JHC Oct 18 by BOC design Inc

Providing Insight, Understanding and Community

October 2018 | Vol.14 No.5

Future Supply Chain Leaders

Lowering total cost of ownership together. Learn how we worked with one medical center to:

Increase efficiencies

Reduce freight costs

Lower packaging costs

Reduce shipping weight

Read the full case study:

cookmedical.com/tcotogether

cookmedical.com ÂŠ COOK 01/2017 HBS-D33288-EN

CONTENTS »» OCTOBER 2018 The Journal of Healthcare Contracting is published bi-monthly by Share Moving Media 1735 N. Brown Rd. Ste. 140 Lawrenceville, GA 30043-8153 Phone: 770/263-5262 FAX: 770/236-8023 e-mail: info@jhconline.com www.jhconline.com

Future Supply Chain Leaders

Editorial Staff

Editor Mark Thill mthill@sharemovingmedia.com Managing Editor Graham Garrison ggarrison@sharemovingmedia.com Art Director Brent Cashman bcashman@sharemovingmedia.com Publisher John Pritchard jpritchard@sharemovingmedia.com Vice President of Sales Jessica McKeever jmckeever@sharemovingmedia.com Director of Business Development Alicia O’Donnell aodonnell@sharemovingmedia.com Sales Executive Lizette Anthonijs Lizette@sharemovingmedia.com

Circulation Wai Bun Cheung wcheung@sharemovingmedia.com

The Journal of Healthcare Contracting (ISSN 1548-4165) is published monthly by Share Moving Media, 1735 N. Brown Rd. Ste. 140, Lawrenceville, GA 30043-8153. Copyright 2018 by Share Moving Media. All rights reserved. Subscriptions: $48 per year. If you would like to subscribe or notify us of address changes, please contact us at the above numbers or address. POSTMASTER: Send address changes to Share Moving Media, 1735 N. Brown Rd. Ste. 140, Lawrenceville, GA 30043-8153. Please note: The acceptance of advertising or products mentioned by contributing authors does not constitute endorsement by the publisher. Publisher cannot accept responsibility for the correctness of an opinion expressed by contributing authors.

4 Editor’s Note

The here and the now … and the future

6 No Time for Shyness

Wellforce’s Communications Officer Brooke Hynes encourages supply chain executives to tell their story

12 AllSpire Health GPO: Bending cultures Five mid-Atlantic health systems

16 Make Room for Non-Acute Care 18 Future Supply Chain Leaders 35 Enhance Your Vendor Relationships with Common Negotiation Techniques

40 ‘Why not us?’

Health systems increasingly look to initiate innovation, instead of being on the receiving end

46 Brent Petty: Voice of experience 48 HSCA GPOs and Emergency Preparedness

50 A Work Force

Each Fourth of July, Carl Meyer pays tribute – and raises support – for veterans entering the civilian workforce

52 Calendar of Events 53 Industry News

36 Get it in Writing

The Journal of Healthcare Contracting | October 2018

EDITOR’S NOTE

The here and the now … and the future The “here and now” is important, according to the folks who espouse mindfulness. And who’s to argue? But the future is pretty important too. Hence our second annual “Future Leaders of Supply Chain” feature. In our call for nominations earlier this year, we asked for your help in identifying “someone under 40 from the provider side who has the energy, dedication and courage to shape tomorrow’s healthcare supply chain.” Mark Thill

Here are this year’s Future Leaders – as well as an excerpt from each one’s nomination:

• Sterling Borders, director, supply chain management, Med Center Health, Bowling Green, Kentucky. (“As his operational knowledge has grown, so has his willingness to engage in a collaborative manner with clinicians and physicians.”) •D erek Havens, associate vice president, strategic sourcing and engagement, HonorHealth, Scottsdale, Arizona. (“Since Derek’s arrival at HonorHealth, a new culture has been created within the organization centered around the physician engagement strategy that he has developed.”) • Tyler Loeb, strategic sourcing manager, clinical supplies and services, Jefferson Health, Center

City, Pennsylvania. (“Tyler is able to balance the demands of his clinical stakeholders, organization savings targets, and supplier relationships.”) •M att McGraw, vice president, supply chain integration, OSF HealthCare, Peoria, Illinois. (“Matt McGraw leads the teams that manage sourcing, supply chain management, ERP and data, and is supporting OSF’s new consolidated service center.”) • Josh Plauny, director, materials management, VCU Health System, Richmond, Virginia. (“His passion is leading teams to deliver structure and process that increase the likelihood of desired outcomes while minimizing errors.”)

• Bruce Radcliff, vice president, sourcing strategy, Advocate Aurora Health Care, Milwaukee, Wisconsin, and Downers Grove, Illinois. (“Bruce Radcliff came from outside healthcare and brings solid supply chain fundamentals, coupled with an inquisitive mind.”) • Matt Roberts, director, internal control, HealthTrust Supply Chain Operations, Richmond, Virginia. (“Matt Roberts is comfortable interacting and providing influence to a diverse set of leaders.”) When you read their stories, you’ll see these individuals are already making an impact on the “here and now.” And you can bet they will be continuing to make an impact on tomorrow’s “here and nows” as well.

October 2018 | The Journal of Healthcare Contracting

EXECUTIVE INTERVIEW

No Time for Shyness Wellforce’s Communications Officer Brooke Hynes encourages supply chain executives to tell their story

Brooke Hynes

Talking about yourself and the supply chain team’s accomplishments isn’t necessarily tooting your own horn. It’s communicating, building relationships, informing, educating, and demonstrating to others that your department’s success ties into the success of the entire hospital or health system. Besides, how can your team’s accomplishments speak for themselves if you don’t speak for them?

October 2018 | The Journal of Healthcare Contracting

EXECUTIVE INTERVIEW

That’s a question that Brooke Hynes, chief communications officer at Wellforce in Burlington, Massachusetts, poses, not just to supply chain professionals, but all departments in today’s healthcare systems. Born and raised in North Carolina, Hynes graduated from the University of North Carolina with a degree in journalism and mass communications. “I followed the public relations track, because I’ve always been interested in, ‘How do you sculpt the message?’ and ‘How do you make sure that message is getting to the right people at the right time?’” Supply chain should be asking itself the same questions, she says. “The key part for supply chain is making sure you’re bringing in the communications team and thinking about how – and when – you

England Quality Care Alliance and the Lowell General Physician Hospital Organization. In January 2017, Hallmark Health – including MelroseWakefield Hospital, Lawrence Memorial Hospital and the Hallmark Physician Hospital Organization, joined Wellforce as an equal, founding member. But even four years after its formation, administration feels it’s still important to educate staff at each facility about Wellforce’s role in their planning and activities. For that reason, Hynes’ team kicked off a “road show” earlier this year. Every month, a leader from Wellforce presents at managers’ meetings in each of the facilities. Leading it off was Christopher Johnson, senior vice president of supply chain. “Folks were raving about it,” she says. The reason Johnson was so successful is that rather than talking about what supply chain has accomplished, he talked about how his department worked with key people in the hospital to accomplish certain goals, says Hynes. “So you don’t necessarily need a formal marketing plan for your department,” she says. “But you do have to have a sense of who you are and how you can serve other departments.” Internal newsletters are another effective way to share your department’s accomplishments with others, she continues. “Departments like mine are always looking for success stories and content,” she says. Better still if supply chain can tie its accomplishments to a hospitalwide or systemwide goal. A case in point might be money saved or better outcomes achieved due to standardization of a physician-preference item. “You always want to tie your message to what matters to your audience,” says Hynes. It’s difficult – though not impossible – to get local newspaper coverage about a costreduction program or major contract, says

“ You don’t necessarily need a formal marketing plan for your department. But you do have to have a sense of who you are and how you can serve other departments.” want to communicate your message,” says Hynes. For example, if supply chain is introducing a change that will affect others in the system, are they doing so in a timely manner, so staff has time to understand and adjust to the change? The message will have greater impact if supply chain has solid relationships with the rest of the hospital or health system, she adds. Those types of relationships can help supply chain orchestrate change in such a way that others in the organization feel they are part of it.

Ways to communicate The communications team can help supply chain market its department in a variety of ways: face-to-face encounters, and hospital or health system newsletters. There also may be opportunities to include supply chain’s work in external messaging that addresses what the system is doing to lower the cost of care. Wellforce is a relatively young system, having been created in 2014 by Circle Health (including Lowell General Hospital) and Tufts Medical Center. It includes the physicians networks of these organizations: New

October 2018 | The Journal of Healthcare Contracting

“Take the editor of your hospital’s internal newsletter out to lunch or coffee, and make sure they understand what you are trying to do.” Hynes. But if your CEO makes presentations or writes blogs for the community, he or she might be eager to share news of a supply chain project that demonstrates how the health system is reducing costs or improving care. “Become friends with people like me,” she adds. “Take the editor of your hospital’s internal newsletter out to lunch or coffee, and make sure they understand what you are trying to do.”

Times of crisis Hynes has had experience with crisis communications, including the Boston Marathon bombing in 2013 and a five-day work stoppage. So too do most supply chain departments. An example might be the unavailability of critical items, such as saline IV solutions, due to natural disasters. Two things to keep in mind when facing a crisis, she says. First, be prepared. Have a plan in place for communicating product outages to the people most affected, e.g., nursing or pharmacy.

The Journal of Healthcare Contracting | October 2018

Second, help your audience understand that resolving crises can be a process, not an overnight event. “Keeping people regularly updated on your progress is huge,” says Hynes. “Sometimes we fall into a trap, where we actually get used to being in the midst of a crisis. Supply chain might realize IV bags will be in short supply for some time to come, but the nurses on the floor might not. They may think the situation will be resolved next week.” Give regular updates about the situation as well as a view out, even if it’s to say you don’t know for sure when the product shortage will end. “Let others in the hospital know this is a longer-term issue, so they can get their heads around the fact that this is something they may have to deal with for awhile.” Bring your story back to one of the “strategic pillars” of the organization, she says. For supply chain, that isn’t too difficult. “I guarantee you that one of the strategic pillars of every health system in the country is providing affordable and efficient care. Tie into that and show how supply chain is helping achieve that goal. “It goes back to relationships, talking to stakeholders, and that’s where your communications team can help. If you have hard news to share, ask for their help in how you can best relay the message. “Your internal communications team wants to know these things. Our job is to ensure that all employees are informed, engaged and involved in the conversation.”

REDUCTION IN

DISTRIBUTOR FEES

99.75%

RATE

FILL

JOHNSTON HEALTH Putting numbers to a problem Johnston Health • Two campuses: Smithfield and Clayton, N.C. • Licensed for 179 med/surg beds • Aligned with UNC Health Care Results: • Distribution markup for suture and endomechanicals reduced by 66 percent. • Fill rate is 99.75 percent. • 26 percent reduction in inventory of suture and endomechanicals. • No more staff time wasted on backtracking, reordering and rescheduling.

26% REDUCTION IN

INVENTORY

The OR team at Johnston Health had a hunch, but it wasn’t until an annual inventory in 2017 that they were able to put numbers to the problem: Too much suture. It was in carts, the suture room, the OR suites, the overstock area. That’s what too many backorders will do to you. “We began exploring better suture inventory options during the summer of 2017,” explains Jennifer Wells, director of resource management for the two-hospital system in North Carolina. Having used Suture Express as a supplier prior to joining Johnston Health in October 2016, she talked to the company about coming to Johnston Health. “We worked through our contracts and submitted to them our usage data,” explains Wells. The IDN’s products were uploaded into the Suture Express system, and both hospitals converted on Jan. 1, 2018.

Apprehension has subsided Was the OR team apprehensive? “Absolutely,” she says. No one wants to jeopardize patient care due to lack of a critical item. But half a year after instituting the revised purchasing and distribution program for suture and endomechanicals, the OR team’s misgivings have subsided. “The entire process was quite painless and friendly,” says Wells, referring to the conversion. In fact, the OR didn’t notice a difference. That’s not a surprise, since they were acquiring the same suture, endomechanical and mesh products from Suture Express that they were from their med/surg supplier. But there have been differences, most notably: • The distribution markup for suture and endomechanicals has been reduced by 66 percent. • Fill rate is 99.75 percent. • Inventory of suture and endomechanicals has dropped 26 percent.

October 2018 | The Journal of Healthcare Contracting

Five steps to RESET The Suture Express RESET inventory management program helps providers find and keep the right balance in their suture and endomechanical inventory. The five steps:

Initial assessment

Ongoing recommendations

100 percent return credit

Monitoring and reporting

Data support

Suture Express professionals examine current inventory levels, PAR levels and historical usage to identify immediate opportunities for inventory reduction.

Starting at 90 days, Suture Express provides the first in a continuous series of customized PAR level recommendations and velocity analysis.

With RESET, the provider receives full credit on returns for excess and no-move inventory. No restocking fee, even on items not ordered from Suture Express.

Suture Express monitors the provider’s PAR levels and inventory turns to help continuously rebalance inventory as usage changes over time.

RESET provides custom tracking and notification tools for expirations, recalls and safety alerts, plus annual savings scorecards and more.

Because the suture and other products purchased from Suture Express are priced through Johnston Health’s GPO or local contracts, Suture Express honors those prices. “We have seen a reduction in distribution fees as well as a reduction in freight expense, as Suture Express charges a daily flat shipping fee,” says Wells.

An ongoing tool The Suture Express RESET inventory management program has been a big part of the offering, says Ryan Wuebbeling, national business development director for Suture Express. RESET helps providers find the right balance in their suture and endomechanical inventory. The results are lower carrying costs and more data-driven decisions. “RESET is an ongoing tool, not a one-time thing,” he adds. On a regular basis, Suture Express reviews significant data points with the Johnston Health team to ensure that optimal inventory levels are being maintained. The OR will always do what they have to do to prevent running out of necessities during a case. “They’re always thinking patient care,” says Wells. But backorders have been minimal since Johnston Health contracted with Suture Express. “Now the OR staff has confidence knowing that when they need a product, it will be available for next-day delivery.” And resource management stands behind that guarantee, having assumed management of the OR inventory. “We have gained a better understanding of how their inventory works, and we are a better resource to them,” she says. For their part, the OR team was excited about the opportunity to shift responsibility for inventory to Wells’ department. “We’ve created a partnership between OR and resource management.”

The Journal of Healthcare Contracting | October 2018

Jennifer Wells, director of resource management

We have seen a reduction

in distribution fees as well as a reduction in freight expense, as Suture Express charges a daily flat shipping fee.

RPC PROFILE

AllSpire Health GPO: Bending cultures Five mid-Atlantic health systems

Paul Tirjan

Bringing about profound change within one organization calls for time, deliberation and ultimately, hard decisions. Now multiply that by five organizations. Five years ago, a group of mid-Atlantic health systems began exploring a virtual network to accomplish things they couldn’t do independently, including group purchasing. In October 2016, AllSpire Health GPO was launched. The GPO is a spin-out company from AllSpire Health Partners, and comprises five equity partners: Atlantic Health, Hackensack Meridian, Lehigh Valley Health, Tower Health and WellSpan Health. “In any collaborative venture involving health systems with a hundred years of entrenched culture, profound change in operations will have myriad issues and challenges,” says President Paul Tirjan. Building an organizational structure to

“We have established a track record, and we think we will be attractive to a lot of folks.”

enable large-scale, long-term collaboration was the first step.

Exclusive management agreement For group purchasing, the health systems decided to pursue a business partnership with an existing GPO, and after issuing multiple bids, signed an exclusive management agreement with HealthTrust Purchasing Group. That in itself required some doing, as four of the five members at the time had to switch from their current GPO to HealthTrust. “While there were many contributing factors, the primary driver of the decision to contract with HealthTrust

October 2018 | The Journal of Healthcare Contracting

INOMAX® (NITRIC OXIDE) GAS, FOR INHALATION

Because Every Moment Counts

INCLUD ALL ED * S ’ IT

IT’

INOmax Total Care®

A complete system with comprehensive care is included in your INOmax Total Care contract at no extra cost. When critical moments arise, INOmax Total Care is there to help ensure your patients are getting uninterrupted delivery of inhaled nitric oxide. • Over 18 years on market with over 700,000 patients treated1 • Continued innovation for delivery system enhancements • Emergency deliveries of all INOmax Total Care components within hours† • Live, around-the-clock medical and technical support and training • Ongoing INOMAX® (nitric oxide) gas, for inhalation reimbursement assessment and assistance included in your INOMAX contract (Note: You are ultimately responsible for determining the appropriate reimbursement strategies and billing codes)

Indication INOMAX is indicated to improve oxygenation and reduce the need for extracorporeal membrane oxygenation in term and near-term (>34 weeks gestation) neonates with hypoxic respiratory failure associated with clinical or echocardiographic evidence of pulmonary hypertension in conjunction with ventilatory support and other appropriate agents. Important Safety Information • INOMAX is contraindicated in the treatment of neonates dependent on right-to-left shunting of blood.

2017 EMERGENCY

DELIVERIES L INCL

UD ED

CONTRACT

AL DRUG &’SDEVICE IT

2,700+ IN YOUR NO EXTRA COST

• In patients with pre-existing left ventricular dysfunction, INOMAX may increase pulmonary capillary wedge pressure leading to pulmonary edema. • Monitor for PaO2, inspired NO2, and methemoglobin during INOMAX administration. • INOMAX must be administered using a calibrated INOmax DSIR® Nitric Oxide Delivery System operated by trained personnel. Only validated ventilator systems should be used in conjunction with INOMAX.

• The most common adverse reaction is hypotension. • Abrupt discontinuation of INOMAX may lead to increasing You are encouraged to report negative side effects pulmonary artery pressure and worsening oxygenation. of prescription drugs to the FDA. Visit MedWatch or • Methemoglobinemia and NO2 levels are dose dependent. call 1-800-FDA-1088. Nitric oxide donor compounds may have an additive Please visit inomax.com/PI for Full Prescribing effect with INOMAX on the risk of developing Information. methemoglobinemia. Nitrogen dioxide may cause airway inflammation and damage to lung tissues.

Visit inomax.com/totalcare to find out more about what’s included in your contract. *INOmax Total Care is included at no extra cost to contracted INOMAX customers. †Emergency deliveries of various components are often made within 4 to 6 hours but may take up to 24 hours, depending on hospital location and/or circumstances. Reference: 1. Data on file. Hampton, NJ: Mallinckrodt Pharmaceuticals.

Mallinckrodt, the “M” brand mark and the Mallinckrodt Pharmaceuticals logo are trademarks of a Mallinckrodt company. Other brands are trademarks of a Mallinckrodt company or their respective owners. © 2018 Mallinckrodt US-1800073 August 2018

INOmax®(nitric oxide gas)

Brief Summary of Prescribing Information INDICATIONS AND USAGE Treatment of Hypoxic Respiratory Failure INOmax® is indicated to improve oxygenation and reduce the need for extracorporeal membrane oxygenation in term and near-term (>34 weeks) neonates with hypoxic respiratory failure associated with clinical or echocardiographic evidence of pulmonary hypertension in conjunction with ventilator support and other appropriate agents. CONTRAINDICATIONS INOmax is contraindicated in neonates dependent on right-to-left shunting of blood. WARNINGS AND PRECAUTIONS Rebound Pulmonary Hypertension Syndrome following Abrupt Discontinuation Wean from INOmax. Abrupt discontinuation of INOmax may lead to worsening oxygenation and increasing pulmonary artery pressure, i.e., Rebound Pulmonary Hypertension Syndrome. Signs and symptoms of Rebound Pulmonary Hypertension Syndrome include hypoxemia, systemic hypotension, bradycardia, and decreased cardiac output. If Rebound Pulmonary Hypertension occurs, reinstate INOmax therapy immediately. Hypoxemia from Methemoglobinemia Nitric oxide combines with hemoglobin to form methemoglobin, which does not transport oxygen. Methemoglobin levels increase with the dose of INOmax; it can take 8 hours or more before steadystate methemoglobin levels are attained. Monitor methemoglobin and adjust the dose of INOmax to optimize oxygenation. If methemoglobin levels do not resolve with decrease in dose or discontinuation of INOmax, additional therapy may be warranted to treat methemoglobinemia. Airway Injury from Nitrogen Dioxide Nitrogen dioxide (NO2) forms in gas mixtures containing NO and O2. Nitrogen dioxide may cause airway inflammation and damage to lung tissues. If there is an unexpected change in NO2 concentration, or if the NO2 concentration reaches 3 ppm when measured in the breathing circuit, then the delivery system should be assessed in accordance with the Nitric Oxide Delivery System O&M Manual troubleshooting section, and the NO2 analyzer should be recalibrated. The dose of INOmax and/or FiO2 should be adjusted as appropriate. Worsening Heart Failure Patients with left ventricular dysfunction treated with INOmax may experience pulmonary edema, increased pulmonary capillary wedge pressure, worsening of left ventricular dysfunction, systemic hypotension, bradycardia and cardiac arrest. Discontinue INOmax while providing symptomatic care.

ADVERSE REACTIONS Because clinical trials are conducted under widely varying conditions, adverse reaction rates observed in the clinical trials of a drug cannot be directly compared to rates in the clinical trials of another drug and may not reflect the rates observed in practice. The adverse reaction information from the clinical studies does, however, provide a basis for identifying the adverse events that appear to be related to drug use and for approximating rates. Controlled studies have included 325 patients on INOmax doses of 5 to 80 ppm and 251 patients on placebo. Total mortality in the pooled trials was 11% on placebo and 9% on INOmax, a result adequate to exclude INOmax mortality being more than 40% worse than placebo. In both the NINOS and CINRGI studies, the duration of hospitalization was similar in INOmax and placebo-treated groups. From all controlled studies, at least 6 months of follow-up is available for 278 patients who received INOmax and 212 patients who received placebo. Among these patients, there was no evidence of an adverse effect of treatment on the need for rehospitalization, special medical services, pulmonary disease, or neurological sequelae. In the NINOS study, treatment groups were similar with respect to the incidence and severity of intracranial hemorrhage, Grade IV hemorrhage, periventricular leukomalacia, cerebral infarction, seizures requiring anticonvulsant therapy, pulmonary hemorrhage, or gastrointestinal hemorrhage. In CINRGI, the only adverse reaction (>2% higher incidence on INOmax than on placebo) was hypotension (14% vs. 11%). Based upon post-marketing experience, accidental exposure to nitric oxide for inhalation in hospital staff has been associated with chest discomfort, dizziness, dry throat, dyspnea, and headache. DRUG INTERACTIONS Nitric Oxide Donor Agents Nitric oxide donor agents such as prilocaine, sodium nitroprusside and nitroglycerine may increase the risk of developing methemoglobinemia. OVERDOSAGE Overdosage with INOmax is manifest by elevations in methemoglobin and pulmonary toxicities associated with inspired NO2. Elevated NO2 may cause acute lung injury. Elevations in methemoglobin reduce the oxygen delivery capacity of the circulation. In clinical studies, NO2 levels >3 ppm or methemoglobin levels >7% were treated by reducing the dose of, or discontinuing, INOmax. Methemoglobinemia that does not resolve after reduction or discontinuation of therapy can be treated with intravenous vitamin C, intravenous methylene blue, or blood transfusion, based upon the clinical situation. INOMAX® is a registered trademark of a Mallinckrodt Pharmaceuticals company. © 2018 Mallinckrodt. US-1800236 August 2018

October 2018 | The Journal of Healthcare Contracting

RPC PROFILE

collectively was leveraging the aggregated purchasing power of their 1,600 hospital clients enhanced by the committed model and further enhanced by our regional consolidated purchasing,” says Tirjan. “Some of the longer-term benefits of this approach are the integration of supply chain decision-making into both strategic and clinical initiatives at AllSpire, which would be impractical with disparate vendor selection in major spend categories.” The agreement with HealthTrust calls for AllSpire members to buy 80 percent of products and services (by value) in defined categories from GPO-contracted vendors. “This allows for some discretionary spending, but also implies a significant amount of conversion to new product and service vendors,” says Tirjan. “An in-depth analysis of the projected disruption and savings was conducted to ensure all members were comfortable with the cost-benefit trade-offs. “Some of the greatest complexities arose from synchronizing processes from legacy GPO vendors into standard formats and managing varied contract termination dates,” he adds. Value analysis teams from each of the health systems designate a delegate or delegates to serve on one of the AllSpire Health GPO Collaboratives, which are advisory councils of subject-matter experts who coordinate the acquisition of products and services within their specialty, be it cardiology, surgery, nursing, etc. Each collaborative meets regularly, either in person or via conference call, and makes its recommendations to the AllSpire Health GPO Operating Committee, which is comprised of health system heads of supply chain, as well as the national advisory groups at HealthTrust.

In its first year of operation, AllSpire Health GPO achieved $57 million in savings and distributed $13 million back to its members in excess administration fees, says Tirjan. That $70 million in first-year annual value, returned on an aggregate investment of $7.5 million in both AllSpire Health Partners and AllSpire Health GPO, equates to an internal rate of return of 91 percent, he points out. “By the end of our second contract year, the annual benefit will exceed $100 million, and the IRR will exceed 110 percent.”

“ In any collaborative venture involving health systems with a hundred years of entrenched culture, profound change in operations will have myriad issues and challenges.”

The Journal of Healthcare Contracting | October 2018

– Paul Tirjan

One of the GPO’s biggest successes thus far has been a pharmacy benefit management agreement. Four out of the five systems contracted with a national vendor, resulting in $27 million in savings for CY 2018.

Regional contracting Many categories of spend – particularly in purchased services – are not covered in the HealthTrust portfolio, Tirjan says. There are also new, emerging fields, for which traditional multi-bidder processes are not possible or where there is no spend history to evaluate. In some cases, the AllSpire staff and the collaborative teams directly evaluate the vendors and products, and in other cases, they retain an outside consulting firm to issue an RFP and conduct a larger scale process (as occurred with the pharmacy benefit management agreement). Over the next one to two years, Tirjan expects AllSpire Health GPO to build a broad portfolio of AllSpire-generated contracts to complement those of HealthTrust, including new categories of spending. In addition, the GPO intends to expand its purchasing power by adding new equity members within its region, as well as non-equity members (called Joint Participants). “Our first two years has been about getting our operations running smoothly,” says Tirjan. “We have established a track record, and we think we will be attractive to a lot of folks.”

ANAE ANNUAL CONFERENCE

• “ How many distributors do we need to service far-flung sites – large hospitals and small clinics alike?” • “Is it possible to track cost-perpatient in the non-acute setting?” • “How can we incorporate our non-acute-care settings in value-based contracts?” • “Can our GPO offer contracts of value for both our acute- and non-acute sites?”

Value-based contracting

Make Room for Non-Acute Care How times change. In the past, post-acute care, primary care and urgent care were afterthoughts to many administrators and supply chain executives in acute-care hospitals, as well as to GPOs and many manufacturers of medical devices and equipment. That’s no longer the case. And that’s why the most recent ANAE Annual Conference in Chicago gave plenty of airtime to the non-acute supply chain. ANAE is the Association of National Account Executives.

Value-based contracting involves risk, and is dependent on data, concluded a second panel of executives, each from Premier-member organizations: Kitty Williams, director of value analysis, Riverside Health System, Newport News, Virginia; Rose Fabry, director of value analysis, East Alabama Medical Center, Opelika, Alabama; John C. Horne, senior vice president and chief supply chain officer, OSF HealthCare System, Peoria, Illinois; and George Hersch, vice president of material management, Norton Healthcare, Louisville, Kentucky. That said, the opportunity for entering value-based contracts is greater than ever, they said.

Distribution considerations Here are some highlights. A panel of three supply chain executives discussed the challenges of integrating ambulatory care and inpatient facilities: Michael Darling, vice president supply chain, St. Luke’s Health System, Kansas City, Missouri; Mark Drafton, director, ambulatory, Sutter Health, Sacramento, California; and Jennifer Sellis, program director, supply chain, Northwestern Memorial Healthcare, Chicago. As IDNs gather more non-acute sites, supply chain professionals must answer a range of questions, they said. Examples: • “Is it prudent to standardize products and equipment across the acute and non-acute sites? And if so, how do we do that?”

As IDNs continue to expand their nonacute-care presence, efficient distribution of medical products and equipment to these sites becomes a growing concern. Three experts in non-acute-care distribution offered their take on the subject: Scott Wakser, senior vice president, non-acute corporate accounts, Medline; Jody Dobson, vice president of business development, health systems, McKesson Medical-Surgical; and Brad

October 2018 | The Journal of Healthcare Contracting

Clark, general manager of strategic accounts, eastern U.S., Henry Schein Medical.

Deep dives Tom Lubotsky, chief supply chain officer for Advocate Health Care, Downers Grove, Illinois, shared his vision for partner relationships between providers and suppliers. Drawing upon the work of Harvard Business School professor and author Clayton Christensen, Lubotsky said that the strongest business relationships demand mutual giveand-take. In other words, providers should be concerned not only about what their suppliers can offer them, but what providers can offer their suppliers. “You have to drive value both ways,” he said.

Gary Fennessy, chief supply chain executive at Northwestern Memorial HealthCare, offered a “deep-dive look” into the Chicago-based IDN’s supply chain operations, including contracting, distribution and regional aggregation. Fennessy also shared ideas about effective ways suppliers can work with Northwestern. The ANAE conference concluded with a panel discussion on the driving forces of change in today’s healthcare supply chain. Speakers were Joe Walsh of Supply Chain Sherpas; Larry Dooley, vice president of national accounts for K2M Inc., Leesburg, Virginia; Chris MacKay, director of corporate accounts, Breg Inc., Carlsbad, California; and Maria Hames, partner, Healthcare Links, Cortlandt, New York.

ANAE Sponsors Graham Medical is the leading manufacturer of disposable paper and nonwoven medical products. Located in Green Bay, Wisconsin, Graham Medical has expe® rience in paper dating back to 1894 and is the only vertically integrated supplier in the market. Graham Medical has been converting paper for the medical industry for over ® 40 years and has complete control over the supply chain process, from paper to finished product. Graham Medical is a reliable partner for healthcare systems and continues to create solutions that reduce cost and complexity without compromising quality. Single-use products help minimize cross-contamination, promote faster room turnover, and reduce the overall waste and cost of re-laundering services. Graham Medical uses recycled materials in the manufacturing process, and all paper-based products are biodegradable and decomposable. To receive more information on how Graham Medical can help improve your healthcare services, visit grahammedical.com or call 1-800-558-6765. At Mead Johnson, the health and development of infants and children is our sole concern. We are the only global company focused primarily on infant and child nutrition. That singular devotion has made our flagship “Enfa” line the leading infant nutrition brand in the world. Today, Mead Johnson develops and markets safe, high quality, innovative products that help meet the nutritional needs of infants and children. With more than 70 products in over 50 countries, Mead Johnson products are trusted by millions of parents and healthcare professionals around the world. Premier Inc. (NASDAQ: PINC) is a leading healthcare improvement company, uniting an alliance of approximately 3,600 U.S. hospitals and 120,000 other providers. With integrated data and analytics, collaboratives, supply chain solutions, and advisory and other services, Premier enables better care and outcomes at a lower cost. Premier, a Malcolm Baldrige National Quality Award recipient, plays a critical role in the rapidly evolving healthcare industry, collaborating with members to co-develop long-term innovations that reinvent and improve the way care is delivered to patients nationwide. Headquartered in Charlotte, N.C., Premier is passionate about transforming American healthcare.

The Journal of Healthcare Contracting | October 2018

Future Supply Chain Leaders Editor’s note: Meet tomorrow’s supply chain leaders. Earlier this year, the Journal of Healthcare Contracting asked for nominations of young people with the energy, dedication and courage to shape tomorrow’s healthcare supply chain. As you can see, the supply chain will be in good hands.

October 2018 | The Journal of Healthcare Contracting

Visit Ventyv.com/JHC for more information Hello@Ventyv.com • 5401 West Kennedy Boulevard, Suite 760, Tampa, FL 33609-2447 • 1.888.4Ventyv

FUTURE SUPPLY CHAIN LEADERS

Sterling Borders Director, Supply Chain Management Med Center Health Bowling Green, Kentucky

Nomination submitted by Susan Helms, MHA, MA, MT(ASCP)SLS, senior region director, Premier Inc. Sterling Borders joined Med Center Health in 2017 and has brought a new perspective to their supply chain functions as well as a tremendous amount of enthusiasm. Over the last year, Sterling has tirelessly attacked contracting opportunities, expanded his product knowledge and developed an improved understanding of healthcare fundamentals to include billing and reimbursement, and has connected their relevance to the organization’s use of supplies. As his operational knowledge has grown, so has his willingness to engage in a collaborative manner with clinicians and physicians. His efforts include improving physician productivity in surgery, line item contract savings in the cath lab and in interventional radiology, and working with ENTs to standardize usage patterns.

Snapshot Born/raised: Bowling Green, Kentucky Undergrad degree: Western Kentucky University (Financial planning and services) Graduate degree: Bellevue University, MBA Joined The Med Center: 2017 Some prior work highlights • Senior business analyst, Camping World • Senior financial analyst, Fiserv • Finance manager, Chico’s FAS • VP operations, Inked Med Center Health • Six hospitals (including one long-term, acute-care facility) • 454 acute-care beds • 110 extended-care beds • 400+ physicians in more than 50 specialties

October 2018 | The Journal of Healthcare Contracting

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FUTURE SUPPLY CHAIN LEADERS

Derek Havens Associate vice president, strategic sourcing and engagement HonorHealth Scottsdale, Arizona

Nomination submitted by Greg Goodall, vice president, commercial contracting, Medtronic MITG Since Derek’s arrival at HonorHealth, a new culture has been created within the organization centered around the physician engagement strategy that he has developed. This strategy has enabled Derek to have a “new seat” at the table when negotiating with the supplier community, to include physicianpreference product portfolios. Suppliers are receptive because Derek and team are now capable of delivering on the commitments they are making … not only the products selected, but also the timeframe in which the products are being converted for the health system. In addition to his knowledge and capabilities, Derek has exhibited great leadership skills by creating a high-performing strategic sourcing team at HonorHealth, which is working across multiple business units to implement culture change and to accelerate the execution of product conversions while improving patient/ staff safety and enhancing clinical outcomes.

Snapshot Born/raised: McPherson, Kansas Undergraduate degree: Kansas State University (Finance) Joined HonorHealth: 2017 Some prior work highlights • Analyst, financial consultant, Children’s Hospital Association • Premier Inc. (Region director. Contracting director. Senior region director.) HonorHealth • 5 acute-care hospitals • Medical group • Outpatient surgery centers • Cancer care network

October 2018 | The Journal of Healthcare Contracting

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FUTURE SUPPLY CHAIN LEADERS

Tyler Loeb, CPSM Strategic Sourcing Manager, Clinical Supplies and Services Jefferson Health Center City, Pennsylvania

Nomination submitted by Geoff Kalman, region director, Premier. Through his work at Jefferson Health, Tyler Loeb has been a leader in driving cost savings throughout an ever-changing organization. Tyler is able to balance the demands of his clinical stakeholders, organization savings targets, and supplier relationships. He has developed an analytical approach to projects that weighs opinions from many stakeholders. This has allowed him to gather feedback and keep all stakeholders engaged and included in the decisions that impact patient care. The engagement throughout the sourcing process leads to successful project implementation and lasting results. This innovative approach to sourcing contributes to Tyler’s success and is a big reason he is an individual to watch.

Snapshot Born/raised: Kutztown, Pennsylvania Undergraduate degree: Elizabethtown College (Economics) Graduate degree: Temple University (MBA in progress) Joined Jefferson Health: 2015 Some prior work highlights: • Procurement/sourcing manager, Gate Gourmet • Purchasing manager, WEBstaurantStore.com Jefferson Health stats: • Center City, Pennsylvania • 14 hospital locations • 40+ urgent care centers and outpatient centers

October 2018 | The Journal of Healthcare Contracting

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FUTURE SUPPLY CHAIN LEADERS

Matt McGraw Vice president, supply chain integration OSF HealthCare Peoria, Illinois

Nomination submitted by Kelly Alexander, Premier Inc., executive director, OSF Healthcare Matt McGraw leads the teams that manage sourcing, supply chain management, ERP and data, and is supporting OSF’s new consolidated service center. Since stepping into this role about four years ago, he has: • Converted medical/surgical distribution ($50M annual) • Oversaw phased implementation of ERP system in 11 acute sites • Added two more acute sites and is addressing ambulatory care • Was on the leadership team that converted OSF to new GPO • Was part of the team that moved two acquired acute care facilities from their incumbent IDN to OSF in one day

Snapshot Born/raised: Born in Lancaster, Ohio/raised in Piqua, Ohio. Undergraduate degree: Ohio University (Sports administration) Graduate degree: Medical University of South Carolina (MHA) Joined OSF HealthCare: 2013 Some prior work highlights • Director materials management/purchasing, Upstate Carolina Medical Center • Director materials management/biomedical engineering, St. Cloud Regional Medical Center • Regional materials manager, Health Management Associates OSF HealthCare • 126 locations • 13 hospitals (nine acute-care, four critical-access) • Two colleges of nursing • 1,200-person physician network

October 2018 | The Journal of Healthcare Contracting

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Start today at www.welchallyn.com. 1 CIN: Computers, Informatics, Nursing: Eliminating Errors in Vital Signs Documentation, FIELER, VICKIE K. PhD, RN, AOCN; JAGLOWSKI, THOMAS BSN, RN; RICHARDS, KAREN DNP, RN, NE-BC, 2013. The paper vital signs recording had an error rate of 18.75%. 2 JHIM FALL 2010 Volume 24:Number 4, Vital Time Savings: Evaluating the Use of an Automated Vital Signs Documentation System on a Medical/Surgical Unit 3 Going One Step Further at Scott & White Medical Center—Temple: Eliminating manual vital signs documentation to prioritize value-added care. 2017 Welch Allyn. www.welchallyn.com 4 CareAware® VitalsLink: Eliminating Data Latency & Manual Documentation at Naples Hospital. Prepared by Cerner, 2013. © 2017 Welch Allyn

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FUTURE SUPPLY CHAIN LEADERS

Josh Plauny, MHA Director materials management VCU Health System Richmond, Virginia Nomination submitted by Townshend Fonville, regional client executive, Vizient A native of Pennsylvania, Josh Plauny enlisted in the United States Marine Corps upon graduating high school. He served proudly [his military occupational specialty was supply logistics, for which he was awarded a Naval Achievement Award] and was honorably discharged in 2000 as a non-commissioned officer. He began working at VCU Health System in 2001 as the office manager for patient care services, and worked full-time throughout his undergraduate studies. Throughout the didactic portion of graduate school, he served as project manager for the VCUHS Critical Care Hospital construction and relocation project. He completed an administrative residency at Sentara Healthcare where, as a director, he had leadership responsibilities for the orthopedic service line and was involved in the implementation of six joint replacement destination centers of excellence. He returned to VCU Health System in 2014 to serve as the administrative director of perioperative services and lead the Perioperative Effectiveness and Efficiency Project (PEEP). In September 2017, the scope of PEEP was expanded to include OR inventory, strategic sourcing, preference cards, and sterile processing. His passion is leading teams to deliver structure and process that increase the likelihood of desired outcomes while minimizing errors.

Snapshot Born/raised: Born in Jamestown, New York; raised in DuBois, Pennsylvania Undergraduate degree: Virginia Commonwealth University (Finance) Graduate degree: Virginia Commonwealth University (MHA) Joined VCU Health System: 2001 Some prior work highlights: • United States Marine Corps, supply logistics • Office manager for patient care services, VCU Health System • Administrative director of perioperative services, VCU Health System VCU Health System • 3 hospitals • More than 30 non-hospital locations • 39,438 inpatient discharges (FY 2018) • 779,987 outpatient clinic visits (FY 2018)

October 2018 | The Journal of Healthcare Contracting

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FUTURE SUPPLY CHAIN LEADERS

Bruce Radcliff Vice president, sourcing strategy Advocate Aurora Health Milwaukee, Wisconsin, and Downers Grove, Illinois

Nomination submitted by Carl Meyer, executive vice president, The Wetrich Group. Bruce Radcliff came from outside healthcare and brings solid supply chain fundamentals, coupled with an inquisitive mind that is always asking, “What is driving the decision-making process and are we evaluating the right decision factors to make the best possible decision for the patient, caregiver and system?” He has the ability to break decisions apart and understand where value can be created, and is always looking for creative methods to create win-win-win situations. Bruce is bright, articulate, energetic and driven, and is very effective in his communication style. It is my belief that Bruce will continue to rise in his career as his contributions provide greater value to Advocate Aurora Health and he is recognized for his leadership skills.

Snapshot Born/raised: Born in Philadelphia/raised in Milwaukee Undergraduate degree: University of Wisconsin Oshkosh (Finance) Graduate degree: University of Wisconsin-Madison (MBA) Joined Aurora Health Care: 2009 Some prior work highlights: • Financial analyst, Disney Movie Club • Senior financial analyst, US Cellular • Financial analyst, Aurora Health Care • Manager of business operations, Aurora Health Care Advocate Aurora Health • April 2018: Merger of Advocate Health Care and Aurora Health Care • 27 hospitals • 500 outpatient locations • 2.7 million unique patient visits

October 2018 | The Journal of Healthcare Contracting

Matt Roberts Director, internal control HealthTrust Supply Chain Operations Nashville, Tennessee

Nomination submitted by Robin Fuqua, AVP Human Resources, HealthTrust and Supply Chain

Snapshot With nine years of healthcare experience including five years supporting supply chain operations of the largest IDNs, Matt Roberts is comfortable interacting and providing influence to a diverse set of leaders. He oversees item and vendor data for HCA Healthcare and other HealthTrust members, where he is accountable for projects requiring streamlined workflows to facilitate change management. Roberts consistently demonstrates the ability to lead teams and move projects to conclusion. He is self-motivated and always eager to learn/help. With respectful and diplomatic interactions, he sets the tone in building relationships. He understands deadlines and engages all necessary resources to meet or exceed those deadlines. He is known as a natural leader with a conviction to excellence.

The Journal of Healthcare Contracting | October 2018

Born/raised: Born in Abilene, Texas; raised in Leander, Texas Undergraduate degree: Independence University (Healthcare management) Graduate degree: Western Governors University (MBA) Joined HealthTrust: 2014 Some prior work highlights: • Histology technician, Eastern Idaho Regional Medical Center • Supply chain director, Parallon • Assistant director, surgical and specialty services, HealthTrust HealthTrust Supply Chain Operations • 5 consolidated service centers • 17 satellite distribution centers • Data governance for material information system for clients representing over 1,000 business units • Item and vendor master file implementation for acquisition/divesture operations • Governance of automation for purchase orders and invoice distributions

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How Scale Accuracy Affects Patient Safety Inaccurate scales can cause more than frustration. Some medications, particularly for renal disease and some cancers, are dosed by weight. An inaccurate weight can lead to a patient getting too little – or too much – medication, resulting in a non-therapeutic or potentially harmful dose. Such errors can lead to potentially dangerous, expensive complications. Establishing and managing a controlled process to ensure your scales are calibrated accurately and consistently can help better manage risk by reducing the potential for weighing errors, which in turn can improve patient outcomes and safety. How and when should I calibrate my scales? The FDA and The Joint Commission do not have specific standards or recommendations regarding calibration of medical scales. To ensure scale accuracy, they do require that facilities and providers engage in a regular and appropriate maintenance program that adheres to the manufacturers’ specifications and / or other procedural components known to be appropriate to ensure scale accuracy. The National Institute of Standards and Technology (NIST), ISO, and ASTM, along with similar agencies around the world, have developed extensive, scientifically-based standards for calibrating weight scales. In the absence of specific guidelines from the FDA and The Joint Commission, institutions often rely on the standards developed and published by the NIST, ISO, and ASTM. Many facilities calibrate their scales annually – unless someone requests an earlier calibration after noticing discrepancies or potential errors.

Establishing a Reliable Calibration Process Step 1. Determine responsibility and governance Decide who should ensure that scales (and other instruments, as needed) are calibrated. This may be an internal team, such as biomedical services, facilities, or a standards department. Your facility may also decide to outsource calibration to a contracted service provider. Step 2. Establish frequency Set a regular, predictable schedule for calibration. While the medical profession in the United States has not officially adopted the NIST and U.S. Department of Commerce Calibration regulations, many standards agencies recommend annual testing. Investigate whether you can align calibration with other mandates or maintenance schedules. Be sure to also implement a process for reporting anomalies and testing scales that may require calibration outside the typical schedule. Step 3. Follow a consistent process Look to the NIST, The Joint Commission, the Food and Drug Administration, and other organizations to establish a consistent process that optimizes your calibration efforts. Document your process and maintain records of when the scales were last calibrated, including any needed traceability certificates. Once you establish a process, educate your team on the importance of calibration and how inaccuracy can harm patients. A team effort can keep your scales calibrated, accurate, and safe. For more information on scales and calibration, visit the Technical Documents page on Health o meter Professional Scales’ website: www.homscales.com/ company/technical-documents.

Evans L., C. Best C “Accurate Assessment of Patient Weight.” Nursing Times, 2014. 110:12, p 12-14. Stein, Risa, PhD; C. Keith Haddock, PhD; Walker S.C. Poston, PhD, MPH; Dana Catanese; John A. Spertus, MD. “Precision in Weighting: A Comparison of Scales Found in Physician Offices, Fitness Centers, and Weight Loss Centers.” Public Health Reports; May-June 2005, p 266-270. 3 “Medication Errors: Significance of Accurate Patient Weights.” Pennsylvania Patient Safety Advisory, March 2009. 1 2

October 2018 | The Journal of Healthcare Contracting

By Jeff Girardi, HIDA Getting the Most from Your Most Important Supplier

Enhance Your Vendor Relationships with Common Negotiation Techniques In both my professional and personal experience, I’ve learned that communication and trust can be foundational elements for building successful long-term relationships. Both are essential when setting up new vendor partnerships, but it doesn’t end there. At AHRMM’s 2018 conference, Andy Motz, AVP, Consulting, HealthTrust, outlined 18 techniques for supply chain managers to improve their vendor negotiations. As I listened, I realized providers can get even more value from their ongoing purchased services and commodity agreements by taking a more proactive approach to negotiations. Among some of the insights I learned: • Make a commitment ahead of time to find or be open to mutually beneficial approaches to negotiated agreements. Your goal may be to achieve product cost savings or a better service level from your partner. But are you willing to accept a price increase if it’s proven to be justified or required to achieve your desired outcome? • Determine what your range of acceptable possible solutions offered by your item or service provider is prior to your conversation. If you’re reviewing a service contract, is your vendor expected to perform services during standard business hours only? Are you willing to contractually define what constitutes standard business hours? • Use data to try and predict your vendor’s responses ahead of discussions. In the service contract example above, for instance, it might be helpful to know what’s the standard hourly wage typically paid to maintain equipment. Industry benchmarks, RFPs, and available item list prices are great resources to help you evaluate your vendor agreements, says Motz. • Test your negotiation strategy with colleagues or subject matter experts ahead of time. One of your physicians may have a higher cost per widget than others, Motz explains, but everything you buy may be coming from the same distributor. If you can determine in advance why this variance is occurring, you and your supplier can spend valuable meeting time working through the issue rather than identifying its root cause.

The Journal of Healthcare Contracting | October 2018

HIDA PRIME VENDOR:

• Set and communicate your agenda ahead of time. It’s okay to say, “We’re going to have this conversation at this date and time,” Motz adds. “You can bring two people because I’m going to bring two people.” Decide if you want to share your negotiation points prior to a face-to-face meeting. It usually leads to a quicker resolution and you can hammer out the tougher details in person. • Look for opportunities to break down barriers, even artificial ones. Studies show likeability leads to better services and better prices, says Motz, so even something as simple as where you sit during your meeting could influence the tone of the conversation. Rather than sitting across the table, consider sitting on the same side as your distributor but with a space buffer between you two. There’s no limit to the negotiation tactics you can use to get more value from your suppliers, but it’s important to try and problem-solve wherever possible. “At a minimum, the work you put into preparing for negotiations is as equally important as any live discussion,” explains Motz. In nearly all cases, it’s best to adopt a “win-win” mentality in order to keep the dialogue positive and productive. By embracing a strategy that encourages communication and transparency, you may start hearing more “Yes” responses to your requests and even learn something new about your most trusted distribution partner.

MODEL OF THE FUTURE

David Forbes

Get it in Writing

deep into the contracting activities of any given organization, but the broad view I experienced of how programs were managed was invaluable.” Most poignant was his experience supporting the company’s international – specifically, United Kingdom – business. “A memory that will forever stand out is seeing how National Health Servicecontracted hospitals paid a fraction of the price of any American hospital for drug-eluting coronary stents,” he says. The position Forbes assumed at Mercy in March 2013 – director of contracting services – was a new one for the organization. “It was designed to formally structure business dealings between Mercy and third parties,” he says. At the moment, Mercy separates purchasing – which is primarily operations/procurement-focused – from contracting, but that may change in the future, with the implementation of a new supply chain information system.

The contracting team When it comes to contracting, David Forbes knows how to get it done. Forbes, who is director of contracting at Mercy Health Services in Baltimore, was schooled in the art and science of data analysis and of leveraging pricing opportunities while working at Spend Compass Performance Technologies, part of The Advisory Board Company. “We leveraged spend intelligence to assist member hospitals in their negotiations,” he says. “Not only did we use supply benchmarks from approximately 150 hospitals from across the country, but we also helped them organize their data via UNSPSC categorization.” While at The Advisory Board, he helped clients monitor the cost performance of individual physicians, and he helped regional purchasing cooperatives quickly pull categorically normalized aggregate data and identify pricing parity opportunities from within the group. “In my short time there, I stepped foot in more than 100 hospitals,” he says. “Obviously, I was never

“If we are able to negotiate something better, we have the fiduciary duty to do so.”

His current team consists of two contract managers and himself. (Forbes also manages a separate data/analytics team). Mercy’s vice president of supply chain is a key participant in larger acquisitions and more complex negotiations, he says. “Each of the four of us are able to draft custom terms and conditions, produce redlines, and negotiate directly with supplier contracting and legal staffs.” In addition to the typical medicalsurgical supply space, the contracting services department manages service, lease, license, and several other agreement types. In fact, only about onethird of Mercy’s contracted spend is related to medical/surgical supplies.

October 2018 | The Journal of Healthcare Contracting

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MODEL OF THE FUTURE

More than one-third of that medical/surgical supply spend is on orthopedic and spine hardware, he says, adding that high-margin, physician-preference market baskets are typically locally contracted. “For what it’s worth, approximately 70 percent of Mercy’s medical/surgical spend is purchased on a contract. If there were an available contract for that remaining 30 percent, or if Mercy were able to convert to GPOcontracted suppliers, then we would gladly leverage GPO paper.” Across all service and product categories, approximately 90 percent of the annual value of contracts is in Mercy contracts, and only 10 percent in those of a GPO.

Contract essentials Every term in an agreement is essential – otherwise, it doesn’t belong in the agreement, says David Forbes. “There are, however, a dozen or so absolutes or ‘gotchas’ that we look out for.” Here are a few. • Firmly defined start/end dates. Mercy does not accept auto-renewals, agreements ending a period of time after an event occurs (such as the installation/acceptance of a piece of equipment), or without-cause cancellations. • The agreement is written bilaterally. “If one party expects it of the other, then it must expect the same of itself,” he says. For example, if Mercy is asked to indemnify the partner, “we expect them to indemnify us,” he says. “Or, if we commit to buying 80 percent of our widgets from the partner, we require a guarantee that they can supply that much and a cure if they can’t.” • Local venue. This is much more than lower costs in the case of litigation; there are also material differences in how laws are interpreted state-by-state. • Rational, if any, limitations on liability. For that reason, Mercy rejects terms such as “liability shall be limited to the amount of money spent against this contract.” • No “gross” negligence or “willful” misconduct carveouts specific to indemnification. •A dequate and specific levels of insurance of the supplier. • Anti-virus protections for software contracts, including software loaded onto equipment or having to do with equipment interfaced remotely to a third party. • Assurance that any software license associated with a piece of equipment is transferable.

“Finally, and not to overstate this, but GPOs typically do not secure the best available price and/or terms in the market,” he says. “This statement is made as one who has worked for a benchmarking firm and is leveraging three different benchmarking databases in my current role. If we are able to negotiate something better, we have the fiduciary duty to do so.”

Hiring the right people A key piece to managing an effective contracting program is hiring the right people, says Forbes. “Given the size of today’s contract portfolios, the front-line negotiators must be empowered to make their own decisions. That doesn’t mean they get to do whatever they want whenever they want. It does mean I have to hire people I can trust to make decisions that are in the best interest of the organization.” Mercy contracting managers must have a bachelor’s degree. (“Ironically, both of our contract managers hold master’s degrees, while I am 18 credits short,” he says.) Potential hires must also perform a writing assessment, to ensure they can draft clear, effective contracts. “What we do not require is healthcare experience. In-industry experience is a consideration, but we look for strong negotiators with contracting backgrounds first. There is also something to be said about bringing unbiased eyes to an industry in need of dramatic change in how it manages its spend. “The final and most critical piece to managing this workload is the customer service orientation of my department. This allows us to engage directly with physicians, other clinicians, and department heads to assist in tasks such as vendor identification, qualification, and post-contract vendor management. “IDNs can be successful regardless of their GPO philosophy,” he adds. “We’ve just happened to come down more times on the side of a local contract. I think our staff and processes are part of it.”

October 2018 | The Journal of Healthcare Contracting

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INNOVATION

under the chief strategy officer), others may be included in the innovation office (under the direction of the chief innovation officer), and some may be stand-alone organizations or separate businesses that report directly to the board of directors. Examples of active health systems include the Texas Medical Center, Cleveland Clinic, Kaiser Permanente, Intermountain Healthcare, Geisinger, Ascension, UPMC, Cedars-Sinai, Partners HealthCare System, Mayo Clinic, and many others.

Why health systems?

‘Why not us?’ Health systems increasingly look to initiate innovation, instead of being on the receiving end Where will the next great medical technologies come from? A Fortune 500 company? A mom-and-pop start-up? Silicon Valley? How about your health system? If it feels like you’ve been reading more news about health-system-operated technology incubators, accelerators and venture funds, you probably have. “Yes, there has been an increase in their involvement in medical device innovation,” says Henry Soch, vice president, Sg2, a Vizient company. The reason is simple: Health systems realize they have a significant amount of intellectual capital within their organizations, and they can leverage it to create new devices and clinical pathways, which they can then commercialize to create new revenue streams, he says. Soch leads Sg2’s intelligence work surrounding technology adoption and innovation. He looks at the technology landscape and informs member organizations when it is appropriate to adopt new technologies, and how they can incorporate those technologies in clinical care. It is difficult to specify exactly how many healthcare systems operate accelerators or venture funds, because they often reside in different parts of the organizational structure, says Soch. Some fall under the strategy team (usually

Health systems are no longer content with waiting for innovation. Instead, they want to create it. The “accelerator” concept has been around for decades, but its adoption within the healthcare industry is only about 10 or 15 years old, says Soch. “It is now being applied more frequently because of the move to value-based care and the increasing need to rapidly respond to changes in the healthcare environment,” he says. “The other major driver is to try and accelerate the ‘bench to bedside’ cycle of innovation and speed up the adoption of new advances to benefit the most patients in the shortest timeframe.” Obtaining FDA clearance for a new device requires serious clinical validation across a wide range of patients, he points out. “In a world that is moving to value-based payment, unless you can demonstrate REAL clinical value in either the diagnosis, treatment or cost implications, you miss the mark in terms of market effectiveness in new product development.”

October 2018 | The Journal of Healthcare Contracting

How does it work? Today’s venture groups and innovation institutes have departed from the traditional “technology transfer” business model, says Soch. That said, “an operational commercialization or technology transfer infrastructure” is the foundation for building a high-innovation environment. An effective technology transfer infrastructure includes a formal process for soliciting ideas from people – clinicians or ancillary personnel – in the organization about projects they believe may have a major impact on healthcare delivery, he says. Perhaps it lowers the cost of delivery, shortens the time-to-diagnosis, reduces the workload burden on the clinical staff, or is truly transformative. The healthy infrastructure allows people to discuss the project from a clinical and business perspective, says Soch. “If it passes that threshold, a certain amount of money will be allocated to the project for a prototype and proof of concept. Then the decision is made whether to provide additional funding or whether to seek outside help.” But for many health systems, making the leap from technology transfer to true innovation can be challenging. “Probably the biggest challenge is to eliminate the ‘silos’ in clinical innovation efforts that exist in most organizations,” says Soch. “It is critically important to understand how broadly a device or medical invention can be applied across disciplines when determining which proposals make the cut in terms of additional investment and prioritization. “And health systems have limitations, not only in capital, but in knowledge of the business aspects of medical technology, such as manufacturing, marketing and distribution. In those cases, the health system would need a business partner with that kind of experience.” If the healthcare system is heavily invested in the technology, it may be very involved in its

The Journal of Healthcare Contracting | October 2018

development and commercialization. But many relationships are more “arms length,” meaning the system may cede these functions to others. Either way, the stakes can be high. And they seem to be getting higher all the time. The payback time to generate a positive ROI is shrinking considerably, says Soch. “In our conversations with healthcare innovation centers, we find they are beginning to look at an ROI of between 18 and 24 months, as opposed to the more typical five to seven years.”

TMC The Texas Medical Center in Houston is a relative newcomer to the business of innovation, says Erik Halvorsen, Ph.D., director of the TMC Innovation Institute. But what it lacks in years, it has made up in terms of the number of early-stage healthcare companies under which it has lit a fire. Five years ago, the leadership of the Henry Soch Texas Medical Center and its major institutions set out to create an environment that would nurture the next generation of therapies, medical devices and digital health applications. The umbrella is the TMC Innovation Institute, which comprises about 200,000 square feet and several programs: • TMCx+ co-working space • TMCx accelerator • J&J JLABS@TMC • J&J Center for Device Innovation • AT&T Foundry for Healthcare, with a focus on digital health technologies • TMC Biodesign Fellowship Program • TMC Venture Fund The TMCx+ incubator is a co-working space in which roughly 30 young companies – ranging in size from just a couple of people to 20 or more – house their offices and research efforts. Another facet of the Institute – the TMCx accelerator – provides start-up companies with a variety of services without charge, including business plan refinement, legal advice to establish or protect intellectual property, prototype design and development, regulatory guidance, and introductions to both medical center partnerships and venture capital. The accelerator runs two cohorts of 20-25 start-ups per year – one for medical devices, one for digital health, explains Halvorsen.

INNOVATION

Accelerator? Both incubators and accelerators help firms grow by providing guidance and mentorship, but in slightly different ways and, more importantly, at different stages in the life of the business, explains Fernando Sepulveda, managing director, Impulsa Business Accelerator, in a 2012 Inc. magazine article. “Like a father to a child, an incubator provides shelter, where the child can feel safe and learn how to walk and talk by offering office space, business skills training, and access Business accelerators to financing and professional “help companies get networks,” he writes. “The through adolescence incubator nurtures the busiand prepare them ness throughout the startup to enter adulthood, phase (childhood) and provides all the necessary tools providing them with and advice for the business strong arms and to stand on its own feet. legs, sound values “However, while learning and a clear mindset to stand on its own is a great entrepreneurial achievement, (strategy) for the walk through adolescence the future. is often wobbly and filled with challenges, and the need for guidance is far from over. Often it becomes necessary to receive advice and guidance from a business accelerator.” Business accelerators “help companies get through adolescence and prepare them to enter adulthood, providing them with strong arms and legs, sound values and a clear mindset (strategy) for the future. In other words, while incubators help companies stand and walk, accelerators teach companies to run.” Incubator programs nurture the business for the time it takes for it to get on its feet, sometimes many years, writes Sepulveda. On the other hand, a business acceleration program usually lasts between three and six months. Source: “The Difference Between a Business Accelerator and a Business Incubator?” Inc. magazine, July 31, 2012

The most recent medical device cohort drew more than 200 applicants from 18 countries. At the end of six months, the participants present their plan to potential investors and strategic partners. A third component of the program is J&J Innovation’s JLABS@TMC, a 34,000-squarefoot facility of common, wet lab and office space, as well as a 1,000-square-foot prototyping space, which includes specialized software, electronics testing and assembly equipment, rapid fabrication and 3D printing capabilities. At press time, JLABS@TMC had 51 resident companies – 49 percent therapeutics, 31 percent med/surg and diagnostics, 10 percent technology and 10 percent consumer. The Center for Device Innovation (CDI@ TMC) is collaboration between Johnson & Johnson Medical Devices Companies, Johnson & Johnson Innovation LLC, and the Texas Medical Center designed to enable rapid prototyping and pre-clinical/clinical testing. The 25,000-square-foot Center includes a full machine shop with advanced prototyping equipment; 60 work benches; facilities for electronics lab, wet lab and mechanical testing; 12 private offices and 24 open workstations; virtual reality system and visualization space; and conference rooms. In November 2017, the Innovation Institute launched the $25 million TMC Venture Fund, dedicated to investing in early stage technologies that can advance human health. The fund has invested $2.5 million across seven companies to date. Finally, the TMC Biodesign Fellowship Program is a one-year paid fellowship for a handful of fellows specializing in digital health and medical devices, says Halvorsen. They are embedded in TMC hospitals, participate in clinical rotations and observational work, and identify unmet needs. They often come up with hundreds of ideas, which they ultimately narrow down to three, based on technical, market

October 2018 | The Journal of Healthcare Contracting

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INNOVATION

Nine questions Who better than health systems to address nine key questions that need to be answered to properly evaluate the potential of a new device or innovation, says Henry Soch, vice president, Sg2, a Vizient company: • Does this provide an improvement over existing practice? • I s it technically feasible? •D oes it fulfill a REAL NEED? •A re there any barriers to commercialization? •H ow easily can it be implemented? • I s it evidence-based and does it provide real merit? • Is there a competitive market advantage if the heathcare system were to develop it? • What is the likelihood of peer adoption? • I s it at an actionable stage of development?

and other business criteria. The fellows then present their plans to the Innovation Institute team, who select one for the fellows to develop into a company. They have approximately six months to build prototypes, test them, and form a company. “It’s a ground-up build, a very exciting program, and great experience for the fellows who participate,” says Halvorsen. “We have been doing this three years, and we’ve launched four companies.”

Corporate help

“Probably the biggest challenge is to eliminate the ‘silos’ in clinical innovation efforts that exist in most organizations.”

Academic medical centers and universities are strong at basic research, but have a tougher time working through prototyping, iterative design – Henry Soch testing, IT, financing, gaining regulatory approval and carrying a product to market, says Halvorsen. “The further they go in the process, the less experience, knowledge and capabilities they usually have. You’re talking about taking a device from concept to regulatory approval and market

entry. That can be several years and millions of dollars.” And that’s why they need help. The TMC Innovation Institute draws on scores of corporate partners – law firms, venture capital groups, medical device companies, digital health companies – to mentor, advise or even partner with the start-ups in residence, he says. With 21 hospitals, collectively more than 800,000 surgeries, and 10 million patient encounters per year, TMC offers plenty of clinician involvement as well. “If you can’t get traction [for your medical product] here, you probably won’t get it anywhere,” he says.

Future The activities of the Innovation Institute benefit TMC, its institutions and its patients, says Halvorsen. “We find the best technologies from around the world that address unmet needs in healthcare, bring them to Houston and work to introduce them into clinical practice, to benefit patients and improve the entire healthcare process and experience. “Our member institutions love it, because they want to be early adopters; they want to deliver the best for their patients. The Institute gives them a competitive advantage. People look at TMC as a destination where they get the best care with cutting-edge devices and procedures. That helps our hospitals recruit the best doctors, researchers and innovators, nurses, medical students and others, who want to be where new technology is being developed and deployed.” Says Soch, as healthcare makes the transition from fee-for-service to value-based purchasing, health systems will have more of an impact on innovation. “They hold the keys to clinical care pathways, and they can determine whether the proper use of a new device will improve clinical outcomes of time-to-diagnose.”

October 2018 | The Journal of Healthcare Contracting

CONTRACTING PROFESSIONALS REVISITED

Brent Petty: Voice of experience Editor’s note: Where do JHC’s past Contracting Professionals of the Year go? Up. We are checking in with the people we’ve recognized since 2007. This month: Brent Petty.

Brent Petty

Brent Petty was named “Contracting Professional of the Year” by the Journal of Healthcare Contracting in February 2010. One month later, President Obama signed into law the Patient Protection and Affordable Care Act. “Quite honestly, nobody knew what the ACA meant operationally, that is, day to day in the hospital,” says Petty, who is executive industry consultant, global healthcare team, for Lexmark. But one thing was clear: If healthcare was to be affordable, its cost had to come down. “Our administrators looked at us and asked, ‘How are we going to meet the three goals – quality, cost per capita and patient satisfaction?” he says. Supply chain became a key part of the formula. “Even though we don’t control all those areas, we do influence them,” he says. “We act as the ‘maestro’ in that we work at the intersection of cost, quality and outcome.” Petty managed shoe stores for the nowdefunct Kinney Shoe Corp. prior to joining Community Health Systems. In 2001, he accepted a position as director of materials at Holston Valley Medical Center in Kingsport, Tennessee, which was Wellmont Health System’s largest facility, and in 2006 was named corporate director of supply chain. In 2010 – the year he was named Contracting Professional of the Year – he was corporate supply chain director at Wellmont Health System, later to become the system vice president. He joined Lexmark in 2015 as the company was building a healthcare team to help customers improve the patient experience of care and the health of populations, and reduce the per capita cost of healthcare. “Lexmark accomplishes this with healthcare-specific hardware and management solutions that allow providers to concentrate on providing patient care,” he says. In addition to supply chain, the company

“We act as the ‘maestro’ in that we work at the intersection of cost, quality and outcome.”

focuses on healthcare IT and health information management. He also served as chair of the Association for Healthcare Resource & Materials Management in 2015. To today’s young supply chain professionals, Petty says “invest in yourself and differentiate yourself from the crowd.” Think seriously about getting a master’s degree, as well as some kind of certification status, such as Certified Materials & Resource Professional, or CMRP, which is designed and administered by the American Hospital Association Certification Center, he says. One more word of advice: Understand that personal and professional growth can’t be rushed. Only through experience can young professionals improve their ability to engage with employees, understand processes and learn how to be part of a team. “Young people want to change the world, and my hat’s off to them,” he says. “But they want to do it in a hurry. To them I say, ‘Don’t rush it. Get your experience. You will become much more valuable to prospective employers.”

October 2018 | The Journal of Healthcare Contracting

HSCA

By Todd Ebert

GPOs and Emergency Preparedness With hurricane season underway, healthcare providers, especially those in potentially impacted areas, must work to prepare and respond to natural disasters. Because healthcare group purchasing organizations serve as partners to virtually all of America’s hospitals, nursing homes, surgery centers, and clinics, GPOs are uniquely equipped to help providers source critical products and coordinate supply chain operations during emergencies. GPOs can help organizations prepare, reBy Todd Ebert spond and rebuild after these challenging situations. Almost any disaster will have an impact on Almost any hospitals and health systems by disrupting the disaster will have supply chain and increasing the number of cases an impact on requiring urgent care. GPOs have developed hospitals and ways to alleviate these pressures by helping prepare for and respond during emergency situahealth systems tions. For example, one HSCA member GPO by disrupting the has a dedicated Disaster Response Team to cresupply chain and ate prevention plans and ensure a 100% uninterincreasing the rupted supply chain. Together, the GPO and its number of members work on advance planning, contacting cases requiring all members in the affected area to ensure supurgent care. plies are on hand for at least three days’ operations with no deliveries or assistance, as well as food and clean linens that may be needed to serve a surge of people turning to the hospital for shelter. Importantly, when evaluating products, the team puts a special focus on life-saving products. The GPO also works with supplier partners to ensure they can meet additional demands, make deliveries in advance and identify backup sources, if necessary. Once disaster strikes, the GPO initiates daily communications with members to ensure they are faring well and are able to provide uninterrupted patient care. The Disaster Response Team also keeps tabs on the affected region, as flooding, debris and other factors can impede usual delivery and operations systems, even in a local area. During the storm, the GPO prepares for anticipated problems

and coordinates with manufacturers to ensure supplies that are running low are forward-loaded as close to the affected area as possible for rapid delivery once it’s safe to do so. Every storm is different, and the aftermath can be difficult to foresee. Each requires its own set of problem-solving skills and ingenuity to respond. Some common solutions GPOs provide include predicting and ensuring members understand the duration of any potential supply interruptions due to damage from the storm; helping members locate alternative sources for supplies when their contracted vendor is unable to accommodate their need; working with distributors and other health systems that may be able to move, donate, or sell supplies to health systems in an affected or shortage area; working with Red Cross and other disaster agencies to secure accessible, staffed warehouse space for medical supplies; and creatively solving transportation, fuel, and other logistics challenges. GPOs take their role as the sourcing and purchasing partners to America’s hospitals very seriously – a commitment that is tried and tested during emergency situations. When immediate action is needed, GPOs step up to the plate to respond to hospital and provider needs by increasing communication with members and suppliers to identify product availability, anticipating potential shortages, and continually collaborating with government agencies at all levels. Working together in times of emergency, GPOs help healthcare organizations and the patients they serve.

Todd Ebert, R.Ph., is president and CEO of the Healthcare Supply Chain Association (HSCA).

October 2018 | The Journal of Healthcare Contracting

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a leisurely outing compared to 2017, when, in recognition of his 10th year, he played 10 rounds – 180 holes. It took 18 hours. “I feel so lucky to live in a country where there are men and women willing to put their lives on the line for us, that my spending some time to play some golf and mail letters to supporters of my efforts is just a very small way of trying to say thanks,” he says. Veterans often fail to grasp the value of the skills they learned in the service, says Meyer. Hire Heroes USA helps them do so, and to communicate that value to prospective employers.

A Work Force Each Fourth of July, Carl Meyer pays tribute – and raises support – for veterans entering the civilian workforce

Carl Meyer believes that anyone who has invested his or her time and effort – not to mention risked their life – so the rest of us can enjoy our freedoms deserves to be at the front of the line for every job they’re qualified for. And Meyer – executive vice president with the national accounts consulting group The Wetrich Group – believes Hire Heroes USA is the best organization to help them do just that. This summer, Meyer raised money for Alpharetta, Georgia-based Hire Heroes USA the way he does best – playing golf. In fact, since 2008, he has spent his Fourth of July holidays golfing in support of the national nonprofit dedicated to helping military members veterans and spouses find careers in the civilian workforce. Over the past 11 years, he has helped raise about $750,000. He may be playing golf, but he’s working. This past Fourth of July, for example, he teed off at 5 a.m. and finished his 111th hole (in honor of his 11th year) at 4 p.m. It was – Carl Meyer

Veterans often fail to grasp the value of the skills they learned in the service.

Challenges veterans face Christopher Plamp, an Air Force colonel and decorated combat pilot, was named chief executive officer of Hire Heroes USA in June, four year after joining the team. “Our core approach has not changed – we stay focused on helping each transitioning military member, veteran and military spouse that we work with to understand how to find a quality career. We do this through personal interaction; we assign them to a Transition Specialist, who works as a resume writer and job coach to empower them in their job search. We have added additional services over the last four years – such as federal resume help, industry expert career counseling, a robust job board – but we remain focused on each client and giving them the training and coaching they need to succeed.” The biggest challenge facing many veterans is their lack of experience in the civilian job market. “They have a skills gap in how to create a resume,

October 2018 | The Journal of Healthcare Contracting

how to network, how to interview,” says Plamp. Furthermore, many HR professionals and hiring managers don’t understand what is on the typical veteran’s resume, so the veteran may not even get to the interview stage. Often veterans need help talking about their military accomplishments in ways that advance their job search, says Plamp. For example, in the service, they learn that teamwork is all-important. “They will say, ‘It’s all about the unit,’ or ‘My squad did this,’” he says. “They don’t want to talk about their individual

is doing something similar, so it doesn’t feel exceptional,” says Plamp. He likens it to elite athletes, such as NFL players. “When they’re playing, they’re surrounded by other players, but when they’re in public, it’s clear they are remarkable human beings. “We teach our veterans to put themselves forward and to understand and be proud of their unique skill set.”

Landing a job “Hire Heroes USA works hard to be aware of the trends and advise our clients on the changing job market,” says Plamp. “Last year, Amazon became our No. 1 commercial company that hired our clients, replicating trends that are occurring in corporate America.”

“ Many veterans are well-suited for jobs that call for selfmotivation, a strong sense of responsibility and proficiency with technology.” – Christopher Plamp

actions that contributed to the outcome. But in corporate America, job-seekers have to talk about what THEY did in prior positions and what THEY can do for the company.” Hire Heroes USA Transition Specialists revamp their clients’ resumes accordingly. “There’s often a light bulb moment,” says Plamp. “The veterans read the revised resume and they go ‘Wow.’ Then we start talking to them about their elevator pitch. It gives them confidence.” Veterans also have a tendency to downplay their experience working in extreme conditions with expensive technical tools. An example might be repairing an M1 Abrams battle tank by oneself in the Iraqi desert. “The thing is, in the service, everyone around you

The Journal of Healthcare Contracting | October 2018

Many veterans are well-suited for jobs that call for self-motivation, a strong sense of responsibility and proficiency with technology, he says. “There’s a huge gap in the workforce for plumbers, electricians, professionals in 3D printing.” The service also offers some of the best leadership training, and many veterans quickly find their way into management posts. It is estimated that 350,000 veterans are unemployed, many having given up looking for work altogether, says Plamp. What’s more, about 250,000 military members leave the military each year. Another issue is underemployment; many veterans are not working at the skill level or pay level they should be, given their experience and education. Many times that is due to their lack of experience navigating the civilian job market. So the need for Hire Heroes USA – and Fourth of July golf – continues. “We wouldn’t be living in the country we are today if not for the sacrifice of the people willing to raise their hands and serve,” says Meyer.

Send all upcoming events to Graham Garrison, managing editor, at ggarrison@sharemovingmedia.com

CALENDAR AHRMM

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HealthTrust University Conference July 29-31, 2019 Nashville, Tenn.

July 28-31, 2019 San Diego, Calif.

Intalere Federation of American Hospitals Public Policy Conference & Business Exposition March 3-5, 2019

Elevate 2019 May 13-16, 2019 Gaylord Rockies Denver, Colo.

Marriott Wardman Park Hotel Washington, D.C.

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Breakthroughs Conference & Exhibition June 18-21, 2019 Nashville, Tenn.

Supply Chain Summit April 29 â&#x20AC;&#x201C; May 1, 2019 JW Marriott San Antonio Hill Country Resort & Spa

Share Moving Media National Accounts Summit November 13-14, 2018 Orlando, Fla. Health Industry Distributors Associations Health Systems Channel Strategies Conference January 29-30, 2019 Biltmore Coral Gables, Fla.

Purchased Services Summit November 14, 2018 Orlando, Fla.

October 2018 | The Journal of Healthcare Contracting

Industry News AHA launches center for health innovation The American Hospital Association (AHA) introduced a center for health innovation to provide hospitals with resources and support as they respond to changes in the healthcare landscape. The center of health innovation will initially focus on developing market intelligence, innovation competitions, cybersecurity services, and “innovation boot camps.” Through the center, the AHA will offer hospitals insights into best practices to address emerging areas of healthcare, such as new payment, delivery and performance improvement models. The center will also test new ideas that improve outcomes and increase the affordability of healthcare services.

Intalere Chief Commercial Officer Steve Kiewiet recognized as AHRMM Fellow for Supply Chain Achievements Intalere announced Chief Commercial Officer Stephen Kiewiet was recently awarded the Association for Healthcare Resource & Materials Management (AHRMM) Fellow designation for 2018. The designation of AHRMM Fellow (FAHRMM) recognizes current AHRMM members for reaching the highest level of education and achievement in both the Association and in the supply chain field. Kiewiet’s fellow paper focused on implementing radio-frequency identification (RFID) in the medical device supply chain. Kiewiet joined Intalere this year as Chief Commercial Officer, where he is responsible for ensuring the integrated

The Journal of Healthcare Contracting | October 2018

commercial success of the organization through business and market share growth with direct oversight of the Sales, Marketing and Customer Service departments. Prior to joining Intalere, Kiewiet served as Vice President, Supply Chain with BJC Healthcare in St. Louis, providing multisite operations management with a $30 million budget, more than $1 billion in supply spend and 210 full time employees at 15 hospitals. He played an instrumental role in positioning the company as an industry leader in driving supply chain visibility, including implementing one of the industry’s first health system based medical device self-distribution models, which delivered more than $2 million in annual savings.

HCA Healthcare chairman and CEO to retire, new CEO named HCA Healthcare announced Sam Hazen, the company’s president and COO, will succeed R. Milton Johnson as CEO on January 1, 2019. Hazen will also serve as a member of the board of directors. Hazen has been with the company for almost 36 years. Johnson will retire as CEO, effective December 31, 2018. He will continue as chairman of the board of directors through the company’s 2019 annual shareholders’ meeting on April 26, 2019 and at the company’s 2019 annual shareholders’ meeting, Johnson will retire from the board of directors. On that same date, the board of directors plans to appoint Thomas F. Frist III, a current board member, to be chairman of the board of directors.

NEWS

Walgreens to sell EpiPen alternative amid shortage Walgreens, in partnership with Kaleo, will be the first retail pharmacy to offer Auvi-Q, an alternative to EpiPen. Walgreens will stock Auvi-Q, an epinephrine auto-injector manufactured by Kaleo, which was previously only available through Kaleo’s mail delivery program. The list price for Auvi-Q is steep at $4,500; however, a spokesperson for the company said eligible patients with commercial insurance, including those with high deductible health plans or whose insurers don’t cover it, can get Auvi-Q for free. Those who pay cash at the pharmacy counter will be charged $360 for two auto-injectors, according to the New York Times.

Intalere introduces OptiAnalytics to help healthcare facilities enhance profitability, procurement, and growth Intalere (St. Louis, MO) launched Intalere OptiAnalytics, software solutions offering cost, market and service line analytics to drive procurement insights, profitability, performance, and growth opportunities. Specifically, the OptiAnalytics software solutions include: analytics to pinpoint opportunities to strengthen service line profitability by integrating clinical and financial data looking at direct and indirect costs and revenues; strategic planning to drive performance and growth opportunities; and analytics to drive improved spend management.

South Carolina hospitals face high costs of hurricane evacuations Hospitals that transferred nearly 400 patients out of South Carolina’s evacuation zone before Hurricane Florence will likely incur significant costs associated with that decision. Patients who were moved won’t face higher bills, said Schipp Ames, a spokesman for the S.C. Hospital Association, but the evacuated hospitals will grapple with unexpected costs and lost revenue. When the North Shore Long Island–Jewish Health System evacuated almost 1,000 patients during Hurricane Irene in 2011, the system estimated it cost $13 million between additional labor and supplies and lost revenue. The hospital system received $2.5 million from its “property casualty and business interruption insurance policy,” according to a Health Affairs report. In 2012, it sought additional reimbursement through FEMA. Meanwhile, the Medical University of South Carolina is still

waiting to receive federal reimbursement related to Hurricane Matthew in 2016 and Hurricane Irma in 2017.

JV of Amazon, JPMorgan, Berkshire hires consulting firm The healthcare venture formed by Amazon, Berkshire Hathaway, and JPMorgan Chase has chosen Monitor Group (Boston, MA), a global consulting firm based, to help develop its strategy for lowering healthcare spending by improving care of chronically ill patients, an unnamed a source familiar with the arrangement told STAT. Monitor Group, the business consulting division of Deloitte, helps companies identify services and technologies that will help them connect with their customers. In addition to working with Monitor Group, the healthcare venture recently hired Jack Stoddard to fill the COO position. Stoddard most recently served as Comcast’s general manager for digital health.

Ascension names permanent market leader for Michigan region Ascension (St. Louis, MO) appointed Joseph Cacchione, MD, SVP of Ascension Healthcare and permanent ministry market executive for its Michigan region. Cacchione has been the interim Michigan ministry market executive since April when Gwen MacKenzie, MSN, departed from the role. He is CEO of Ascension Medical Group and will continue in that role in addition to taking on the responsibilities of Michigan ministry market executive permanently.

Cigna announces Cigna Ventures with $250M to fund transformative innovation, growth Cigna announced it has committed $250 million of capital to Cigna Ventures to invest in companies across three areas: insight and analytics, digital health and retail, and care delivery/management. The fund builds on Cigna’s existing venture activity, including collaboration with five venture capital partners and an equal number of existing direct investments. Last November, Optum, the health services business of UnitedHealth Group, announced the creation of Optum Ventures, a $250 million venture fund focused on investing in digital health companies that use data to improve consumers’ access to healthcare services and how care is delivered and paid for.

October 2018 | The Journal of Healthcare Contracting

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