategic plan. • The IDN has failed to commission anyone with knowledge of the CSC model to conduct a thorough feasibility study. • There is no compelling ROI or payback for the required investment. • The IDN simply lacks the talent to develop the right plan and execute it.
“ If IDN mergers and acquisitions continue the rapid pace they are on today, I believe there will be continued growth in CSCs.” CSCs come in many shapes, colors and models, says Kowalski: • Some use a third-party-logistics provider to manage warehousing and distribution, others do it all by themselves. • Some rely on a med/surg distributor to handle certain products or act as a backup, while others are totally into self-distribution. • Some rely on their GPO for contract pricing for some percentage of the products they buy, while others prefer self-contracting. • Some – particularly, larger IDNs – may offer different centralized functions out of multiple buildings. “There’s no one ‘pure’ way of doing this,” he says. “Each IDN has to decide the best configuration of the model for themselves. But the core principles apply to all
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What’s more, IDNs should probably resist the temptation to commercialize their CSC operation, that is, act as a “distributor” to facilities that are not part of the IDN. “It’s a matter of overhead,” says Kowalski. That includes salespeople and SKUs. “Most CSCs typically handle 7,000 to 15,000 SKUs. But a distributor can have 100,000 SKUs in the warehouse. Think about the cost of that inventory. It’s big.” Of course, the future will bring with it some wild cards, he says. For example, what impact will companies such as Amazon have on the supply chain and on CSCs? They could be a factor, though to this point they have demonstrated their expertise primarily at handling and delivering small packages, not pallet-loads of IV solutions. As healthcare CEOs, CFOs and others learn about the CSC model and see the success stories – which outnumber the failures – the risk-aversion factor will likely be reduced, says Kowalski. And as the industry gains more experience, the likelihood that a new CEO – that is, someone who was not involved in the original strategy – will close the CSC, will diminish. For more information on the survey, contact Jamie Kowalski at jamie.kowalski@jckcllc.com
December 2018 | The Journal of Healthcare Contracting
Health systems continue to rely on distribution There may be a buzz around consolidated service centers. But according to the Health Industry Distributors Association, most health systems continue to depend on healthcare distributors to access products. HIDA surveyed 171 IDN executives in 2017 to learn how systems will approach supply chain strategy in the coming years. The results were published earlier this year in a HIDA Horizon Report. Among the findings: • 90 percent of systems surveyed use a prime vendor distributor to acquire med/surg supplies. • 73 percent said they obtain “all or most” med/surg supplies from distributors. • 76 percent purchase a “few or some” supplies direct from manufacturers. • 10 percent purchase “most or all” supplies direct. • 40 percent plan to increase their reliance on distribution.
Many (71 percent) of surveyed health systems perform some internal distribution of med/surg supplies to care settings within their organizations, according to the HIDA report. The leading sites to which systems deliver med/surg supplies are: • Hospital (49 percent). • Laboratory (49 percent). • Physician office/clinic (49 percent). • Imaging center (46 percent). When asked if they will build a new supply chain facility in the next three years: • 7 percent said yes, they will build a consolidated service center. • 8 percent said yes, they will build a distribution center. • 28 percent said they are “not sure” about building a CSC. • 1 8 percent said they are “not sure” about building a DC. • 65 percent said they will not build a CSC. • 74 percent said they will not build a DC.
For more information on the 2018 Horizon Report, “Health System Supply Chain Strategies,” contact HIDA at www.hida.org.
The Journal of Healthcare Contracting | December 2018
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TRENDS
What can supply chain executives do to get a “seat at the table?”
Seat at the Table
“Outsourcing is a skill that can be honed and used as a vehicle for continuous improvements,” says Chapman. He says he recommends his clients use outsourcing as a skill to evaluate and improve internal operations and (in a way) steal shamelessly from what suppliers say they can do for you. Because the vast majority of what a supplier can do for a health system, the system can actually do for itself.
As healthcare providers face the challenge of “doing more with less,” many leaders are beginning to look outside the healthcare industry for solutions. As non-labor costs rise at unprecedented rates, c-suite executives are looking for assistance with supply chain, in particular. While supply chain leaders should be involved in this process, that isn’t always the case. Back in the ’80s and ’90s, the concept of taking best practices from outside the industry and applying them to the healthcare industry was pretty novel. But now those same questions are being asked again and executives are reaching out for guidance from outside firms such as McKenzie, Navigant, and Deloitte, to name a few. John Pritchard, publisher of The Journal of Healthcare Contracting, recently sat down with Tim Chapman of Vantage Point Logistics, to discuss why it is so vital that supply chain executives are included and how they make sure they have a “seat at the table” in these discussions.
Why are c-suite executives looking for outside help? Margins are being squeezed. In fact, a Moody’s study found that, for the first time in a long time, hospital and health system’s total operating expenses outpaced revenue growth. Non-labor costs are growing rapidly in part because health systems are increasingly complex. Additionally, hospitals and health systems are substituting non-labor costs for labor costs. Historically, providers have frequently outsourced services like housekeeping, laundry and food services. But now health systems are opening up to the idea of outsourcing in other areas, like energy management or total facilities management. In some cases, providers and suppliers are creating shared service areas – with suppliers co-running a hospital’s cath. Labs, the sterile processing department, or other areas. Many of the areas of increasing spend are not within the traditional purview of supply chain, which has previously overseen med/surg procurement and occasionally, some purchased services. This can mean that a very large portion, of a provider’s non-labor costs are not getting the benefit of a really rigorous, professional sourcing value analysis approach that supply chain executives can offer, Chapman says.
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In the webinar, Chapman goes into detail about the best way for supply chain leaders to respond to their leadership when an outside consultant is brought in. Here are some of the takeaways: • Thank your leadership for investing the capital and time and energy in your supply chain team. • Be mindful of helping to shape the objective of the efforts and the scope of the effort. • Make sure the effort will deliver on the cost objectives (It is a cost reduction exercise, after all) • Work to “muscle build” the capabilities of the health system’s supply chain overall – not just the department that calls itself supply chain, but the capability of the entire enterprise – really focusing on a comprehensive, all-in approach to non-labor cost management. JHC readers wishing to download the recording of the webinar, can do so here at https://www. vantag epointlogistics.com/timchapman-supply-chain-interview/.
December 2018 | The Journal of Healthcare Contracting
Send all upcoming events to Graham Garrison, managing editor, at ggarrison@sharemovingmedia.com
CALENDAR AHRMM AHRMM Conference & Exhibition July 28-31, 2019 San Diego, Calif.
HealthTrust HealthTrust University Conference July 29-31, 2019 Nashville, Tenn.
Federation of American Hospitals Public Policy Conference & Business Exposition March 3-5, 2019 Marriott Wardman Park Hotel Washington, D.C.
IDN Summit Spring IDN Summit & Reverse Expo April 8-10, 2019 Omni Orlando Resort at ChampionsGate Orlando, Fla. Fall IDN Summit & Reverse Expo
GHX Supply Chain Summit April 29 – May 1, 2019 JW Marriott San Antonio Hill Country Resort & Spa
September 9-11, 2019
Health Connect Partners Spring ’19 Hospital Supply Chain Conference April 29 - May 1, 2019 Miami, Fla.
Intalere
Fall ’19 Hospital Supply Chain Conference September 25-27, 2019 Kansas City, Mo.
JW Marriott Desert Ridge Resort and Spa Phoenix, Ariz.
Elevate 2019 May 13-16, 2019 Gaylord Rockies Denver, Colo.
Premier Health Industry Distributors Associations Health Systems Channel Strategies Conference January 29-30, 2019 Biltmore Coral Gables, Fla.
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Breakthroughs Conference & Exhibition June 18-21, 2019 Nashville, Tenn.
December 2018 | The Journal of Healthcare Contracting
Industry News University of Miami Health System hires Keith Murphy as VP of supply chain services The University of Miami Health System hired Keith J. Murphy as its new VP of supply chain services, effective October 1. In this newly created role, Murphy will provide oversight of the supply chain of the health system, including the hospital-based and amKeith Murphy bulatory facilities, and the UM Medical Group. Murphy previously was at the Yale New Haven Health System, where he was executive director of Corporate Supply Chain.
lease the hospital facilities and the land on which they stand under an amended and restated agreement with the Hospital District for a term of up to 75 years. The agreements are expected to be formally signed later this week. Under the terms of the transaction, Cleveland Clinic is committing to invest at least $250 million in IRMC over the next 10 years. In addition, Cleveland Clinic will maintain maternity care, in-patient well baby care/pediatrics and gynecology services, behavioral health/mental health services, inpatient and outpatient cardiovascular services, inpatient and outpatient cancer care services, and gastroenterology services at IRMC for at least 10 years.
Sanford Health now co-owns three hotels Indian River Medical Center to join Cleveland Clinic Health System Indian River Medical Center’s governing board voted in favor of a series of agreements that will result in IRMC joining the Cleveland Clinic health system. When finalized, IRMC and its affiliates will become part of the Cleveland Clinic health system, with the Cleveland Clinic having ultimate governing authority at IRMC. IRMC will continue to
The Journal of Healthcare Contracting | December 2018
Sanford Health (Sioux Falls, SD) expanded its reach into the hospitality business with joint ownership of three hotels in South Dakota. The hospital system is partnering with the Brandt Hospitality Group. Under the deal, the organizations will jointly own three hotels: the Fairfield Inn & Suites Sioux Falls Airport, the Home2 Suites Sioux Falls, and a Courtyard by Marriott scheduled to open in the coming months in Fargo, South Dakota.
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NEWS
Mayo Clinic gets $10M donation to support several initiatives Mayo Clinic (Rochester, MN) received a $10 million donation from The Louis Gerstner Jr. Fund at Vanguard Charitable to support several initiatives across the health system. The grant will support five initiatives at Mayo Clinic’s various care sites in Minnesota, Arizona, and Florida. The money will be used to advance research into augmented human intelligence in cardiovascular care, regenerative medicine for spine care, and will support ongoing educational opportunities for nurse practitioners and physician assistants.
168M flu shots available this season Up to 168 million doses of flu vaccine will be available to protect people from the strains of the influenza virus that should be most common in the 2018-2019 flu season, according to the CDC. The CDC recommends that everyone 6 months and older get a flu shot by the end of this month, because it takes about two weeks after getting the vaccine for the antibodies against flu to develop, and the flu generally starts spreading by early November. This year, the nasal spray vaccine – which was not recommended the past two flu seasons – is again considered an acceptable alternative to the injectable vaccine, according to the Washington Post. The CDC says that, in recent years, being vaccinated has reduced the risk by about 40% of being hospitalized because of the flu. Still, about 900,000 people were hospitalized because of influenza, and about 80,000 people, including 180 children (most of them unvaccinated), died during the 2017-2018 flu season, the deadliest in decades.
Vizient launches next-gen eCommerce Exchange platform Vizient (Irving, TX) launched its next-generation eCommerce Exchange platform, which is integrated with more than 500 of the largest suppliers in healthcare. The company says that the new platform will allow providers to lower their operating costs and streamline operations with suppliers by automating many common supply chain transactions, such as the purchase order, purchase order acknowledgement, and invoices. The platform’s new
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functionality also enables users to customize the tool by uploading local, custom and aggregation contracts. The integrated platform enables: Automation of purchasing tasks; greater visibility into purchasing operations; automation of invoices; and increased accuracy on purchase orders, confirmations, and invoices.
CMS’ new Bundled Payment model recruits 1,300 providers CMS has announced that 1,299 entities, including hospitals and physician groups, signed agreements to participate in Bundled Payments for Care Improvement (BPCI) Advanced, CMS’ newest bundled payment model. CMS unveiled the new model in January. It currently includes 32 clinical episodes, with 29 in the inpatient setting and three in the outpatient setting. CMS said the top three clinical episodes currently selected by participants are: major joint replacement of the lower extremity, congestive heart failure, and sepsis. Hospitals owned by Dignity Health (San Francisco, CA), Tenet Healthcare (Dallas, TX), and HCA Healthcare (Nashville, TN) are among those participating in BPCI Advanced. Under the program, provider payments will be based on quality performance during a 90-day episode of care. BPCI Advanced qualifies as an advanced APM under the Quality Payment Program, meaning participants will be eligible for bonuses under the Medicare Access and CHIP Reauthorization Act.
DOJ approves CVS/Aetna merger CVS Health entered into an agreement with the Department of Justice (DOJ) to move forward with its $69 billion acquisition of Aetna. As part of CVS Health’s agreement with federal officials, Aetna will sell its stand-alone Medicare Part D prescription drug plans to WellCare Health Plans (Tampa, FL). WellCare will assume control of the 2.2 million-member business December 31. Aetna will provide administrative services and retain financial results for the plans through 2019. The CVS Health-Aetna deal is still subject to some state regulatory approvals, most of which have been granted. The companies still expect the deal to close in Q4 2018.
December 2018 | The Journal of Healthcare Contracting
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