Providing Insight, Understanding and Community
February 2020 • Vol.16 • No.1
Contracting Professional of the Year Tony Johnson, senior vice president and chief supply chain officer at Baylor Scott & White Health
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CONTENTS »» FEBRUARY 2020 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 Graham Garrison ggarrison@sharemovingmedia.com Managing Editor Daniel Beaird dbeaird@sharemovingmedia.com Art Director Brent Cashman bcashman@sharemovingmedia.com Publisher John Pritchard jpritchard@sharemovingmedia.com Vice President of Sales Katie Educate keducate@sharemovingmedia.com Circulation Wai Bun Cheung wcheung@sharemovingmedia.com
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 2020 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
Tony Johnson
2 Editor’s Letter: 3 words 4 Two points of view. One solution.
Highmark Health applies the provider and the payer perspective to new medical technologiese
8
All hands on deck
TPC members believe success is all about engagement.
16 Bold steps
How this year’s Contracting Professional of the Year led his organization’s supply chain through a transformation – and realized $92 million in value during the past fiscal year – by moving to a more strategic model
28 What does your 2020 and 2021 look like?
34 Physician reimbursement What you need to know about physician payment changes
38 Physician productivity
Physician compensation is up. But productivity isn’t.
40 Trending upward
Urgent care center growth up 6%
42 The healthcare landscape in 2020 Key trends to watch
44 Is change hard?
Do leaders make it harder?
45 Calendar 46 Contracting News & Notes
contributing authors.
The Journal of Healthcare Contracting | February 2020
1
EDITOR’S NOTE
Graham Garrison
3 words A few years ago, I heard of a unique approach to goal setting. The idea was to frame your new year’s direction with three words. So, instead of saying you wanted to run a marathon or go on a strict diet, you could frame the goal with a word like “healthy.” I thought of this while talking with Tony Johnson, senior vice president and chief supply chain officer at Baylor Scott & White Health. The following are a few of many great insights from this year’s Contracting Professional of the Year:
Observe Before implementing a new strategic plan, Johnson took time to evaluate how his organization’s supply chain operated. What he noticed was that the integrated delivery network’s supply chain was designed to process orders. Purchasing and payment decisions were made at the hospital level. To move toward a more strategic model, the supply chain team took a step back to evaluate its marketplace position as well as how it made decisions on supplies. “We should take the $1 billion of spend that we have and make corporate decisions rather than hospital decisions on everything,” Johnson said.
Talent Johnson said Baylor Scott & White faced several challenges implementing the new model. One was having the right talent in place. “It takes a very different type of talent to process transactions than it does to mine through millions of transactions, discover what you’re doing, benchmark, understand where the market is, come up with a strategy, get alignment with the stakeholders, build teams that are led by the stakeholders, have targets that are achievable but aggressive targets, and then actually deliver,” he said. To ensure the right talent, Johnson recruited seasoned supply chain executives and leaders from different industries.
Facilitate The Baylor Scott & White supply chain team analyzed spending across the board, selected what programs that they were going to go after for that year, and presented that to their senior-level leadership. The team connected with the service line leaders for each area. The supply chain provided a very detailed, fact-based report with what they had been doing in the past, where they saw benchmarks, and where there was variation. While the supply chain team would present the data to the service lines, it was the service lines that would lead and make the decision, Johnson said. “We would be there as the facilitators to keep the process moving and bringing more data when they needed it. Of course, we were not short of opinions on the process. We gave them a program with opportunity that we could go after as an enterprise. They were very successful in doing that,” he said.
2
February 2020 | The Journal of Healthcare Contracting
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EXECUTIVE INTERVIEW
Two points of view. One solution. Highmark Health applies the provider and the payer perspective to new medical technologies
Supply chain executives and their contracting teams work hard to make new
As both provider and payer, Pitts-
technology decisions that make sense for patients and their families, clinicians, and the
burgh-based Highmark Health believes it
health system’s CFO. The tension between cost and quality is ever present.
is in a unique position to resolve – or at least reduce – that tension. Highmark’s Allegheny Health Network provides healthcare delivery, research, medical education, and wellness services through an integrated delivery network of eight hospitals and more than 2,300 staff physicians. Meanwhile, Highmark Inc. and its affiliates operate health insurance plans in Pennsylvania, Delaware, and West Virginia, which serve more than 4.4 million members, and hundreds of thousands of additional individuals through its BlueCard program. In 2015, Highmark Health created its VITAL Innovation Platform, which analyzes clinical and claims data to test the viability of FDA-approved technologies. Last fall, VITAL announced it would test Moving Analytics’ MOVN virtual cardiac rehabilitation solution for delivering cardiac rehab remotely to patients with heart disease. “Highmark Health is in a unique position as a payer and clinician-led integrated system [to] make decisions with the best interests of the patient in mind, not thinking in a one-sided fashion,” says VITAL’s director of strategy, Matthew Tucker. “That allows us to look for the most innovative technologies to achieve a win-win for both improving patient’s
Matthew Tucker
4
health and better controlling costs.”
February 2020 | The Journal of Healthcare Contracting
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PATIENT CARE
INTERVENTIONAL CARE
ENVIRONMENT OF CARE
EXECUTIVE INTERVIEW
The Journal of Healthcare Contracting
VITAL’s evidence will show if the
ers aren’t trained to conduct value or
asked Tucker to talk about VITAL and
product can apply to a broad population
economic analysis on new innovations.
the broader question facing not only sup-
but also work just as well in a less-con-
That isn’t their role. They want to focus
ply chain executives, but developers of
trolled environment than the trial used for
on delivering great care to their patients.
new medical technologies as well: How do
FDA approval. The data generated by VI-
VITAL, however, provides a platform
we balance cost and quality?
TAL also can help to educate a payer or
to accelerate the further discovery of
IDN on a missed opportunity. There are
important new technologies by identifying
Journal of Healthcare Contracting:
a number of health conditions that could
and validating those that providers should
Talk about the challenges facing
be treated or diagnosed faster, or that
have in their tool kit to make patients
startup companies as they work to
could improve patient health or reduce
better, faster.
gain a market for their innovations.
costs, if payers or health systems know
Matthew Tucker: Innovative products
about an innovation and its impact.
and solutions often face post-approval
Journal of Healthcare Contracting: Startup companies frequently
challenges with adoption due to lack of
Journal of Healthcare Contracting:
point out that hospitals and health
clinical and economic evidence compel-
What are the difficulties that health-
systems demand objective evidence
ling enough to open access and availabil-
care providers face when trying to pre-
of the technology’s value in terms of
ity, thereby delaying the impact they can
dict the value – in terms of outcomes
outcomes and cost. But the startups
have on patient care.
and costs – of new technologies?
find it difficult to present such data, since they lack a track record. How do you help innovators deal with
“ Does the product lead to better patient outcomes and does it lead to a reduction in costs for our system, our insurance plan, and ideally, our patients?”
this problem? Tucker: Every solution provider has to judge how much convincing they are going to need to do to gain adoption. Not all products are the same, and many inherently solve bigger problems than others, clinically or economically. For the right company, Highmark Health’s VITAL platform can be extremely beneficial because we look for technologies that are high-impact within our system as a marker of their potential nationwide. By sizing the impact they could have and
Increasingly, payers and health sys-
Tucker: Real-world evidence is playing
validating it inside our system, VITAL
tems across the nation feel that evidence
an increasing role in healthcare deci-
can give others a relative benchmark of
generated for approval or clearance by
sions. The healthcare community is
the impact they might see.
the FDA doesn’t give a complete picture
using these data to support coverage
of the potential impact a product could
decisions and to develop guidelines
Journal of Healthcare Contracting:
have on clinical care or cost reductions.
and decision support tools for use in
How far (how much) should our
To answer these questions, Highmark
clinical practice.
readers invest in a new company or
Health’s VITAL platform generates real-
6
Providers are interested in this
new technology that lacks a real-
world evidence to validate efficacy and
type of evidence because it confirms
world track record? Is it possible to
also, to size the economic impact of a
which technologies are valuable. But the
“test the waters” before diving in?
given technology.
important thing to note is that provid-
Tucker: The problem you state is exactly
February 2020 | The Journal of Healthcare Contracting
why VITAL was started. We take new
Journal of Healthcare Contracting:
Journal of Healthcare Contracting:
technologies that lack a track record,
What are some of the components
Will programs such as VITAL su-
do a deep dive to determine if we have
of the cost of a new technology that
persede the work currently being
confidence they will benefit patients,
VITAL measures?
done by value analysis teams in
and test them on a small scale to validate
Tucker: We view the cost of the technol-
health systems?
that they work as expected. What makes
ogy to be both the acquisition cost and
Tucker: We think they complement each
us different than a ‘pilot’ is that we are
any implementation costs. If a technology
other. The evidence we generate in VI-
doing this in our closed system, which
is difficult to implement, requires sig-
TAL helps make value analysis or medical
reduces variability and has been designed
nificant training, or involves a significant
policy decision-makers’ jobs easier or
to deliver to the solution provider a data
infrastructure for it to work, we will take
more effective, but each of those groups
package that can be used with other pay-
that into account.
look at a number of important factors in
ers or systems as well.
addition to clinical or economic evidence. Not every product is a fit for VITAL. We
Journal of Healthcare Contracting: VITAL says it can provide innovators with “accelerated real-world tests.” Can you elaborate? Tucker: Due to our integrated system, we are able to align the insurance side and clinical side to perform tests in a real-world environment and generate results faster. Most health systems or payers aren’t working together in the way we do, so it takes significantly longer
“We are looking for innovations that push care forward rapidly.”
are looking for innovations that push care forward rapidly, and there still needs to be a place to evaluate products leading to more incremental improvements. Journal of Healthcare Contracting: Finally, in what areas of technology are you finding some of the most exciting innovations? Tucker: We have been focusing on technologies that help us solve the big-
to align everyone around a new and in-
gest problems out there. Those problems
novative idea that can improve care and
represent the costliest disease states with
economics, and to generate the evidence
Journal of Healthcare Contracting:
the most patients, and they include areas
to prove the outcomes it can produce.
Clinician input and satisfaction –
such as cardiology, diabetes, orthopedic
as well as patient satisfaction –
and musculoskeletal, and kidney disease.
Journal of Healthcare Contracting:
can determine whether a technology
Because of the market opportunity, inno-
What markers does VITAL use
is accepted and widely used.
vations are also very much focused here.
to gauge the outcomes of a new
How do you measure this in a
It can get difficult to find the needles in
technology? How do you decide
fairly objective way?
the haystack, but the payoff when you do
what to measure?
Tucker: To this point, we have evaluated
is worth it.
Tucker: What we measure really depends
technologies through qualitative means by
on the technology we are testing. As I
asking for clinician and patient feedback.
ing how to treat people and their condi-
mentioned before, all products are very
That has been sufficient to help make
tions on an individual level. Technologies
different, and we customize based on
adoption decisions. As we expand the
that facilitate a clinician’s ability to treat
that. Generally, we are looking for clinical
program, however, we want to generate
a patient more effectively and get them
and economic impact: Does the product
quantitative measures of experience that
healthier, faster is very important. There
lead to better patient outcomes and does
can then be leveraged by our customers
are some very unique and interesting
it lead to a reduction in costs for our
so they can more effectively explain the
diagnostics we are seeing that help de-
system, our insurance plan, and ideally,
importance and impact of greater pro-
termine optimal therapies or help avoid
our patients?
vider and patient satisfaction.
interventions that are unnecessary.
The Journal of Healthcare Contracting | February 2020
We are also interested in understand-
7
RPC PROFILE: TPC
All hands on deck TPC members believe success is all about engagement.
Roger Nolan
Familiarity leads to trust, which leads to commitment, then accountability,
represent approximately $1 billion in pur-
and finally, results.
chasing volume, and have achieved more than $300 million in savings since 2009. “For over 30 years, our mission has
It is a formula that has worked for
together to improve their operations for
remained consistent,” says Roger Nolan,
the members and owners of the TPC for
decades. With a model of trust and co-
who became president and CEO of TPC
quite some time.
operation in place, TPC has expanded its
in September 2019. “We foster an envi-
Based in Plano, Texas, TPC was
8
scope and size, so that today, it represents
ronment in which our members can thrive
formally created in 2009, but some of
11 health systems in Texas, Missouri,
and best serve their communities while
its member/owners have been working
Arkansas and Colorado. Together they
maintaining their independence.”
February 2020 | The Journal of Healthcare Contracting
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RPC PROFILE: TPC
Performance improvement
of our executive suites, including CEOs,
TPC members continue to demonstrate
“TPC has created a disciplined envi-
CFOs, COOs, CNOs and CMOs. The
an extraordinary ability to operate
ronment, which has allowed for our
uniqueness and challenge of managing
effectively together to address these chal-
relationship with our members to go
a virtual system of providers is to have
lenges while maintaining local control of
beyond traditional purchasing activities,”
them engaged.”
the decisions that impact their patients.
says Nolan. “Our model goes beyond
Nolan has plenty of experience keep-
“The benefit of them doing so is
the basics of commodities, and we’ve
ing people engaged, given his 30 years
we get to address the more challenging
found a niche in successfully navigating
of experience in healthcare consulting,
opportunities that often offer a higher
more difficult categories, like physician
operations improvement and business
reward. We have worked closely with
preference items. We have partnered
development. He has held senior titles
our members to evolve their engage-
with our members in areas that are typi-
with several GPOs, including MedAssets,
ment with TPC with the purpose
cally addressed at the local level, and we
Broadlane and Vizient. “I’ve been build-
of driving incremental value in our
have collectively realized significant wins
ing unifying platforms for 30 years, from
strategic programs.
in tough categories that other coalition
cardiac emergency networks to centers of
groups may not consider.”
excellence,” he says.
“Together we are able to drive the highest value in the most difficult categories when members trust the process
“ Together we are able to drive the highest value in the most difficult categories when members trust the process and hold each other accountable.”
and hold each other accountable. This is both a testament to our members’ willingness to actively participate on a regular basis, and our greatest example of success. The physicians and clinicians engaged in TPC’s initiatives understand that better patient outcomes come from sharing best practices. In addition, our physicians and clinicians are highly motivated to keep healthcare decisions at the local level. They do not want to be told how to practice medicine from a corporate office. TPC gives our healthcare providers the ability to voice their opinions and make better decisions for
Nolan refers to TPC not as a regional
their patients.
“The TPC value proposition continues to
mance improvement coalition.
reflect our historical principles as a virtual
dous value in working together to address
system – that is, aggregate our individual
their respective local needs and missions,
more traditional supply chain arena has
resources, expertise and capabilities to
and we welcome others with the desire
led to an expanded focus, which today
create greater collective value.
and commitment to do the same, regard-
“Our demonstrated success in the
includes revenue cycle, purchased ser-
“The communities our members
“TPC members have found tremen-
less of geography,” he continues.
vices, insurance services and performance
serve, as with all of healthcare, are grow-
improvement,” he says.
ing more complex each year. There is
everyone. But those wanting a voice
more pressure for independent provid-
to maintain independence and local
similar approach – active member partici-
ers to maintain – if not exceed – the
control realize active participation and
pation at every level, to include our physi-
cost, quality and market performance of
member-to-member engagement is the
cians, clinicians and the full complement
larger health systems than ever before.
cost of admission.”
“Each of these categories follows a
10
A virtual system
purchasing coalition, but as a perfor-
“Our model is admittedly not for
February 2020 | The Journal of Healthcare Contracting
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When it comes to the future of health care delivery, location matters – just not
14% for urgent cares. Additionally, discharge-
in the traditional sense. According to a survey by the Advisory Board, up to 77% of
related telehealth consultations have grown
consumers would consider seeing a provider virtually.
exponentially – up by 407% in rural areas and 157% in urban areas (from 2014 to 2018), according to another study from FAIR Health.
While patients are keen to take advantage of virtual visits, providers have struggled to find a solution for the
12
care in innovative ways, without sacrificing diagnostic capabilities.
Providers and patients alike increasingly view telehealth as a cost-effective
Virtual visits are increasing in frequency
and efficient method to deliver and
inefficient, centralized nature of care
as traditional physician office visits are declin-
expand access to quality care. As changes
and the high cost of physicians’ time.
ing. According to FAIR Health, telemedicine
to legal, regulatory, and reimbursement
However, the introduction of new tech-
utilization grew 53% from 2016 to 2017.
rules increase telemedicine’s feasibility,
nology is opening doors and enabling
More traditional care settings saw much
telemedicine is coming to the forefront of
health care providers to offer quality
more modest utilization growth, such as
the care delivery model.
February 2020 | The Journal of Healthcare Contracting
Is your health system in a position to
ʯ Enable patients who feel too sick
demand continues to grow faster than
reap the benefits of telemedicine, including
to travel to be consulted from the
supply, and will lead to a shortfall of
cost savings, increased efficiencies and pro-
comfort of their own home, and
122,000 physicians by 2032. The AAMC
ductivity, and reducing physician burnout?
ʯ Reduce the chance that the patient
research found the increased demand is
will look for another, more
driven by the aging population; the num-
convenient option for care.
ber of individuals 65 or older will grow
Telehealth helps lead to cost savings Patient no-shows not only impact a provider’s ability to accurately plan and manage resources, but also their bottom line. When a patient simply doesn’t show up for his or her appointment, the providers still incur staffing and overhead costs, but have no opportunity to fill that slot with revenue generating activities. On average, a no-show patient costs practices $200 according to the National Center for Biotechnology Information. Given that the average no-show rate across outpatient settings is 14.2%, what are
by 48% by 2032. Physicians themselves account for part of this growth – within
One way to help your talent strategy stand out is to remember that compensation is not just about money – it’s also about work-life balance.
no-shows costing your organization?
be 65 or older. Telehealth has the potential to reduce the gap between physician demand and supply. Because telehealth removes the physical barriers of traditional patient visits, it enables physicians to provide care for more – and more geographically diverse – patients. Telehealth can improve a practice’s efficiency by helping to optimize resource allocation – no matter where those resources may be located. If a
The reasons for no-shows run the gamut: from transportation logistics to
the next decade 33% of physicians will
practice has multiple locations, telehealth All of these benefits enable patients
allows clinicians to consult patients from
child care obligations to simply forget-
to keep their appointments and ensure
any site, on demand. This capability can
ting. Implementing a telehealth strategy
that the provider’s resources are being
reduce the need to pay staff overtime or
can help reduce the number of no-
employed efficiently.
to hire temps to meet patient demand.
issue, 7% due to a problem with transpor-
Telehealth’s flexibility helps optimize resources
Make telehealth part of your talent strategy
tation, and 5.5% due to being too sick to
According to research by the Association
With physician-employment at an all-time
come into the practice.
of American Medical Colleges, physician
high, your organization must be competitive
shows. The Journal of Family Medicine reports that 16% of patients missed their appointment due to a personal or work
No matter the reason, the end result is the same for health care providers: lost revenue and idle resources. Implementing telehealth in your non-acute settings can help reduce the number of no-shows by making appointments convenient and reducing total cost for the patient. By conducting a patient visit virtually, health care providers can:
ʯ Eliminate the time and cost of
Virtual visits on the rise According to a FAIR Health white paper: ʯ Telemedicine utilization grew 53% from 2016 to 2017, while more traditional care settings grew 14% for urgent cares. ʯ Discharge-related telehealth consultations are up by 407% in rural areas, and 157% in urban areas (from 2014 to 2018)
traveling to and from a physical practice for patients,
The Journal of Healthcare Contracting | February 2020
13
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conduct patient visits from home and during their preferred hours.
What should you consider when implementing telehealth? Before integrating a telehealth program, ask the following questions:
ʯ Do your patient demographics and preferences support a telehealth strategy?
ʯ Which telehealth applications will be most valuable for your organization and why?
ʯ What resources are needed to implement telehealth into your organization? Once you have evaluated whether pursuing telehealth is the right strategy, look in its compensation packages. The
same flexibility to health care providers
for a telehealth partner. A valuable tele-
Advisory Board reports that, in 2014,
themselves. This flexibility can help your
health partner will offer you an unprec-
46% of final-year residents had been
organization retain and acquire talent,
edented level of options for achieving
contacted more than 100 times about
ultimately minimizing the risk of staff
high quality doctor-patient encounters,
employment opportunities. They also
shortages. Telehealth can help clinicians
enhancing information-sharing among
report that 92% of hospital executives
to achieve work-life balance (however
care team, and delivering real-time and
expect to experience a clinician short-
they define it), by enabling them to
store-and-forward communications.
age within the next 10 years. Physician recruitment is more competitive than ever, and your organization’s talent strategy must reflect that. One way to stand out is to remember that compensation is not just about money – it’s also about work-life balance. As more millennials and more women come into the physician work-
Reasons for Missed Appointment Personal/work issue Problem with transportation Too sick to come Used another source of care Thought the appointment was not essential
Percentage of Patients 16.1% 6.9% 5.5% 3.7% 2.8%
force, work-life balance and flexible hours will be key differentiators. In fact,
Source: The Journal of Family Medicine
final-year medical residents ranked both “availability of free time” and “earning a good income” as top considerations of employment. Telehealth doesn’t just enable patients to engage with their health care
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14
February 2020 | The Journal of Healthcare Contracting
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Tony Johnson, senior vice president and chief supply chain officer at Baylor Scott & White Health
16
February 2020 | The Journal of Healthcare Contracting
BY GRAHAM GARRISON
Bold steps How this year’s Contracting Professional of the Year led his organization’s supply chain through a transformation – and realized $92 million in value during the past fiscal year – by moving to a more strategic model
Tony Johnson has had the confidence to tackle big projects since early in his
ready to leverage your training, think
career. He credits the U.S. military for giving him that confidence.
through any objective, develop plans and execute. And of course, we learned very early that transportation, when it comes
Johnson specialized in healthcare
sent to Entebbe, Uganda, as the senior
to pure logistics, is always the Achilles
supply chain in the military. While being a
healthcare logistics officer on a Depart-
heel. You have to figure out how you’re
supply chain leader in a military hospi-
ment of Defense joint task force. He was
going to get the stuff there.”
tal was not much different than being a
given a laptop and an Inmarsat satellite
Johnson has used that and similar
leader or manager in a commercial hospi-
communications dish to connect with
experiences to build a successful career in
tal, the difference was the mission and the
the medical logistics hub in Europe and
healthcare supply chain, including in his
scale of the military, he said.
the national inventory control point in
current role as senior vice president and
Pennsylvania. His mission was to set up a
chief supply chain officer at Baylor Scott
sion: Protecting our forces around the
system to pull supplies into central Africa
& White Health. Johnson is this year’s
globe and being able to support them
and distribute them to refugee camps in
Contracting Professional of the Year.
in any place, any time. The military is
Rwanda, Tanzania, Democratic Republic
designed to basically move an entire ware-
of the Congo, Kenya and Uganda. As the
house from point A to point B, set it up
senior healthcare supply chain person in
From transactional to strategic
and have it operational within a couple of
the conflict region, he found himself sup-
When Johnson first arrived at Baylor
days if it has to,” Johnson said.
porting the U.S. Department of Defense,
Scott & White in 2016, he took some time
U.S. Department of State, the Centers
to observe how the organization operated
pieces and sheer mass involved with
for Disease Control and Prevention, the
before implementing changes. What he
military operations forced you to think
United Nations High Commissioner for
noticed was that the integrated delivery
bigger, he said, “and, because you’re so
Refugees and several non-governmental
network’s supply chain was designed to
used to dealing with so much scale, it
organizations like Doctors Without
process orders. Purchasing and payment
takes away the fear of doing something
Borders. Johnson and a 12-person medi-
decisions were made at the hospital level.
that you haven’t done before.”
cal logistics team planned the shipment
“We always had that underlying mis-
Photography by Rusty Schramm
The systems, transportation links,
Military personnel are given the op-
of approximately 40 tons of medical
“That’s what we were staffed for and that’s what we did,” said Johnson. As a result, the organization was pay-
portunity to do some extraordinary things,
supplies, pharmaceuticals and equipment
Johnson said, “so I think it gives you the
into Uganda and executed the shipment
ing two to three times more for the same
confidence to feel that you could take bold
and delivery of those supplies to multiple
product from one hospital to the next.
steps and you’re going to be okay.”
countries and organizations from Uganda.
There was no consistency, Johnson said.
For instance, in 1994 immediately after the Rwandan genocide, Johnson was
“We did this with no process manual or instructions,” he said. “You must be
The Journal of Healthcare Contracting | February 2020
“Vendors were charging each one based on negotiations at that individual
17
CONTRACTING PROFESSIONAL OF THE YEAR
hospital,” he said. “We saw that across
an enterprise. And then delivering the
source-to-settle as a work environment
the board. Not only did it cost us, but it
results,” Johnson said.
or an ecosystem where all processes are
increased the numbers of contracts exponentially when you had to have a contract for every facility with different terms and conditions and different pricing.”
The second challenge was having the
integrated and that uses the same set of data for everything related to:
right talent. “It takes a very different type of talent to process transactions than it does to mine
To move toward a more strategic
through millions of transactions, discover
model, the supply chain team took a step
what you’re doing, benchmark, understand
back to evaluate its marketplace position as
where the market is, come up with a strat-
well as how it made decisions on supplies.
egy, get alignment with the stakeholders,
“ We created a very programmatic way of analyzing our spend, identifying opportunity, building the teams to go after that opportunity, developing an enterprise-wide strategy, and then going into the market as a single entity of Baylor Scott & White.”
ʯ Analyzing ʯ Purchasing ʯ Planning and executing strategic sourcing events
ʯ ʯ ʯ ʯ
Writing, storing and managing contracts Ordering products from the contracts Receiving and invoicing Instructing the ERP to pay the bills
“That puts our operation on steroids in a sense, that we can see what we’re doing real-time,” he said. “It’s more of a point and click or web-based kind of environment. It unleashes the power of research at the fingertips of the users versus having to send a query over to the report writing team for something very detail specific … and hoping that they can figure out a way to get your information back. So this basically pairs down the research and the decision-making capability, and puts everything at your fingertips.” Before source-to-settle, the supply
“We should take the $1 billion of
build teams that are led by the stakeholders,
chain team “didn’t even have a clue as to
spend that we have and make corporate
have targets that are achievable but aggres-
how many contracts we had,” Johnson said.
decisions rather than hospital decisions
sive targets, and then actually deliver,” he
“Today, the first thing I see when I log on, is
on everything,” Johnson said.
said. To ensure the right talent, Johnson
how many active contracts we have and how
recruited seasoned supply chain executives
many of them are expiring within the next
and leaders from different industries.
120 days. That’s on the top of my screen.
Johnson said Baylor Scott & White faced several challenges implementing the new model. The first was cultural. “When you have an organization as
Data, too, posed a problem. “The data
There’s a panel with my to-do list. Now,
large as this, with a lot of prestigious
with it was problematic, so we had to
there are still things that I need to approve
physicians on staff, if it’s not approached
work through that,” Johnson said.
or take a look at. But all of those things were
in the right way, people may think that
disjointed coming from different systems
you are taking an administrative func-
18
There’s a shopping cart, graphs and analytics.
was there but being able to do something
before. Now it’s all tied together.”
tion and basically telling the clinical side
Source-to-settle
what they should do or how they should
One concept that helped Baylor Scott
practice. That was not the intent at all.
& White’s supply chain team implement
Improvements
It was getting the culture to take a step
the new strategic model was a source-to-
While technology played a critical role
back and decide what it wanted to do as
settle system. Johnson said he looks at
bringing in $92 million in value to the
February 2020 | The Journal of Healthcare Contracting
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CONTRACTING PROFESSIONAL OF THE YEAR
organization, so did interpersonal dy-
supply chain team wanted to find some-
that we’re not accountable for, but even
namics. The team created a commodity
thing measurable through the financials
then you see that number start to move
management process where MBA-level
that would indicate that something good
south in 2018, when we launched this
team members analyzed purchases like
was happening or recognize that nothing
process,” he said.
orthopedic or cardiac products.
was happening.
“So, we analyzed our spending across the board, we selected what programs
supply chains saying, ‘I saved this or I
Gaining more visibility
that we were going to go after for that
saved that’ and they put some astronomi-
Johnson said the next phase involves
year, and we presented that to our senior-
cal numbers up, but when you look at the
creating dashboards so that every user
level leadership. They bought into it,”
financials, it all looks the same or it’s just
in Baylor Scott & White, and every
Johnson said.
random noise in the financials,” Johnson
administrator, will have access to these
said. “We’re actually held accountable to
dashboards. The dashboards will give
line leaders for each area. The supply
lowering that number. And for us, every
them data on their specific piece of the
chain provided a very detailed, fact-based
half a percentage point we lower that num-
operation and what they need to do.
report with what they had been doing in
ber, it’s $32 million of cost permanently
the past, where they saw benchmarks, and
taken out of the system. We’ve lowered at
systems I’ve been involved with … they
where there was variation.
approximately 2 percentage points already.”
will do accruals at the end of the year, but
The team connected with the service
While the supply chain team would
When looking at the company finan-
“Healthcare, at least the healthcare
they basically book expenses when bills
present the data to the service lines, it was
cials for the last eight years, Johnson said
are paid. So, there’s a lag between that and
the service lines that would lead and make
he could see a noticeable change in 2018.
when you have actually placed an order,”
the decision, Johnson said. “We would be there as the facilitators
“Now, when you look at the financials, the supply line has all sorts of things in it
he said. To illustrate, Johnson uses a check-
to keep the process moving and bring-
book metaphor, where you write a check
ing more data when they needed it. Of
for a product, but when it clears the
course, we were not short of opinions on the process. We gave them a program with opportunity that we could go after as an enterprise. They were very successful in doing that,” he said. People didn’t feel they were in turf fights, Johnson said, “and the very highest levels of the organization, our C-suite executives were involved in some of these discussions. They really pushed us across the board to do the right thing. We created a very programmatic way of analyzing our spend, identifying opportunity, building the teams to go after that opportunity, developing an enterprise-wide strategy, and then going into the market as a single entity of Baylor Scott & White.” Part of that value involves using supply expense as a percentage of net patient revenue as a key indicator. The
20
“I think historically, you see a lot of
“Military personnel are given the opportunity to do some extraordinary things, so I think it gives you the confidence to feel that you could take bold steps and you’re going to be okay.”
bank is when it actually shows up as an expense. “Well, we’re going to show the checks that have been written. We’re going to show the things that have cleared the bank and we’re going to show those things that haven’t cleared the bank, that are waiting, so that every user has a look at those all the time and can make the appropriate decisions.” Johnson said he expects to have that capability within six months. “The key to that, again, is the data. The very good data that we can now put together.” Baylor Scott & White is focused on clean, consistent and complete data and on business intelligence tools to unlock the power of data. Johnson expects many more improvements by unlocking information from millions of transactions each year.
February 2020 | The Journal of Healthcare Contracting
CONTRACTING PROFESSIONAL OF THE YEAR
Building a team What does it take to build a successful healthcare supply chain team? A combination of thinking inside – and outside – the box.
Front row: left – Janet Watson, Vice President, Strategic Sourcing; Pamela Wiseman, Vice President, Operations Back row: left – Julio Carrillo, Vice President Logistics; Tony Johnson, SVP & Chief Supply Chain Officer; Alan Koreneff, Vice President, Healthcare Technology Management
Tony Johnson, senior vice president and chief supply chain officer at Baylor Scott & White Health, is a big believer in having a well-rounded supply chain team with backgrounds inside and outside of healthcare. “I think it’s absolutely necessary to have people from healthcare, and I also think it’s absolutely a good idea to bring people from outside of healthcare and let them work together and share. That blended expertise, I think, far exceeds the expertise that would come up in healthcare only,” he said.
22
Johnson gets excited talking about the supply chain leadership team Baylor Scott & White has assembled: Janet Watson, vice president of strategic sourcing, came from Entergy, an energy company based in New Orleans. “She grew up in the oil industry, and is an absolute superstar,” said Johnson. “I don’t think we could have found anyone better. She has an MBA, she runs all the sourcing events, and she’s the person that’s driving the value capture for us.” Watson had no healthcare background, but was “just an incredible leader, an
February 2020 | The Journal of Healthcare Contracting
incredible manager,” Johnson said. She put on scrubs, visited the operating rooms and cath labs, and made it mandatory for her team to watch the procedures of everything that they were supporting. The physicians became enamored with her team because they showed so much interest, “and they are incredibly bright and smart people,” Johnson said.
“These guys maintain 150,000 devices for Baylor Scott & White, and his team has basically insourced the maintenance of 95% of the equipment. They’ve even built a center that repairs surgical scopes significantly reducing maintenance costs, and they plan to cut it more this year, even though the size of the company has grown, and that’s over the last two years.”
Pamela Wiseman, vice president of operations, runs the data, systems and technology group. She was the lead on the implementation of Baylor Scott & White’s sourceto-settle system. Wiseman came from GE and previously worked with Medtronic. Wiseman has a combined bachelor’s degree in geology, physics and math, a master’s degree in electrical engineering, and she also has an MBA. “Just a brilliant, brilliant person,” Johnson said. “She has brought so much to the table in terms of perspective, and being able to take stats from all of the hospitals across Baylor Scott & White, from South Austin to North Dallas, and create standard practices. I mean, she’s just built an incredible team across the company. And to get the data and the systems and get a value and implement it, she’s done a great job.”
Infusing thoughts and ideas People from outside healthcare can bring skillsets that are hard to find in people who have focused on the healthcare environment, Johnson said. “They bring a different set of perspectives. They’ve seen supply chains and multiple
Johnson said today’s supply chain executives need very good quantitative skills. “In fact, they need to be top percentile when it comes to quantitative skills,” he said.
Julio Carrillo, vice president of logistics, brought a background of working with automotive supplier companies. He previously worked for Tenneco, GE Transportation, and Kongsberg Automotive, and has run distribution centers. “Julio is our director of logistics, so he is responsible for running our distribution center, transportation, and courier services,” Johnson said. “Julio came on board at a time when we were being challenged, trying to get our center stood up, and he’s done a phenomenal job with that. Again, no healthcare background, and he has just done a great job.” Alan Koreneff is vice president of healthcare technology management. Koreneff worked with Johnson at Novant Health, retired, and then Johnson brought him on board as a contractor at Baylor Scott & White. Like Johnson, Koreneff has a military background. Koreneff’s group is responsible for repairing the equipment across the enterprise, Johnson said.
The Journal of Healthcare Contracting | February 2020
industries work, and they bring fresh ideas to the table. And their talent level is ... I mean, they’re the best of the best. Supply chain, if you look strictly in healthcare, you’re basically growing from within. You know what you know, or you know what you’ve been taught, and I believe strongly in infusing thoughts and ideas and talents from multiple places and letting them teach each other.” Johnson said today’s supply chain executives need very good quantitative skills. “In fact, they need to be top percentile when it comes to quantitative skills,” he said. “The same with communication skills or the ability to engage and to gain the trust of stakeholders. If they can’t do that, I don’t care how much you may know or think you know about supply chain and process, if you can’t gain the trust of your stakeholders to the point that they are going to trust you to be at the table, to help them make the best decision, then it’s meaningless. You’ve got to be smart and you’ve got to be able to connect with the clinicians.”
23
SPONSORED
MCKESSON MEDICAL-SURGICAL
How a war room and the power of collaboration improved standardization by 66%
Supply chain executives must rely on all kinds of people and things in order
non-acute distribution portfolio for
to integrate their non-acute members into the health system’s supply chain. Data is es-
Novation (now Vizient) from 2013 to
sential. Formularies too. A reliable med/surg distributor is a must.
2015, and having worked closely with Vizient’s non-acute arm, Provista, to drive value for its non-acute members.
But beneath it all, supply chain execu-
than 700 facilities across nine states,
“Unlike acute care settings, with
including hospital campuses, urgent-
their purchasing or strategic sourc-
care centers, home-health and hospice
ing departments, in non-acutes, office
show our value to our customers by meet-
agencies, and nursing homes. Adams has
managers or clinicians are often
ing them where they are,” says Darrick
supply chain responsibilities for all non-
responsible for purchasing,” he says.
Adams, director of non-acute supply
acute-care sites.
“They know a lot about products,
tives must rely on themselves. “I had a manager who said that we
chain, AdventHealth. It is a lesson that
“My focus was to cultivate relation-
proved essential when he joined the sys-
ships with our 12 physician groups and to
tem in February 2019 as its first director
align their purchasing habits with those
of non-acute supply chain.
of the system,” said Adams.
Headquartered in Altamonte Springs, Florida, AdventHealth comprises more
24
but less about purchasing, pricing or distribution. “AdventHealth felt it was important to standardize our purchases to our
He brought valuable experience with him, having managed the
preferred contract suppliers in order to maximize savings.”
February 2020 | The Journal of Healthcare Contracting
Face to face He started where he had to – building trust among people and departments who barely knew him. “It was important to cultivate relationships with each physician group, because as their liaison to corporate, I needed them to get to know me and understand my role,” he says. “I am their support system and give them a voice at the corporate supply chain level.” He set up weekly meetings with the physicians in central Florida, which comprise about 40% of AdventHealth’s physicians. During these visits, he learned about issues the groups were experiencing from a prod-
Keeping it lean Setting up a formulary isn’t easy. Maintaining it – and preventing product “creep” – may be even more difficult. Here are a few ways Adams and the AdventHealth team plan to manage formulary in the months ahead: ʯ All “adds” to the formulary must be approved by designated parties. ʯ The formulary will be reviewed every six months. Items with limited purchases over the last rolling 12-month period will be dropped. ʯ “Special” orders will be reviewed every six months to determine if an alternative product exists on formulary, or whether the special orders should be added to it. ʯ Each physician group will receive a detailed compliance report of their purchases. (The goal is to have 95% compliance to the formulary by the end of 2020.)
uct or supplier standpoint. More important, “any time you have face-to-face interaction and actually learn about their business, you gain credibility in the room,” he says. formulary many times prior to Adams’
for several days, and just start working
prepared for the hard task ahead – slim-
arrival, said Francis D’Avanza, vice
on it,” he said. The McKesson team is on
ming down the 8,000-plus SKUs that
president, strategic accounts, McKes-
hand as well, providing data about prod-
were being purchased by the 12 physician
son Medical-Surgical. “They knew they
uct usage, brands and pricing. “It takes
groups into a workable formulary.
needed to get there, but they were waiting
time, and you’ll have your tug-of-wars.
for the PeopleSoft implementation. After
But the results are worth it.”
Having laid that groundwork, Adams
In addition to his non-acute experience, he enjoyed two advantages that
they hired Darrick, and with the People-
other supply chain executives often lack.
Soft implementation in place, the light
said Adams. “For us to be able to get this
went on. It was ‘go’ time.”
done and get it done quickly, we needed
The first was the recent IDN-wide
“The war room was Francis’s idea,”
To proceed, D’Avanza suggested a
McKesson’s support and effort. We
“The PeopleSoft implementation was criti-
strategy that McKesson and its customers
couldn’t have done it without them.”
cal,” says Adams. It helped with information-
had found successful in the past – a “war
gathering, and it gave the physician groups
room” event.
implementation of Oracle PeopleSoft.
The time and dates were set: The war room would take place on AdventHealth’s
easy access to the formulary, once it had been
“The idea is to bring key people –
campus from Monday morning, April 22,
created. “By clicking on the link, requestors
clinical and supply chain – into one place
2019, to Wednesday afternoon, April 24.
had instant access to the AdventHealth preferred products in one centralized location.” The second advantage was AdventHealth’s longstanding relationship with McKesson Medical-Surgical.
‘Go’ time The health system and its distributor had discussed the need for a non-acute
“Since July, 87% of products purchased and 89% of spend is from the new standardized formulary. This puts us on track to reach our goal of 90% compliance within the first six months.”* — Darrick Adams, director of non-acute supply chain, AdventHealth
The Journal of Healthcare Contracting | February 2020
25
SPONSORED
MCKESSON MEDICAL-SURGICAL
Who to invite
and SKUs, were eye-opening to all,
tions to the formulary. He found that the
“Absolutely critical to the success of a
and in some ways, helped energize the
groups were happy about the decision to
war room is participation by key clini-
proceedings. There emerged kind of a
standardize, and grateful for the opportu-
cal players throughout the system,” said
competition to see how many reductions
nity to participate in the process. In fact,
Adams. “You want those in charge of
we could make.”
some asked for a monthly report of those
patient care to be a part of decisions that
By Wednesday afternoon, the group
ultimately affect patients. Their opinions
had winnowed its non-acute formulary
were critical to the decisions that were
from 8,000-plus SKUs to just about 2,500.
made over those three days.
requestors who were out of compliance. “Since July, 87% of products purchased and 89% of spend is from the new standardized formulary,” said Adams. “This
“I framed the invitations by telling
puts us on track to reach our goal of 90%
them, ‘This is your opportunity to have
Epilogue
a voice.’ The promise of that dialogue
Following the war room, Adams em-
was what made them want to be a part of
barked on a “road show” to reinforce
reduce our non-acute formulary by 66%
what we were doing.”
the decisions made in the war room and
over the course of three days. It demon-
to gauge the 12 physician practices’ reac-
strates the power of collaboration.”
During the weeks leading up to the
compliance within the first six months.”* “I am still amazed that we were able to
war room, the McKesson team compiled and categorized data, including pricing by unit of measure, as directed by Adams. As displaying physical product samples was not to be part of the proceedings, AdventHealth would use its audiovisual system to display photos, descriptions and product numbers (for comparison of like products) from the McKesson catalog. Adams and his team decided that participants at the war room would tackle relatively “easy” product categories – that is, those with the fewest number of SKUs – first. Gloves was one of them. In addition, the team categorized products as “preferred” if they were on contract. “One of the key things that McKesson provided for the war room was the presence of Dalisay Watkins, strategic account manager, for all three days,” said Adams. “She recorded every single decision that was made in that room, and after it was over, compiled all that data in an easy-to-read format, so I could present it to the participants.” Decisions for many categories were
Thinking of organizing your own ‘war room?’ Do you want to stage your own “war room” to hammer out a non-acute product formulary? Francis D’Avanza, vice president, strategic accounts, McKesson Medical-Surgical, has helped health systems do just that. Here are some of his suggestions. ʯ Before all else, get buy-in and commitment from leadership. ʯ Compile clean 12-month usage data. ʯ Invite key stakeholders from the health system (i.e., clinical, financial, supply chain,) and the med/surg distributor, but try to limit participation to 12 or so people. ʯ Hold the war room at the health system’s corporate headquarters. A good audio/visual system helps. ʯ Don’t rely on an outsider to lead the proceedings. Instead, the director of non-acute or the vice president of supply chain – i.e., someone with skin in the game – should “emcee” the proceedings. ʯ At the outset, communicate the objective of war room at a high level (e.g., SKU reduction, savings targets, GPO compliance, clinical efficiency and alignment within the continuum of care). ʯ Communicate to all participants a clear “hierarchy of importance” to guide product selection (e.g., clinical considerations first, followed by financial, GPO contracts, etc.). ʯ Plan for lunch and breaks throughout the day to keep people refreshed. ʯ Follow up with participants with monthly reports on formulary compliance, financial savings, etc.
reached fairly quickly, he added. “Our successes, including reductions in pricing *Per internal data by McKesson.
26
February 2020 | The Journal of Healthcare Contracting
The non-acute continuum is complicated. We’ve got your roadmap. Did you know 34% of health system leaders say that aligning their non-acute supply chain is their biggest challenge?*
McKesson can help you take control of:
Supply chain leaders are challenged with balancing the many needs
• Operations • Analytics • Process Automation
of their non-acute facilities — from surgery centers to doctors’ offices to long-term care facilities and even to patients’ homes. McKesson can help you implement comprehensive strategies that drive out costs and provide better care across the non-acute continuum.
McKesson.com/TakeControl Medical-Surgical. Pharmaceutical. Lab. Equipment. © 2019 McKesson Medical-Surgical Inc. All rights reserved. *HIDA Hospital And Health System Provider Survey, June 2018.
• • • •
Supply Cost Management Visibility Standardization Post-Acute Care
• Laboratory • Pharmaceuticals • Leading Change
MODEL OF THE FUTURE
What does your 2020 and 2021 look like?
Last year, the Journal of Healthcare Contracting asked supply chain execu-
ERP systems and two prime distributors.
tives, “What are you looking forward to in the next 12 to 18 months.” Here are just a
This year we will evaluate ERP systems,
few of their responses. Some of them will sound familiar to JHC readers; others may
partnering with IT and Finance. After
lie further out.
we make our decision, we will develop a strong implementation plan. I am also looking forward to selecting one med/surg
28
Integrating two legacy supply chains
plate. “Key projects will center around
distributor, freight management company
the integration of our two legacy supply
and vendor credentialing supplier. Finally,
Joel Prah, vice president of supply chain
chains,” he said. “Mercy Health and Rock-
we will be evaluating the opportunity to
for Mercyhealth in Janesville, Wisconsin,
ford Health came together in 2015, but
design and develop a centralized integrated
and Rockford, Illinois, has a lot on his
we have been operating with two different
service center for Mercyhealth.”
February 2020 | The Journal of Healthcare Contracting
MODEL OF THE FUTURE
Reducing unnecessary variation
the next year is to … develop a success-
transparency and enhancing clinical en-
Michael Gray, system vice president
ful strategy within nutritional services.
gagement. Investment in these tools helps
and chief supply chain officer for SSM
I would like to support dieticians and
supply chain champion evidence-based
Health in St. Louis, told JHC he is
nurses by developing lean processes,
decision-making while optimizing total
looking forward to continuing to work
ensuring we get product to the patient
value, reflecting the needs of our patients
systemwide with physician leaders and
floors, seeing that it’s well managed, mak-
and providers.”
others to reduce unnecessary variation
ing sure we have no issues with expiration
in vendors, products, and processes.
dates. We can provide tools, and, they – as
“We should be able to measure which
experts in the field – will determine how
Managing software as an asset
products are used where, and which
to use them.”
Jonathan Kempton, category leader, Intermountain Healthcare, Salt Lake
products lead to favorable outcomes
City, Utah, said he is “excited about the
for the majority of patients. It’s exciting getting all these groups together. Rather
Investing in information systems
opportunity to get more involved in
than calling them ‘value analysis groups,’
Adrienne Ainsworth, director of strate-
developing our maturity in software asset
I call them ‘solution groups.’”
gic sourcing for Advocate Aurora Health
management.” [“Software asset manage-
in Milwaukee, said that “as Advocate
ment” refers to the management and
Aurora Health moves to a common EMR
maintenance of a software license after
A strategy for nutritional services
and ERP platform over the next year,
a contract is signed, including staying
Herman Lovato, director of support
our team will be able to better normalize
in compliance with contract terms and
services for Centura Health in Centennial,
disparate data and enrich our quality and
realizing the full value of what has been
Colorado, said, “One of my goals over
cost-per-case tools, allowing for more
purchased.] “I have been a part of the governance team, and feel there are a lot of improvements that the group is looking to make in our process and tools
“ It is so helpful in supply chain to have good data to understand the needs of the organization and how to maximize the value of technology contracts.” – Jonathan Kempton, category leader, Intermountain Healthcare
in the coming years. It is so helpful in supply chain to have good data to understand the needs of the organization and how to maximize the value of technology contracts. That is why I feel strongly about software asset management’s role as an input to supply chain.”
Pulling off a makeover Ryan Rotar, executive director of supply chain, UNC Health Care, Chapel Hill, North Carolina, said, “Seldom does someone in supply chain leadership get the opportunity to build a system from the ground up. Often, you settle for incremental change. But a year from now, our supply chain will look 180 degrees different than it does today. I’m blessed to be a part of all these changes.”
30
February 2020 | The Journal of Healthcare Contracting
SPONSORED
HEALTH O METERS PROFESSIONAL SCALES
Facing the challenges of weighing immobile patients and the need for an accurate and efficient solution
Acquiring a critical or immobile patient’s weight is not easy. It takes time, and
Traditional options
disrupts clinical workflow. Despite the difficulties in obtaining weight measurements, a
Currently, the three most commonly
patient’s body weight is a critical measurement in calculating the appropriate dosage of
used options for weighing time-crit-
life-saving drugs. In addition to providing patients with the proper drug dosage, drugs
ical, immobile patients are weighing
need to be administered quickly, as in some cases every minute is a factor in a patient’s
beds, hoist scales, and estimation. How-
outcome. Faster treatment is also a goal of Process Improvement teams as hospitals
ever, these methods are problematic as
across the country are focused on shortening door to needle times to meet American
they are difficult to use, time-consum-
Heart Association 2020 credentialing guidelines and to be designated as a “Stroke
ing, inaccurate, and uncomfortable for
Honor Roll Elite Plus” certified institution.
the patient.
The Journal of Healthcare Contracting | February 2020
31
SPONSORED
HEALTH O METERS PROFESSIONAL SCALES
Typically most emergency rooms
commonly used in the ICU are dosed
now offers the Patient Transfer Scale.
or stroke centers will weigh immobile
based on precise patient weight, and an
The new PTS-1000KL is an innova-
patients using a stretcher or bed with a
over or underestimated weight measure-
tive piece of equipment that combines
weighing scale inside of it. This is not
ment can lead to fatal drug levels or
a transfer board with a weighing scale
a reliable solution – weighing beds are
inadequate treatment. Weight estima-
inside, allowing clinicians to quickly
not always available, as they are often
tion should only be considered as a last
and accurately weigh immobile patients
in use or have been moved. Clinicians
resort when time is critical to providing
without changing their workflow. This
are not confident in the use of weigh-
life-saving treatment.
easy-to-use scale can be quickly zeroed
ing beds as they can be inaccurate due
It is evident that a more efficient and
for immediate use, is always available
to not being calibrated regularly or
accurate method of weighing immobile
using its convenient wall-hanging stow-
properly zeroed before use. In some
patients would provide better patient
ing system, and decreases the number
instances using a weighing bed can in-
outcomes, enhance workflow, and reduce
of patient transfers. All departments in
crease the number of patient transfers.
the burden on staff.
the hospital can benefit from the Patient
In the case of an immobile stroke patient, the patient is transferred from an EMS stretcher, to a weighing bed and then to a CT scanner. This extra transfer is a risk to the patient’s safety and a burden on staff ’s physical health. Lastly, weighing beds can be very expensive, costing over $15,000 in many cases. Another less common option to weigh immobile patients is to use a hoist scale. Hoist scales lift patients from a bed to obtain a weight measurement. These scales are not a popular choice as they are difficult to use, timeconsuming as well as being uncomfortable and stressful for the patient. Obtaining a weight using a hoist often involves several steps to set up the
All departments in the hospital can benefit from the Patient Transfer Scale, particularly stroke units, the emergency room, ICU, and radiology. In addition to the practical benefits, the Patient Transfer Scale is also an effective costsaving alternative to other weighing options.
scale and properly position the patient. And as previously stated, these patients need to be treated quickly and every
The Patient Transfer Scale
Transfer Scale, particularly Stroke
minute counts.
As a leading manufacturer in the health-
Units, the Emergency Room, ICU, and
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weight measurement of an immobile
sional Scales focuses on developing
benefits, the Patient Transfer Scale is
patient is estimation. Staff can estimate
and introducing healthcare products
also an effective cost-saving alternative
weight by what is told to them by the
that can make marked improvements
to other weighing options.
patient or by a visual estimate. But
on patient care and outcomes. To help
estimation is not accurate and can be
healthcare facilities overcome the chal-
choose the brand that makes it weigh easi-
very dangerous when weight is used
lenges of weighing immobile patients,
er for you, the customer and the patient,
to determine drug dosing. The drugs
Health o meter Professional Scales
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A third method used to obtain the
32
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February 2020 | The Journal of Healthcare Contracting
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TRENDS
Physician reimbursement What you need to know about physician payment changes
On November 1, 2019, the Centers for Medicare and Medicaid Services (CMS)
Gary LeRoy, M.D., president, AAFP:
issued a final rule that includes updates to payment policies, payment rates, and quality
[Although the American Academy of
provisions for services furnished under the Medicare Physician Fee Schedule effective
Family Physicians had yet to formally
on or after Jan. 1. JHC asked the American Academy of Family Physicians (AAFP) and
respond to CMS’s final rule at press time]
the Medical Group Management Association (MGMA) for their reactions.
AAFP is likely OK with their decision to maintain the weights … given ongoing concerns with the cost category. One
34
The Journal of Healthcare Contracting:
evidence that they provided high-quality,
downside to maintaining the quality and
For 2020, CMS will maintain the
efficient care supported by technology.
cost weights is that there will be a more
weights of the cost (15%) and quality
To do so, they must submit information
significant shift in those weights later,
(45%) performance categories for
on “quality” (e.g., processes, outcomes),
since – by law – they both must be 30%
the Merit-based Incentive Payment
“promoting interoperability require-
by the 2022 performance year.
System, or MIPS.
ments” (e.g., electronic exchange of infor-
Background: Under the Medicare Ac-
mation), “improvement activities” (e.g.,
Mollie Gelburd, J.D., associate director
cess and CHIP Reauthorization Act of
expanding practice access, promoting pa-
of government affairs, MGMA: MGMA
2015, or MACRA, physicians earn a pay-
tient safety) and “cost” (i.e., the resources
is pleased to see that CMS maintained the
ment adjustment (up or down) based on
clinicians use to care for patients).
category weights for 2020, particularly after
February 2020 | The Journal of Healthcare Contracting
originally proposing that the “cost” category
Effective Jan. 1, 2021, changes to CPT
coding changes allow clinicians to choose
be weighted at 20%. We have concerns
codes will allow clinicians to choose
the E/M visit level based on either medical
about this category, because certain mea-
the E/M visit level based on either
decision-making or time, rather than on
sures contain methodological flaws, which
medical decision-making or time.
a combination of three variables: history,
inappropriately hold physicians accountable
Background: CMS is aligning its E/M
exam and medical decision-making. They
for costs beyond their control. For example,
coding with changes adopted by the Amer-
also revise the time and medical decision-
the Total Per Capita Cost measure holds
ican Medical Association Current Proce-
making process for all of the codes, and
physicians responsible for the cost of a
dural Terminology (CPT) Editorial Panel
require performance of history and exam
patient’s care even after that patient is no
for office/outpatient E/M visits. The CPT
only as medically appropriate.
longer in the physician’s care, but in the care of another physician. In addition, because CMS has not yet provided feedback on cost measure performance, clinicians can’t change their clinical workflows in order to become more efficient and improve category performance. Until CMS fixes these performance flaws and provides feedback, MGMA believes the current MIPS category weights should be maintained. The Journal of Healthcare Contracting: Effective Jan. 1, CMS is increasing the performance threshold from 30 points to 45 points. Background: Eligible Medicare Part B clinicians are scored on a 100-point MIPS performance scale. Payments are adjusted up or down based on the MIPS performance score. (These adjustments are applied to the Medicare payment for every Part B service billed by the clinician two years after the performance year.) Mollie Gelburd: The performance threshold is critical, because if the physician’s score is lower than the threshold floor, then Part B payments are reduced; if the score exceeds it, payments are adjusted upward. The Journal of Healthcare Contracting: The 2020 Medicare Physician Fee Schedule introduces several changes regarding evaluation/management
Physician assistants get more responsibility Physician assistants may gain expanded responsibilities as a result of the final 2020 Physician Fee Schedule Rule, issued in November by the Centers for Medicare and Medicaid Services (CMS). The rule loosens Medicare’s supervision requirements for PAs by largely deferring to state law on how PAs practice with physicians and other members of the healthcare team. “In recent years, 11 states have replaced the outdated term ‘supervision’ with other terms, such as ‘collaboration,’ to better reflect current PA practice,” says Michael Powe, vice president of reimbursement & professional advocacy for the American Academy of PAs. “Another state, North Dakota, has eliminated the legal requirement for a specific relationship between a PA, physician, or any other healthcare provider in order for a PA to practice to the full extent of their education, training, and experience.” “Deferring to states on how PAs work with other healthcare providers ensures that Medicare policy aligns with the direction many states are already heading when it comes to how healthcare is delivered,” David E. Mittman, PA, DFAAPA, president and chair of the Board of Directors for AAPA, said in a statement. The final rule also: ʯ Authorizes PAs to prescribe medications in their role as “attending physicians,” similar to physicians and advanced practice registered nurses, under Medicare’s hospice benefit. ʯ Allows physicians, physician assistants, and advanced practice registered nurses (APRNs, that is, nurse practitioners, clinical nurse specialists, certified nurse-midwives and certified registered nurse anesthetists) to review and verify (i.e., sign and date) – rather than re-document – notes made in the medical record by other physicians; residents; medical, physician assistant, and APRN students; nurses; or other members of the medical team.
(E/M) services provided by doctors.
The Journal of Healthcare Contracting | February 2020
35
TRENDS
Gary LeRoy: Focusing on medical
ing CPT code 99201 [i.e., office or other
beneficiaries with chronic condi-
decision-making (MDM) or time as a single
outpatient visit for the evaluation and
tions,” CMS says specialists can now
variable for choosing the level of service
management of a new patient] and reduc-
bill Medicare for providing principal
simplifies code selection. That said, the re-
ing the number of levels of new patient
care management to patients with
vised CPT interpretive guidelines for medi-
office/outpatient visits makes sense. This
one complex chronic condition while
cal decision-making represent a significant
is particularly relevant since CPT codes
the patient is receiving chronic care
change in the way physicians and coders are
99201 and 99202 have the same type of
management services from a pri-
accustomed to thinking about MDM. They
medical decision-making, i.e., straight-
mary care doctor.
will require some study and education be-
forward. In some sense, this will simplify
Gary LeRoy: [In its response to the
fore they become effective on Jan. 1, 2021.
matters for physicians, because they’ll
proposed rule, the American Academy of
have only four rather than five levels from
Family Physicians commented] the addition
which to choose. The impact should not
of new principal care management (PCM)
be significant, since new-patient visits are
codes would move away from the con-
less numerous than established patient visits,
tinuous, comprehensive, and coordinated
and level-one new-patient visits are among
value-based care and primary care CMS has
the least frequent of new-patient visits.
otherwise been encouraging as a cost-effec-
We believe reporting requirements should be aligned with clinical improvement as well as cost efficiency. Likewise, the time element is changing
tive way to care for Medicare patients. The Journal of Healthcare Contracting: CMS is implementing several changes
eficiaries have two or more chronic
for “care management” services (i.e.,
conditions for which AAFP members are
“transitional care management,”
already caring in a continuous, compre-
“chronic care management” and
hensive, and coordinated way via existing
significantly. Currently, it represents face-
“principal care management”).
chronic care management, I do not expect
to-face time in the office or outpatient
Regarding chronic care management
the creation of PCM codes by Medicare
setting and can be used only to choose
(i.e., services provided to beneficiaries
to have a significant impact on how
level of service when counseling and/or
with multiple chronic conditions over
AAFP members care for these patients.
coordination of care dominates the en-
a calendar month), a Medicare-specific
counter. In 2021 and beyond, the relevant
code will be assigned for additional
The Journal of Healthcare Contracting:
time will be time on the date of service,
time spent beyond the initial 20 min-
Taking a step back, what is your orga-
not just face-to-face time, and it can be
utes allowed in the current coding.
nization’s reaction to these changes?
used to select level of service for any
Gary LeRoy: CMS’s creation of a code for
Mollie Gelburd: MGMA would like to
encounter, not just those dominated by
additional time spent beyond the initial 20
see MIPS become more clinically relevant.
counseling and/or coordination of care.
minutes is consistent with a proposal that
Currently, our members see it primarily as
the AAFP and others submitted to the CPT
a compliance program, that is, a means to
The Journal of Healthcare Contracting:
Editorial Panel. We are supportive of it until
either avoid financial penalties or gain ad-
Regarding E/M services, the CPT cod-
such time as a similar code can be incorpo-
ditional reimbursement. But as they stand,
ing changes retain 5 levels of coding
rated into CPT. The code will more appro-
the MIPS measures don’t further clinical
for established patients, reduce the
priately compensate AAFP members for the
goals. We believe reporting requirements
number of levels to 4 for office/outpa-
additional time they and their staffs spend in
should be aligned with clinical improve-
tient E/M visits for new patients, and
support of patients with chronic conditions.
ment as well as cost efficiency. In a well-
revise the code definitions.
36
To the extent most Medicare ben-
functioning program, an investment in a
Gary LeRoy: Given that physicians will
The Journal of Healthcare Contracting:
practice’s clinical program would also be
be allowed to choose the level of service
“Recognizing that clinicians across
an investment in MIPS. As it stands, those
on medical decision-making alone, delet-
all specialties manage the care of
two things are separate.
February 2020 | The Journal of Healthcare Contracting
Will MVPs bring a simpler future? There’s nothing simple about the Medicare Physician Fee Schedule, including the Merit-based Incentive Payment System, or MIPS. But credit the Centers for Medicare and Medicaid Services (CMS) for trying. For 2021, CMS has proposed a next-generation MIPS program, called MIPS Value Pathways (MVPs). The goal is to move away from siloed activities and measures, and move toward an aligned set of measure options that are relevant to a clinician’s scope of practice. Currently, MIPS-eligible physicians must submit information on a variety of measures in each of four categories: Cost, Quality, Promoting Interoperability, and Improvement Activities. The MVP framework would align and connect measures and activities across all four. A clinician or group would be in
one MVP associated with their specialty or with a condition, reporting on the same measures and activities as other clinicians and groups in that MVP. “We believe the MVP framework would help to simplify MIPS, create a more cohesive and meaningful participation experience, improve value, reduce clinician burden, and better align with APMs [Alternative Payment Models] to help ease the transition between the two tracks,” CMS said in a statement. Simple, right? That remains to be seen. “We recognize that this would be a significant shift in the way clinicians may potentially participate in MIPS,” says CMS. “Therefore we want to work closely with clinicians, patients, specialty societies, stakeholders, third parties and others to establish this new framework.”
How MVPs would change physician reporting and reimbursement
Overall direction of program
Example: Diabetes
Current state of MIPS (2020)
New MIPS Value Pathways Framework (in next 1-2 years)
Future state of MIPS (in next 3-5 years)
ʯ Many choices ʯ Not meaningfully aligned ʯ Higher reporting burden
ʯ Cohesive ʯ Lower reporting burden ʯ Focused participation around
ʯ Simplified ʯ Increased voice of the patient ʯ Increased CMS-provided data ʯ Facilitates movement to
pathways that are meaningful to clinician’s practice/specialty or public health priority
Alternative Payment Models (APMs)
ʯ Endocrinologist chooses from ʯ Endocrinologist reports same
ʯ Endocrinologist reports on
same set of measures as all other clinicians, regardless of specialty or practice area ʯ Four performance categories (Cost, Quality, Promoting Interoperability, Improvements Activities) feel like four different programs ʯ Reporting burden higher and population health not addressed
same foundation of measures with patient-reported outcomes also included. ʯ Performance category measures in endocrinologist’s Diabetes Pathway are more meaningful to their practice ʯ CMS provides even more data (e.g. comparative analytics) using claims data and endocrinologist’s reporting burden even further reduced
“foundation” of Promoting Interoperability and population health measures as all other clinicians, but now has a MIPS Value Pathway with measures and activities that focus on diabetes prevention and treatment. ʯ Endocrinologist reports on fewer measures overall in a pathway that is meaningful to their practice ʯ CMS provides more data; reporting burden on endocrinologist reduced
Source: Centers for Medicare and Medicaid Services
The Journal of Healthcare Contracting | February 2020
37
TRENDS
Physician productivity Physician compensation is up. But productivity isn’t.
Value-based incentives for physicians are growing, but they still constitute a
major specialty group to see an increase
small percentage of total cash compensation for most specialties, reports Chicago-
greater than 1.5%.
based SullivanCotter, a consulting firm in the assessment and development of rewards
“With growing concerns regarding
programs for the healthcare industry and non-profit sector. What’s more, even as market
provider supply and demand, organiza-
supply-and-demand for physicians continues to drive increases in compensation, physi-
tions are evolving their compensation
cian productivity is stagnant.
programs to align with an increasingly competitive talent market,” said Dave Hesselink, principal, SullivanCotter, in
From 2018 to 2019, the prevalence of value-
Productivity stagnant
a statement. “With a looming physician
based incentives, which rewards performance
Despite continued year-over-year in-
shortage placing pressure on orga-
on measures such as clinical quality, patient
creases in median compensation across
nizational recruitment and retention
experience and access, increased by 5-7%
all major specialty categories, productivity
strategies, this demand continues to push
across all four major specialty categories:
remains relatively flat and in many cases is
physician compensation upwards with-
even declining.
out being supported by corresponding
ʯ For primary care, the prevalence of value-based incentive components in plan design was up 5% from last year, with 62% of organizations incorporating these incentives into their physician compensation programs.
ʯ Medical, surgical and hospital-based specialties all fell in the range of 55-57%.
“ We expect to see continued growth in valuebased incentives as organizations work to further develop and refine these programs to ensure they have credible measurement and reporting systems in place before moving forward.” – Mark Ryberg, principal, SullivanCotter
The actual amounts paid for valuebased performance remain relatively small, at 6.2% of total cash compensation across
From 2014-2019, median total cash
gains in productivity or reimbursement
all specialties at the median, according to
compensation for primary care physicians
– resulting in higher levels of organiza-
the firm. However, this is up from 5.6% in
increased by 14.7% (reflecting a growing
tional investment per physician.”
2018. Primary care is highest at 7% of total
demand for primary care providers by
cash compensation, with hospital-based
healthcare organizations), but work RVU
ter’s “Physician Compensation and Pro-
specialties following at 6.3% and medical
(wRVU) productivity declined by 0.2%,
ductivity Survey” is now in its 27th year.
and surgical specialties at just below 6%.
according to SullivanCotter. (Work RVU
With data from nearly 700 organizations
reflects the relative time and intensity asso-
on more than 206,000 individual physi-
in value-based incentives as organizations
ciated with furnishing a Medicare Physician
cians and advanced practice providers,
work to further develop and refine these
Fee Schedule service.)
this survey is intended to provide insight
“We expect to see continued growth
38
Released in December, SullivanCot-
programs to ensure they have credible
Over the same five-year time
into base salary, total cash compensation,
measurement and reporting systems in
period, hospital-based physicians saw
and productivity data and ratios, includ-
place before moving forward,” said Mark
the largest growth in median wRVU
ing wRVUs, collections, patient visits and
Ryberg, principal, SullivanCotter.
productivity at 5.2%. This was the only
panel sizes.
February 2020 | The Journal of Healthcare Contracting
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TRENDS
Trending upward Urgent care center growth up 6%
The Urgent Care Association reports industry growth of almost 6% in 2019,
54.1% of centers were physician owned
with 9,279 urgent care centers in the United States as of June 2019, up from 8,774 in
while hospitals represented 24.8% of the
2018 and 8,125 in 2017.
total. But by 2014, physician ownership had dropped to 40% and hospital (or healthcare system) ownership had increased to 37%
In a recently updated white paper,
of respondents. Many multisite urgent care
“The Essential Role of the Urgent Care
centers have taken on private equity part-
Center in Population Health,” the as-
ners, according to the association.
sociation reports that urgent care centers handle more than 112 million patient
Typical services: Non-life- or-limb-threat-
visits per year, representing 23% of all
ening illnesses and injuries typically seen
primary care visits and 12.6% of all out-
in urgent care centers include, but are not
patient physician visits.
limited to:
ʯ ʯ ʯ ʯ ʯ ʯ
UCA’s membership includes more than 3,000 urgent care centers. The association defines urgent care services as:
ʯ A medical examination, diagnosis and treatment for non-life or limb threatening illnesses and injuries that
Patient volume: In the UCA’s 2018
are within the capability of an urgent
Benchmarking Report, representing 2017
care center which accepts unscheduled,
data, respondents reported a median
walk-in patients seeking medical
patient volume of 35 patients per day.
attention during all posted hours
Urgent care volume can be seasonal, typi-
of operation and is supported by
cally spiking during late fall and winter.
on-site evaluation services, including radiology and laboratory services.
of the UCA benchmarking survey, 25-40%
procedure and treatment to the
of urgent care patients lack a primary care
extent they are within the capabilities
physician. A large demographic that often
of the staff and facilities available at
chooses urgent care for their acute needs
the urgent care center.
are young, healthy adults devoid of chronic health conditions, according to UCA.
The UCA’s database does not include
40
retail clinics housed inside retail operations
Ownership: Urgent care centers emerged
and typically alongside in-house pharma-
largely as a physician or physician group
cies, or traditional primary care practices
strategy. In an early UCA Benchmarking
with extended hours for their patients.
Report based on the calendar year 2008,
Asthma. Burns, minor. Cough/cold/influenza. Conjunctivitis (pink-eye). Dermatological conditions (rashes, infections, including incision and drainage as a procedure).
ʯ ʯ ʯ ʯ ʯ
Dehydration. Ear infections. Fractures. Gastrointestinal disorders. Gynecological infections and disorders.
Patient profile: Depending on the year
ʯ Any further medical examination,
Allergies.
ʯ ʯ ʯ ʯ ʯ ʯ ʯ ʯ
Headaches/migraines. Influenza. Lacerations, including suturing. Pharyngitis (sore throats). Sprains/strains. Upper respiratory infections. Urinary tract infections. Work-related illness, injury, screening and wellness.
ʯ Detection of complications of chronic illness.
February 2020 | The Journal of Healthcare Contracting
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HSCA
The healthcare landscape in 2020
BY KHATEREH CALLEJA, J.D.
Key trends to watch
42
The year 2019 was a busy one for the healthcare sector. Policymakers on
Here are a few of the trends we are seeing
Capitol Hill explored solutions to a variety of healthcare issues ranging from drug pric-
as well as areas of focus and policy priori-
ing to the opioid crisis. Natural disasters have strained the resources of healthcare pro-
ties that HSCA will continue to pursue in
viders across the country and exacerbated ongoing critical prescription drug shortages.
the coming year:
The Healthcare Supply Chain As-
clinics, and other healthcare providers.
Drug shortages
sociation (HSCA) represents the nation’s
Given our unique line of sight over the
Ongoing critical prescription drug short-
leading healthcare group purchasing
entire healthcare supply chain and our
ages continue to be a public health crisis
organizations (GPS), the sourcing and
experience working on the front lines
and endanger patient care. As the U.S.
purchasing partners to virtually all of
of the healthcare industry, HSCA has an
Food and Drug Administration (FDA)
America’s 7,000-plus hospitals, as well
intimate understanding of the challenges
has noted, drug shortages are a complex
as the vast majority of the 68,000-plus
the healthcare industry will continue to
problem that requires a multi-stakehold-
long-term care facilities, surgery centers,
face as it enters the 2020.
er solution. HSCA supports bipartisan
February 2020 | The Journal of Healthcare Contracting
legislation called the MEDS Act, which
legislation. The CREATES Act encour-
provide top-quality care to patients in
provides the FDA with additional
ages generic drug competition and will
every situation.
authority to address drug shortages,
help end anti-competitive abuses utilized
strengthens manufacturing reporting
by some brand name manufacturers. In
requirements and develops new market-
the year ahead, HSCA will continue to
Healthcare data standards
based incentives to help ensure a stable
advocate for policy solutions that in-
In an increasingly connected world,
supply of critical prescription drugs.
crease competition and foster innovation
healthcare supply chain data standards
This bill will help provide significant
throughout the marketplace.
play a critical role in helping to deliver
relief for patients struggling to access their medications. In 2019, HSCA submitted comments to Drug Enforcement Administration (DEA) providing recommendations on ways to help control narcotics abuse while also protecting provider access to injectable opioids that are critical to patient care. HSCA also weighed in with FDA as the Agency continues to foster improvements to medical device sterilization processes and work to reduce the healthcare industry’s use of Ethylene Oxide (EtO) for sterilization. As we
Patients have long relied on generic drugs to reduce costs and increase access to essential medications, and price spikes for commonly used drugs create hardship for patients and providers alike.
begin a new year, HSCA will continue to support the MEDS Act and work with policymakers to pursue solutions to pre-
Emergency preparedness
important supply chain data to clinicians
vent and mitigate drug shortages.
In 2019, the country experienced a
and patients. In 2019, HSCA’s Committee
wave of natural disasters and other
for Healthcare eStandards (CHeS) submit-
emergencies that put stress on hospi-
ted comments to the American National
Drug pricing and generic drug competition
tals and healthcare providers as they
Standards Institute (ANSI) providing
served affected communities. GPOs
recommendations on healthcare supply
Significant price spikes for critical gener-
were on the front lines of those
chain data standards to help improve accu-
ic drugs and ongoing prescription drug
emergencies, providing support to
racy, efficiency, and patient safety. HSCA
shortages continue to jeopardize patient
healthcare providers and working with
will continue to advocate for policies that
access to affordable healthcare. Patients
manufacturers to identify and locate
accelerate the adoption, implementa-
have long relied on generic drugs to
supplies of much-needed resources.
tion, and active usage of industry-wide
reduce costs and increase access to es-
As we enter 2020, HSCA will work
data standards for improving efficiencies
sential medications, and price spikes for
with lawmakers and healthcare sup-
throughout the supply chain.
commonly used drugs create hardship
ply chain stakeholders to provide key
for patients and providers alike. HSCA
insights into improving emergency
members remain committed to helping
supported the CREATES Act, which
preparedness and offer strategic policy
hospitals and healthcare providers deliver
was ultimately passed at the end of 2019
recommendations that will enable the
the most effective and affordable care
as part of Congress’ year-end spending
healthcare industry to continue to
possible to the patients they serve.
As we head into 2020, HSCA and its
Khatereh Calleja, J.D., is the president and CEO of Healthcare Supply Chain Association (HSCA).
The Journal of Healthcare Contracting | February 2020
43
LEADERSHIP
BY LISA EARLE MCLEOD
Is change hard? Do leaders make it harder?
It’s nice to think that everyone is
Traditional thinking tells us people don’t like change. But if that were true, no one would ever get married or have a baby. Or move, or go
all-in to improve the company. But it’s
to college, or change jobs, or the myriad of other changes we humans regularly impose
naïve to believe employees will happily
on ourselves.
jump through hoops to increase share price. Even when employees own stock in the company, dandling a potential
People make huge sweeping changes
future earnings increase doesn’t win
every single day. They don’t do it because
hearts and minds.
they’re forced to; they do it because they
Talk to any kid whose parents have
want to. The change people don’t like is
divorced and they’ll tell you: making my
change that is thrust upon us and that has
life harder so your life can get better is
no clear benefit for us.
not a change anyone in their mind gets
In the work world, we often assume
excited about.
people’s resistance to new programs and
When people hear about a change, the
ideas is because they can’t handle change.
first things they think are, why is this hap-
Often, intelligent people resist change
pening and how is this going to affect me?
because they don’t want to do a lot of
In Gill’s case, he figured out quickly,
work for something that does not matter
he needed to level with people. The truth
to them.
was, if the company didn’t change, their
A friend of mine, Gill, told me about
competition would clean their clock. Gill
how their company approached a recent reorganization. They held a big meeting to tell everyone about their plans. Senior leadership laid out the new structure. They discussed the efficiencies the com-
was also honest about how much work This is going to be soooo much work.
it was going to be. He said, “It’s going to
This is pointless. I bet some consul-
be chaotic for the next month. Then for
tant sold them on this.
the month after, when we’re working out
After hearing the complaints, Gill
the kinks it will likely still be harder than
pany would gain, and how it would better
thought, “HR told me this would probably
normal. By month three things should
them in the marketplace. Leadership
happen. People don’t like change.” As a
start to get easier.”
closed by emphasizing the anticipated
well-intentioned leader, he thought his job
When you sugarcoat things, people
increase in earning and share price.
was to help people cope with the change.
are less likely to trust you. Whether you’re
But the problem wasn’t that his
telling your kids you’re moving, or telling
Gill attended the meeting with all his direct reports. His team was clearly less
people couldn’t handle change. The prob-
your team the company is reorganizing, be
than delighted by the changes. They left
lem was the senior leaders hadn’t outlined
honest. If it’s going to be hard, tell them.
the meeting grumbling, and by the time
any clear benefits for anyone other than
they got back to their area, the grumbles
shareholders. Meanwhile, people’s jobs
especially when the leaders consider the
turned into full-throttled complaints.
and lives would be turned upside down.
team’s perspective.
People can and do adapt to change,
Lisa Earle McLeod is a leading authority on leadership and the author of four books including the bestseller, Selling with Noble Purpose. Companies like Apple, Kimberly-Clark and Pfizer hire her to help them create passionate, purpose-driven organization. Her NSP is to help leaders drive revenue and do work that makes them proud.
44
February 2020 | The Journal of Healthcare Contracting
CALENDAR
Calendar of events Association for Health Care Resource & Materials Management (AHRMM) AHRMM20 Conference and Exhibition July 26-29, 2020 Austin, Texas
Federation of American Hospitals 2020 Public Policy Conference & Business Exposition March 1-3, 2020 Marriott Wardman Hotel Washington, D.C.
IDN Summit Spring IDN Summit & Reverse Expo April 27-29, 2020 Omni Orlando Resort at ChampionsGate Orlando, Fla. Fall IDN Summit & Reverse Expo August 24-26, 2020 JW Marriott Desert Ridge Resort and Spa Phoenix, Ariz. Spring IDN Summit & Reverse Expo April 12-14, 2021 Omni Orlando Resort at ChampionsGate Orlando, Fla.
GHX Supply Chain Summit April 27-29, 2020 Gaylord National National Harbor, Md.
Intalere Elevate 2020 May 11-13, 2020 Gaylord Opryland Resort & Convention Center Nashville, Tenn.
Health Connect Partners Spring ’20 Hospital Supply Chain Conference May 20 - 22, 2020 New Orleans, La.
Premier Breakthroughs Conference June 23-26, 2020 Gaylord Opryland Resort & Convention Center Nashville, Tenn.
Fall ’20 Hospital Supply Chain Conference September 30 - October 2, 2020 Kansas City, MO
Health Industry Distributor’s Association (HIDA) Supply Chain Visibility Conference February 5-6, 2020 Hyatt Regency Coral Gables, Fla.
Share Moving Media Association of National Account Executives April 8, 2020 Consolidated Service Center Forum Atlanta, Ga. August 11-13, 2020 ANAE Annual Conference San Diego, Ca.
SEND ALL UPCOMING EVENTS TO DANIEL BEAIRD, MANAGING EDITOR: DBEAIRD@SHAREMOVINGMEDIA.COM
The Journal of Healthcare Contracting | February 2020
45
NEWS
GPO NEWS Premier: Hospitals see 20% increase in childbirth costs from complications and common chronic conditions
Konica Minolta receives Innovative Technology designation from Vizient
U.S. hospitals could save upwards
Inc. announced its Order and Refer-
of 20% in costs for complicated
ral Management Solutions, provided by
childbirths, according to a nationally
All Covered, the company’s IT Services
representative analysis by Premier
Division, have received a 2019 Innovative
Premier releases statement on Next Generation ACO model results
Inc. (Charlotte, NC). The organiza-
Technology designation from Vizient, Inc.
Premier Inc. (Charlotte, NC) congratu-
tion says that increased costs associ-
(Irving, TX). The designation was based
lated all of the Next Generation Account-
ated with childbirth are in part due to
on the recommendations of healthcare
able Care Organizations (NGACOs) for
potentially preventable complications
experts serving on a member-led council
reducing Medicare spending by more than
and pre-existing chronic conditions.
who interacted with the product shown
$123 million during the program’s first two
In aggregate, complications, includ-
at the Vizient Innovative Technology
years. The company also announce that,
ing severe maternal morbidity factors
Exchange. All Covered’s Order and Refer-
in performance year 2018, all six NGACO
and chronic conditions, add on aver-
ral Management Solutions help improve
participants in Premier’s Population Health
age 20% to the cost to hospitals to
organizations’ ability to more securely
Management Collaborative generated more
perform a vaginal delivery and 25%
and efficiently capture, manage, and share
than $70 million in savings to Medicare, re-
to the cost to perform a cesarean
patient information, as well as transform
sulting in shared savings payments in excess
delivery. The Premier analysis shines
workflow, creating more optimum clinical
of $63 million back to their organizations.
light on the opportunity to improve
and administrative experiences.
see the bipartisan legislation included in the larger spending deal that the president is expected to sign into law.
Konica Minolta Business Solutions U.S.A.,
outcomes and avoid excess costs and longer lengths of stay by working appropriate care prior to childbirth,
Vizient praises Congressional action on the CREATES Act
and standardizing processes to iden-
Vizient, Inc. (Irving, TX) praised the
new cybersecurity resources for mem-
tify and prevent labor and delivery
work of the House and Senate in ap-
bers within its Operational Continuity
complications. Other findings include:
proving year-end spending legislation
and Emergency Management Program.
that includes the Creating and Restor-
Earlier this year, Intalere convened a
maternal morbidity costs hospitals
ing Equal Access to Equivalent Samples
Cybersecurity Advisory Board, comprised
88% more compared to an
(CREATES) Act. Vizient says that the
of Intalere members with distinguished
uncomplicated vaginal delivery
bipartisan legislation will encourage new
industry experience and expertise, to iden-
ʯ A cesarean with severe maternal
generic drug competition and help lower
tify cybersecurity needs, best practices and
morbidity costs hospitals 111%
prescription drug costs for hospitals and
resources. Through the leadership of this
more than an uncomplicated
patients. The CREATES Act prevents
group, Intalere’s Operational Continuity
cesarean delivery, on average
brand name drug manufacturers from us-
and Emergency Management Program
across provider networks to ensure
ʯ A vaginal delivery with severe
46
Intalere expands cybersecurity resources for members Intalere (St. Louis, MO) announced
ing tactics that slow the development and
has been enhanced with the addition of a
These serious, lifelong complica-
entry of new, lower cost generic drugs
new cybersecurity offering that includes:
tions are often preventable, and women
into the marketplace, such as blocking
who experience these factors stay in the
access to samples. Vizient has strongly
hospital 70% to 75% longer than those
supported passage of the CREATES Act
with uncomplicated deliveries.
since its introduction, and is pleased to
ʯ Educational Resources ʯ Cyber insurance ʯ Access to strength and vulnerabilities assessments
February 2020 | The Journal of Healthcare Contracting
develop a one-stop shopping experience,
has earned the Fellow designation from the
a new contract portfolio that will provide [its]
which launched in December 2018 as
American College of Healthcare Execu-
members with a spectrum of cybersecurity
Kroger Express in 13 Walgreens stores in
tives (ACHE). Kiewiet has a strategic and
products and services.” The company said it
Northern Kentucky. They announced an
diverse perspective of the healthcare
would announce new contracts in 2020.
expansion of the pilot in August 2019 at
industry supported by more than 12 years
35 Walgreens locations in Knoxville, TN,
of direct patient care combined with over
and introduced a curated assortment of
18 years in product management, business
Walgreens health and beauty products at
development, medical products/devices
17 Kroger stores in the same area.
distribution, strategic sourcing and large
Intalere said that “work continues to build
New GPO formed by Walgreens, Kroger The Kroger Company (Cincinnati, OH)
academic healthcare system/IDN supply
and Walgreens Boots Alliance (Deer-
chain management. He is a nationally-recognized leader and innovator in healthcare
costs and combined resources. Kroger
Intalere’s Steve Kiewiet earns prestigious Fellow designation from American College of Healthcare Executives
and Walgreens initially announced an
Intalere (St. Louis, MO) announced Steve
Contracting as one of the “Top 10 People
exploratory pilot in October 2018 to
Kiewiet, Intalere chief commercial officer,
to Watch in Healthcare Contracting.”
field, IL) have formed a new GPO called Retail Procurement Alliance, aimed at delivering purchasing efficiencies, lower
supply chain management, leadership development and operational efficiency, and was featured in The Journal of Healthcare
HOSPITAL AND IDN NEWS Georgia's largest safety-net hospital, busiest ER to operate at reduced capacity for much of 2020
Sutter hospitals honored for reducing C-section rates
three Virginia hospitals and their associ-
Sutter Health announced that 14 of its
Mercy Health, Inc. The hospitals were:
Grady Memorial Hospital (Atlanta, GA),
hospitals, which have among the lowest ce-
Georgia’s largest safety-net hospital and
sarean section (C-section) rates in California,
one of the busiest emergency rooms in
were recognized by the California Health
the country, will operate at a reduced
and Human Services Agency (CHHS)
capacity for much of 2020. A water pipe
for reducing cesarean births for first-time
burst in early December 2019 flooded
moms with low-risk pregnancies. Of the 14
three floors and hospital officials origi-
Sutter hospitals named to the state’s 2019
nally expected repair work to take a few
Maternity Care Honor Roll, nine have been
months. Now they say it won’t be done
recognized on this honor roll for four con-
is January 1, 2020. The three hospitals are
until October 2020. John Haupert, presi-
secutive years. The Sutter Hospital Quality
among the planned divestitures discussed
dent and CEO of Grady Health System,
Dashboard allows patients to learn more
on CHS’ third quarter 2019 earnings call.
says the revised timeline comes after a
about the care provided throughout Sutter’s
one-month long review of the damage
integrated network.
by the hospital and its insurer, Zurich, as well as the state fire marshal and the city
ated assets to subsidiaries of Bon Secours
ʯ 300-bed Southside Regional Medical Center (Petersburg)
ʯ 105-bed Southampton Memorial Hospital (Franklin)
ʯ 80-bed Southern Virginia Regional Medical Center (Emporia) The effective date of the transaction
Tenet announces agreement to divest Memphis-area hospitals and operations
damaged when the fourth, fifth and sixth
CHS completes divestiture of Virginia hospitals
floors were flooded in Grady’s A and B
Community Health Systems, Inc. (Nash-
entered into a definitive agreement with
wings. The cause of the water pipe burst
ville, TN) announced that subsidiaries of
Methodist Le Bonheur Healthcare to divest
is still being investigated.
the company have completed the sale of
Tenet’s hospitals and other operations in
of Atlanta. Approximately 220 beds were
The Journal of Healthcare Contracting | February 2020
Tenet Healthcare (Nashville, TN) has
47
NEWS
how the program has been adminis-
– Memphis and Saint Francis Hospital –
Audit finds problems in program that sent $60M to rural Georgia hospitals
Bartlett, the physician practices associated
A state audit of a program that has di-
the money has gone, according to the
with both hospitals, and six MedPost urgent
verted millions of Georgia state tax dol-
report. The state Legislature created the
care centers. The agreement provides that
lars to rural hospitals has found that it
program for rural hospital tax credits to
Tenet’s Conifer Health Solutions subsidiary
hasn’t always benefited the most needy
shore up the facilities after seven closed
will continue to provide revenue cycle man-
families. The audit was requested by the
for lack of funds. The audit raised the
agement services to the hospitals following
state House Appropriations Commit-
possibility of either creating a state-run
completion of the transaction. The transac-
tee, whose chairman, state Rep. Terry
nonprofit to administer the tax credit or
tion is expected to be completed in 2020.
England, has expressed concerns about
turning it into a state grant program.
spending, the study found. Health spend-
violates the First Amendment by provoking
ing grew overall 4.6% in 2018, accounting
compelled speech and reaches beyond the
for nearly 18% of the U.S. economy.
intended meaning of “standard charges”
the Memphis, Tenn., area. The agreement includes the sale of Saint Francis Hospital
tered. A vendor that administers the program won’t let the state see where
GOVERNMENT NEWS U.S. spent more than $1 trillion on hospitals in 2018, the largest percentage in health spending According to a new CMS analysis of
transparency in the Affordable Care Act.
health spending released this week, the
The groups filed the suit in the U.S. District Court in Washington, DC, and are ask-
or 33% of healthcare spending in 2018,
Hospital groups file lawsuit to stop the Trump administration's price transparency rule
was on hospitals. Total health spending
A lawsuit, filed by the American Hospital
rule if it is ultimately ruled unconstitutional.
reached $3.6 trillion. Retail prescription
Association, among other hospital groups,
The Wall Street Journal reported that the esti-
drug prices fell slightly last year for the
has been filed to stop the Trump admin-
mated cost to hospitals to follow the rule is
first time in 40 years but spending on
istration’s price transparency rule that re-
between $38.7 million to $39.4 million due
retail drugs grew 2.5% to $335 billion,
quires hospitals to disclose negotiated rates
to releasing data on negotiated drugs, sup-
which amounts to 9% of total health
with insurers. The suit argues that the rule
plies, facility and physician care prices.
U.S. spent more than $1 trillion on hospitals in 2018. CMS found that $1.2 trillion,
ing for an expedited decision to prevent hospitals from needing to prepare for the
TRENDS
48
ʯ Increasing complexity and growth
McKesson unveils insight into hospital pharmacy trends, what to expect in 2020
resulting in uncertainty and instability,
McKesson announced that its McKes-
to or elimination of the 340B Drug
son RxO team, a group of trusted
Pricing Program, the potential repeal
advisors helping hospital and health
or modification of the Affordable Care
system pharmacy operations, has
Act (ACA) and the continued expan-
addressed and analyzed challenges ex-
sion or contraction of government
pected to impact hospital pharmacies
programs. The McKesson RxO team
next year. Healthcare will be a major
anticipates these other challenges in
relying on data-informed decisions,
theme of the upcoming election cycle,
election year 2020:
not intuition
and hospital leaders will watch potential drug pricing legislation, changes
in IDNs
ʯ Hospitals expanding specialty pharmacy footprint, swiftly
ʯ 340B delivering clinical and economic benefits
ʯ Out-of-pocket costs impacting patients and revenue
ʯ Finance and pharmacy leadership
February 2020 | The Journal of Healthcare Contracting
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