Partnering with IDNs
for Efficiency and
Innovation
Moderator
Patrick Carroll, President, Patrick E. Carroll &
Associates, Inc.
Panelists
David McCombs, VP ERP/Supply Chain Operations,
Bon Secours Health System
Tony Benedict, CPIM, CIO, Vice President Supply
Chain, Abrazo Healthcare
Raymond J. Seigfried, MA, Senior Vice President
Administration, Christiana Care Health System
Healthcare Reform



Federal health care reform is the result of the March
2010 enactment of the Patient Protection and
Affordable Care Act (PPACA) as amended by the Health
Care and Education Reconciliation Act
These two laws are commonly referred to together as
PPACA, the Affordable Care Act (ACA) or health care
reform
Mandates become effective over several years. While
health care reform is now law, many implementation
details remain unanswered and will be clarified by future
regulations and guidance
Reform Impact on Providers

Insurance Coverage
Bundled Payments for Episodes of Care
Pay for Performance
Market Basket Updates
Expansion of Medicaid
Primary Care Funding
Disproportionate Care
Accountable Care Organizations

Hospital Acquired Infections

Preventable Readmissions
Device Taxes








The Response from IDNs







4
Improve operational performance
Changing decision-makers and influencers
Physician consolidation and integration
IDN/Hospitals mergers and consolidations
Significant changes in the Care Model to create
value
Capital/Cash investments redirected
Elevate role, responsibility and expectations of
Supply Chain Management
The Healthcare Supply Chain




5
Extremely heterogeneous marketplace
 The playing field is not level
Advanced Supply Chain Executives
 Focus on Value
 Focus on partnerships with suppliers
Middle Level Supply Chain Executives
 Focus on Cost
 Preliminary discussion of partnerships with
suppliers
Lower Level Supply Chain Executives
 Focus on Price
 The supplier is “tolerated”
Value Based Competition
Bon Secours Health
System, Inc.
IDN Panel: Partnering with
Suppliers for Efficiency and
Innovation
Presentation Objectives
Review four major issues that will impact our future
Supply Chain model and relationship with Suppliers:
1.
2.
3.
4.
Physician Preference Item (PPI) procurement will
move from Contracts to more disciplined Formulary
Models to insure optimal clinical outcomes and cost
predictability
Supply Chain Logistics and Value Optimization
Strategies must be integrated across the entire
continuum of care
Supply Chain must directly support optimizing the
Provider’s performance under Value Based
Purchasing models
Progress toward Global Data Synchronization is
critical for provider/supplier transaction efficiencies
and data transparency
Profile of Bon Secours Heath System
Good Help to those in Need
Key Trends for Bon Secours Health System
1. Continued movement to centralization and
standardization of all support functions
2. With EPIC installation nearing completion,
movement toward standardized care and
“hard wired” process/protocols in all locations
3. Aggressive participation in ACO and
population health risk
•
•
•
•
Medicare Shared Services Plan
Covers all BSHSI Acute Service
markets in five states
57,000 beneficiaries as of January
2013
Partnership with Aetna, community
and employed Physicians, other
acute non-BSHSI hospitals
Key Issues for BSHSI Supply Chain Partnering with
Suppliers for Efficiency and Innovation
1. Physician Preference Item (PPI) procurement will move
from Contracts to more disciplined Formulary Models to
insure optimal clinical outcomes and cost predictability
Implant Formulary Definition:
The main function of the Implant Formulary is to specify specific implant products
that are approved for physician use within a facility . Implant products are grouped
into functionally equivalent classifications. Within the classification implant products
are authorized for use based on evaluation of efficacy, safety, patient outcomes and
cost-effectiveness.
Differences of a Formulary and Contract Model:
Formulary
Contract
Same terms, definitions and provisions for
change for all vendor purchase agreements
for formulary items
Separate agreement for each vendor with
distinct terms , definitions , changes
All items classified into functionally equivalent
groupings; items evaluated in context of
benefits as compared to equivalents
Each vendor item considered unique and
evaluated separately
Includes only authorized items that meet
evaluation criteria
Includes full or selected portion of catalogue
All items must go through new product
classification and Clinical Value Analysis
Fairly “open” process for addition and
conversion of new item versions
Ongoing review of utilization, cost and
outcomes at procedure and physician level
Review of purchase volume as compared to
committed volumes
Implant Formulary Design example – Spine hardware;
other PPI products include Total Joint, Biologics,
Cardiovascular products, Specialty Surgical devices
BSHSI Implant Formulary Model - Spine
80,000 Individual Items
36 Vendors
226180
239817
239818
142942
142944
142945
142946
142934
169862
169863
142901
142902
142903
142904
142905
142906
142907
142908
142909
142910
142911
142912
142913
142914
142915
142916
142917
142918
142919
142920
142921
142922
142923
142924
142925
142926
142927
142928
142929
142930
142931
142932
142949
142950
142951
238063
238064
288094
261353
159238
146353
146354
159239
146356
146351
146352
190409
SCR SPNE PEDCL SEQUOIA 6.5X45
SCR POLY SEQUOIA 6.5X50MM
SCR POLY SEQUOIA 7.5X40MM
SCR ANT CERV SC-ACUFIX 4X13
SCR ANT CERV SC-ACUFIX 4X13MM
SCR CERV CANC THINLINE 4X14
SCR ANT CERV SC-ACUFIX 4.5X14
CLOSURE TOP LOK PTHFNDR TI
CONN SPNE TRNSVRS 4X35MM
CONN SPNE TRNSVRS 4X40MM
PLT ANT CERV SC-ACUFIX 2LEV 34
PLT ANT CERV SC-ACUFIX 2LEV 36
PLT ANT CERV SC-ACUFIX 2LEV 38
PLT ANT CERV SC-ACUFIX 2LEV 40
PLT ANT SC-ACUFIX 2 LEV 42MM
PLT ANT SC-ACUFIX 2 LEV 44MM
PLT ANT SC-ACUFIX 2 LEV 46MM
PLT ANT CERV SC-ACUFIX 2LEV 48
PLT ANT SC-ACUFIX 2 LEV 50MM
PLT ANT CERV SC-ACUFIX 2LEV 52
PLT ANT SC-ACUFIX 2 LEV 54MM
PLT ANT SC-ACUFIX 3 LEV 50MM
PLT ANT SC-ACUFIX 3 LEV 53MM
PLT ANT SC-ACUFIX 3 LEV 56MM
PLT ANT SC-ACUFIX 3 LEV 59MM
PLT ANT CERV SC-ACUFIX 3LEV 62
PLT ANT SC-ACUFIX 3 LEV 65MM
PLT ANT SC-ACUFIX 3 LEV 68MM
PLT ANT SC-ACUFIX 3 LEV 71MM
PLT ANT SC-ACUFIX 4 LEV 68MM
PLT ANT CERV SC-ACUFIX 4LEV 72
PLT ANT CERV SC-ACUFIX 4LEV 76
PLT ANT CERV SC-ACUFIX 4LEV 80
PLT ANT CERV SC-ACUFIX 4LEV 84
PLT ANT SC-ACUFIX 4 LEV 88MM
PLT ANT CERV SC-ACUFIX 4LEV 92
PLT ANT CERV SC-ACUFIX 4LEV 96
PLT ANT SC-ACUFIX 1 LEV 24MM
PLT ANT CERV SC-ACUFIX 1LEV 26
PLT ANT CERV SC-ACUFIX 1LEV 28
PLT ANT CERV SC-ACUFIX 1LEV 30
PLT ANT SC-ACUFIX 1 LEV 32MM
PLT ANT CERV TRIMLINE 1SEG 24
PLT ANT CERV TRIMLINE 2SEG 40
PLT ANT CERV TRIMLINE 2SEG 44
SCR BNE CORT FT 4X32MM TI
SCR SPNE BNE CORT PT 4X32MM TI
SCR SPNE CORT 4X40MML TI
SCR SPNE CORT PT 4X46MM TI
SCR ANT CERV BICORT ABC 20MM
SCR ANT CERV BICORT ABC 21MM
SCR ANT CERV BICORT ABC 22MM
SCR ANT CERV UNICORT ABC4.5X17
SCR SPNE STBL ANT MAC TL 40MM
PLT ANT CERV ABC 6H 43MM TI
PLT ANT CERV ABC 12H 91MM TI
PLT CERV EXT ABC 2H 10MM TI
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
ABBT
AESC
AESC
AESC
AESC
AESC
AESC
AESC
AESC
AESC
AESC
AESC
AESC
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
SPIN
3305-6545
3305-6550
3305-7540
402-40113
402-4413
402-4414
402-4614
2101-1
721-4035
721-4040
1703-2034
1703-2036
1703-2038
1703-2040
1703-2042
1703-2044
1703-2046
1703-2048
1703-2050
1703-2052
1703-2054
1703-3050
1703-3053
1703-3056
1703-3059
1703-3062
1703-3065
1703-3068
1703-3071
1703-4068
1703-4072
1703-4076
1703-4080
1703-4084
1703-4088
1703-4092
1703-4096
1706-1024
1706-1026
1706-1028
1706-1030
1706-1032
407-1024
407-2240
407-2244
LB472T
LB512T
LB520T
LB526T
FJ800T
FJ801T
FJ802T
FJ853T
SX785T
FJ760T
FJ786T
FJ860T
Implant Formulary
Reports, New
Technology Review,
Item Additions
32 Component Constructs
- Fixed Price per Construct
Spine Construct
Screw, Cervical
77 Product
Classification Codes
Plate, Cervical 1-3
Levels
Plate, Cervical 4+
Levels
Plate, Occipital
Screw, Lumbar
Cervical Spacer/Cage
Interbody fusion device - Anterior
Interbody fusion device - Direct Lateral
Interbody fusion device - Parallel
Interbody fusion device - Transforaminal
Plate, Cervical Anterior - 1 level
Plate, Cervical Anterior - 2 level
Plate, Cervical Anterior - 3 level
Rod < 300mm straight/lordosed/bent
Screw Pedicle, Poly/Multi- axial
Screw Pedicle, set/locking screw/cap
Screw, Cervical
Crosslink/Crossbar
Crosslink/Crossbar set/locking
Plate, Cervical Anterior - 4 level
Plate, Cervical Anterior - 5 level
Plate, Cervical cover
Plate, Lumbar
Plate, Lumbar cover
SP-Cerv Spacer
SP_ALIF
SP-ALIFL
SP-PLIF
SP-TLIF
SP-Cerv Plt 1 lvl
SP-Cerv Plt 2 lvl
SP-Cerv Plt 3 lvl
SP-Rod < 300
SP-Ped Multi
SP-Ped Lock
SP-Cerv Screw
SP-Crosslink
SP-Crosslink Lock
SP-Cerv Plt 4 lvl
SP-Cerv Plt 5 lvl
SP-Cerv Plt Cov
SP-Lumb Plt
SP-Lumb Plt Cov
100% Audit of
every Implant
Purchase Order to
confirm price, data
Plate,
Lumbar
Plate, Posterior or
Lateral
Buttress Assembly
Hooks and Offset
Assembly
Pedicle Screw
Assembly, fixed
angle
Pedicle Screw
Assembly, Polyaxial
Definition
Any screw used to secure cervical plates to cervical vertebrae;
Including but not limited to self-drilling, self-tapping, cancellous, cortical, locking,
cannulated, translational, domed, transitional, semi-constrained, fixed or variable
angle, washers, nuts, set screws, etc.
One, two, or three level translating and fixed plate; including hole covers, integrated
locking mechanisms and all materials
Four + level translating and fixed plate; including hole covers, integrated locking
mechanisms and all materials
Translational single and multi-level plate (2 and 3 levels) involving C1; includes
hole covers includes integrated locking mechanisms and all materials
Any screw/bolt used to secure anterior, posterior or lateral plates to ThoracicLumbar-Sacral vertebrae; including but not limited to self-drilling, self-tapping,
cancellous, cortical, locking, cannulated, translational, domed, transitional, semiconstrained, fixed or variable angle, washers, nuts, set screws, etc.
Any anterior Thoracic-Lumbar-Sacral plate - includes anterior single or multi - level
plate and cover if applicable; excludes Buttress plates
Any posterior or lateral plates for Thoracic-Lumbar-Sacral fixation(i.e. Arch, Core)
Includes any buttress plate & screws or staple assembly
Includes any fixed-angle, posted or monoaxial hook or offset assemblies including
all washers, nuts, collars, off-sets, locking caps, blockers, set screws, etc. required
for the assembly and / or attachment of the hooks offsets to the rods (or links/hooks).
Includes all Anterior / Posterior / Cervical / Lumbar / Thoracic / hooks used with
rods.
Includes any fixed-angle, posted or monoaxial pedicle screw assemblies; screw
assembly includes all washers, nuts, collars, off-sets, locking caps, blockers, set
screws, etc. required for the assembly and / or attachment of the screws to the rods
(or links/hooks). Includes all Anterior / Posterior / Cervical / Lumbar / Thoracic /
Iliac fixed angle, posted or monoaxial screws used with rods.
Any Pedicle Screw used in conjunction with a rod (or link). Anterior / Posterior
Cervical / Lumbar / Thoracic / Iliac (including multi-axial or variable angle extended
tab, reduction, favored angle, fenestrated, or those used with flexible rod and cord)
and dynamic screws include all washers, nuts, collars, off-sets, locking caps,
blockers, set screws, etc. required for the assembly and / or attachment of the screws
to the rods. Includes all multi-axial and variable/favored angle screws used with rods
(or link).
Implant Purchase
Agreement for all vendors
(Facility)
Implication of Formulary on BSHSI Vendor Relationships
Approved Formulary Vendors – Strategic Partner relationship
• Continuous update of all purchase transaction data and
priority Accounts Payable and SPS customer service response
• Collaborative efforts to streamline transactions, reduce
vendor inventory and minimize SGA expense
• Collaborative clinical outcome studies
• Vendor Access Level 1 to approved clinical areas
• Direct Participation in periodic Clinician new product reviews,
CVA process
Non-Formulary Vendors – Exception-based relationship
• Per case exception approval of all product used
• No access to utilization data, clinical outcome data or
collaborative studies
• Vendor Access Level 3 – restricted access,
appointment only
• No direct participation in Clinician product reviews,
CVA process
2. Supply Chain Logistics and Value Optimization Strategies must
be integrated across the entire continuum of care
Acuity
Hospital
Community-Based Care
Acute
Care
Free-Standing ED
Ambulatory
Procedure Center
Retail
Pharmacy
Home
IP Rehab
Physician
Practice Sites
Wellness and
Fitness Center
Diagnostic/
Imaging Center
Urgent
Care
Center
PostAcute
Care
SNF
OP
Rehab
Home
Care
Areas of Focus for Healthcare Continuum Supply
Chain Integration
Key Activities for Integration:
1.
2.
Tracking utilization, cost and correlated outcomes of key
supply products across the continuum
Focus on cost/utilization management of products/equipment
that “follow” patient and support the patient through the
continuum
Issues
•
•
•
•
•
•
•
•
Multiple and non-integrated product distribution processes
Need for Standardization of products across continuum
Expansion of Formularies to covered population
Elimination of waste, duplication in care transition
Pricing models/cost predictability –item, bundled, per acute
episode of care, per patient across continuum
Logistical support, distribution, procurement, patient-level
customer service
Clinical Value Analysis – New technology assessment,
outcomes
Equipment – Total Cost of Ownership, inventory
management
3. Supply Chain must directly support optimizing the Provider’s
performance under Value Based Purchasing models
Core Measures = 10%
HCAHPS = 25%
Efficiency = 25%
Outcomes = 40%
17
Impact of VBP Measures on Supply Chain
1.
2.
3.
4.
HCAHPS – 25%
•
Unacceptable for patient to experience changes of
direct supplies during care transitions ( trach,
lines/ports, Ortho soft goods, etc.)
Core Measures – 10%
•
Supply Chain logistics must support 100%
compliance to care process protocols (timeliness
of intervention, supply packs, etc.)
Outcomes – 40%
•
Only products that have evidenced-based support
for optimal clinical outcome will be utilized
Efficiency – 25% ( cost per beneficiary)
•
Cost measured from pre-acute, acute and 30 day
post acute time period
•
Requires suppliers to directly assist with utilization
management and support predictive capped cost
per episode of care
4. Progress toward Global Data Synchronization
is critical for provider/supplier transaction
efficiencies and data transparency
Key Data standards and benefits:
A. GLN: Global Locator Number
•
•
•
The GS1 Identification Key used to identify physical locations or
legal entities.
Requires conversion from provider/supplier unique “ship to”
identifiers and required crosswalks to standardized GLN
Critical to insure right item gets to right location and minimize any
transaction or accounting errors
B. GTIN: Global Trade Item Number
•
•
•
an standardized identifier for trade items developed by GS1
requires conversion from unique provider/supplier item identifiers
Critical to support tracking/analysis across many transactional
and clinical databases as well as to support transaction
efficiencies ( barcode/RFID data capture, etc.)
BSHSI Global Data Synchronization Plan and Status
A.
GLN Implementation Plan
1.
2.
Status:
A.
Complete internal ERP build and test of GLN for all BSHSI
locations – FY 2013, complete
Implement GLN with major BSHSI suppliers and Distributors –
FY 2014
Limited Suppliers ready to transact
Distributors maintaining legacy “ship to”
General lack of urgency
GTIN Implementation Plan
1.
2.
Implement as first priority the FDA UDI for Class III High Risk
items, including implement process changes in all phases of
business transactions and device documentation
Identify high-value categories of products for next phase of
Implementation
Status: In early stages of assessment
Challenge of supporting multiple processes as GTIN
adoption progresses
Partnering with IDNs for
Efficiency and
Innovation
Tony Benedict, CPIM, CBPP
CIO, Vice President Supply Chain
Tenet/Abrazo Healthcare
Biography
• 2010-Present - Tenet/Abrazo Healthcare, CIO, VP
Supply Chain
• 2010-Present – Association of BPM Professionals,
(abpmp.org), President, Director, Board of
Directors
• 2003-2010 – Association of BPM Professionals,
VP Relationships, Director, Board of Directors
• 2006-2010 – Tata Consultancy Services, Senior
Manager, Strategy & Operations Management
Consulting/Outsourcing
• 1997-2006 – Intel Corporation, Supply Chain
Management, Technology Manufacturing Group
• 1988-1997 – GlaxoSmithKline, Medical Center
Sales
22
“The New” Tenet Healthcare
Tenet Healthcare
Service Line Feeders to Care Delivery Settings
Wellness/Prevention
Acute Care
Post Acute Care
Ambulatory
Bariatric / Sleep
Psych
25
Care & Service Delivery Sites
Clinical Standards
Rehab
Palliative Care
Orthopaedics
Imaging
Neurosciences
Surgical Services
Women Services
Hospitalists
Service Lines
Drive Volume
Oncology
Critical Care
Cardiovascular
Emergency Medicine
Primary Care
Lab/Pathology Services
Continuum of Care
Tenet/Vanguard Integration Challenges
Tenet
• 49 hospitals
• GPO – MedAssets
• Similar VAT
structure/processes
• Supply Chain
outsourced, not
“regionalized”
• High C-Suite
Accountability
• Geographical regions
Vanguard
• 28 hospitals
• GPO – Premier (just
switched from HPG 1/13)
• Similar VAT
structure/processes
• Supply Chain insourced
and “regionalized”
• Low C-Suite
Accountability
• Market based “fiefdoms”
• Imperative to drive $200+ million of cost out of new organization
• What is best way to structure Supply Chain in the “new” Tenet?
• There are best practices in each organization, plan is to merge best, drop
worst
• GPO will play role in commodities, PPI strategy going forward?
26
Healthcare Reform Challenges
• Tsunami of Baby Boomers beginning transition
to Medicare
• Cost of Healthcare increasing 2x faster than
inflation
• Fee for Service model is obsolete
• Implications of declining reimbursement on case
cost and profitability
• Medicare provider payments will face a cut of 2%/yr
over nine years (2013-2021).
• How to bend the cost curve to remain profitable
• Supply base (PPI) stuck in dollar/margin/market
share growth paradigm
27
Bending the Cost Curve
Several opportunities in combination
exist to bend the cost curve:
• Reduce acquisition costs
• Bundled Payments
• Disease management/Care
Reliability
• Medical homes
28
IT Market Dynamics
Leading Software Supplier Market Share (2000 – 2010)
67.5%
2000
2010
50.2%
38.2%
10%
EMR Vendors
20%
29.6%
Enterprise Software
30%
Source: Dorenfest Institute & HIMSS Analytics Database (2011)
HIMSS, “The Clinical Systems Hospital IT Market, 1998 – 2005” (2006)
Scott Weiss, “The Enterprise Software Massacre” (2011)
29
EMR Vendors
40%
Enterprise Software
50%
Risk Platform – Future State
Comprehensive portfolio of discrete, integrated assets
Acquire Customers /
Manage Business
Aggregate Data
Identify Opportunities
Deliver Care
Analyze Populations
Biometric
Precision
Marketing
Utilization
Physicians
Lab
Pharmacy
Claims
Communicatio
ns
Medical
Claims
Extended Clinical
Team
Quality
Remote
Monitoring
Cost Reduction
Mitigate Risks
PHR
Experience
Avoidable
Events
Sustain Health
Social
Footprint
Demonstrate Outcomes
Extended Care Team
Registry
Clinical Gaps
Scheduling
Revenue Cycle
CRM
Employer
Manage Conditions
& Events
EMR
Internal
Referrals
HIE
Enable Multi-Modal &
Multi-Site Interactions
Web
Email
Mail
30
Text/Mobile
Social
Communities
CCD
Telephonic
External
Referrals
IVR
Risk Management
Face-toFace
Home Care
Individualized Longitudinal Analytics
Performance / Payment = Value Creation / Value Demonstration
Illustrative Care Episode
Physician E/M (2)
Allowed
Dollars
Paid
Physician procedure
Pharmacy
Facility
Lab/X-Ray
$6,000
$5,000
Surveillance/
Risk mitigation
Acute
Phase
$4,000
Post
Acute
Phase
Additional acute
phases may be
avoided or
delayed
Risk mitigation
$3,000
$2,000
$1,000
Longitudinal
analytics
$0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Cost Prediction Analytics
And this model – chasing historical claims data – is all wrong
Medical and Pharmacy Costs
9000
8000
7000
Serious disease
Minor Disease
6000
5000
No Disease
4000
3000
2000
1000
0
Q_12 Q_10 Q_8
Q_6
Q_4
Q_2
Q0
Q2
Q4
Q6
Q8
Q10
Q12
Quarters before and After High Cost Event Diabetics with Heart Failure Event
Months before and After High Cost Event
The Healthcare Supply Chain
33
•
The future is a volume based game for supplies, the
intention of ACA is to commoditize healthcare
•
Suppliers need to think long term and redefine what
“partner” means to IDNs and themselves
•
Suppliers need to design for safety, predictable
outcomes and cost, not just margin
Christiana Care
Health System
Wilmington, Delaware
Raymond Seigfried
Senior Vice President Administration
Paradigm Change
“The current system is not a health care
system; it is a sickness and disability-care
system. Getting rid of illness, what we don’t
want, is not the same as maintaining
wellness, what we do want.”
Russell Ackoff 2003
Value formula that sustained
volume and profit
Value =
Product
Quality
Price
New World Value Formula
EFFICACY
Value =
SOCIETAL
BENEFIT
COST
Patient
SAFETY
QUALITY
Innovation that supports health
1. Adds value
2. Improves quality of care
3. Improves quality of life