Revolutionising the health supply chain. Megan Main Chief Executive Health Purchasing Victoria

Transcription

1 Revolutionising the health supply chain Megan Main Chief Executive Health Purchasing Victoria

2 A revolution? 2 Health Purchasing Victoria Working with Victoria s health sector to achieve best-value supply chain outcomes

3 Old hospital Materials Management model Purchasing place and chase orders Stores receive and deliver 3 Health Purchasing Victoria Achieving best-value supply chain outcomes for Victoria s health sector

4 About HPV Health Purchasing Victoria was established in 2001 as an independent statutory authority Purpose Health Purchasing Victoria achieves best value supply chain outcomes for Victoria s health sector. 4 Health Purchasing Victoria Working with Victoria s health sector to achieve best-value supply chain outcomes

5 Why change is needed now Healthcare spending in Australia is growing (in billions) 5 Health Purchasing Victoria Working with Victoria s health sector to achieve best-value supply chain outcomes

6 The tip of the iceberg Purchase Price Drivers of price Clinical variation Demand variation, uncertain demand Quality over spec? under spec? Inventory # lines, out of date Logistics small orders, frequent deliveries Manual processes and rework Duplication

7 NOW (in Victoria) Supplier Distribution Hospital Ward Patient 7 Health Purchasing Victoria Working with Victoria s health sector to achieve best-value supply chain outcomes

8 Future? Supplier Distribution Hospital Ward Patient Consolidation Picked to ward Economies of scale Process efficiency Optimised distribution Reduced inventory, obsolescence Returnable packaging 8 Health Purchasing Victoria Working with Victoria s health sector to achieve best-value supply chain outcomes

9 Supply chain reform Procurement reform Logistics reform Supply Chain Opportunity Assessment Engage Sourcing Strategy Invitation to Supply Evaluate & Negotiate Contract(s) Implement Contract(s) Purchasing Contract / Noncontract Warehouse and Distribution Receipt Payment Delivery Supplier Relationship tools Spend analysis Systems / technology E-Sourcing Catalogue / Purchasing - ecommerce VPCS EDI Recalls Contract Management 9 Health Purchasing Victoria Working with Victoria s health sector to achieve best-value supply chain outcomes

10 Supply Chain Today and Tomorrow Sourcing Distribution Hospital Point of Care Suppliers Many supply chain organizations and clinical departments with great opportunities to improve our accountability and ownership Technology platforms offers the first step in providing enterprise and system level information, and can help us integrate our point of care visibility in the future Point of Care Clinician experience today: Lots of hunting and gathering Too much inventory or no inventory Constant vigilance for expired product Very manual recall process Total value of product not evident/known What it should be: Complete focus on the patient Supplies always there when needed No risk of expired product No risk of recalled product Standard, high quality products 10 Kaiser Permanente. All Rights Reserved.

11 An example: demand management Saving opportunity by reducing clinical variation Weighted average price Bare metal stents $ Q Drug-eluting stents $4 x Q Target range for % of drug-eluting stents Source: McKinsey report for HPV, HPV supplier sales data 1 Sep 10 to 31 Mar 11, clinician discussion, 28 June 2011

12 Using data - usefully Sometimes the raw data doesn t tell us much $7,000,000 Graph of spend on nurse agency services, 12 months $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 12 Health Purchasing Victoria Achieving best-value supply chain outcomes for Victoria s health sector

13 Using data - usefully but when we normalise the data it tells a different story 7.0% Nurse agency spend as % of total nursing salaries 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 13 Health Purchasing Victoria Achieving best-value supply chain outcomes for Victoria s health sector

14 G o o d s & S e r v i c e s Think and act as a system SUPPLIER NETWORK Source Buy Deliver Integrated supply chain processes SUPPLY CHAIN PROCESSES Category Management Contract Management P2P Logistics Management Materials & Inventory Mgt CLINICAL CARE NETWORK P A T I E N T S Supplier Relationship Management Customer Relationship Management

15 Stakeholders Scope of opportunity is broad Hospitals Community Health Home Care Med Group Hospitals Community Health Home Care Med Group Marketing Marketing Marketing Marketing Hospitals Select Health Home Care Med Group Hospitals Marketing Community Marketing Health Home Care Marketing Med Group Marketing Hospitals Select Health Home Care Med Group Marketing Marketing Marketing Marketing Hospitals Select Health Home Care Med Group Support Services Support Services Support Services Support Services Hospitals Marketing Select Health Marketing Home Care Marketing Med Group Marketing Hospitals Select Health Home Care Med Group Marketing Marketing Marketing Marketing Clinical Services Clinical Services Clinical Services Clinical Services Hospitals Marketing Select Health Marketing Home Care Marketing Med Group Marketing Clinical Programs Clinical Programs Clinical Programs Clinical Programs

16 Potential Scope of Influence Non-Clinical Spend is Also Very Big 50% of Financial Contribution Hardware Travel Office Supplies Insurance Software Vehicles Office Equipment HR Benefits Often the forgotten categories (in healthcare) but with just as much opportunity for financial, quality and service benefits Support Outsourced Services Consulting Services Contract Labor Vehicle Maintenance SaaS Solutions Design Services General Contractors Equipment Maintenance Furniture Flooring Forms/Labels Payroll Services Chemicals Distribution Services Records Storage Temp Labor Architect Services Third Party Printers Telecom Grounds Maintenance Services Building Supplies Duplication Services MRO Auditing Services Marketing Materials Banking Relationships Etc Etc Etc

17 Lost Value Nirvana 17 Supplier Performance & Collaboration Supplier Collaboration Supplier Performance Management Contract Start Date Strategic Sourcing Value 75% of sourcing savings can be lost within 18 months without SRM - Geller & Company Survey No Supplier Relationship Management Program Time

18 Supply Chain will need to deliver value across the entire continuum of care Community-Based Care Retail Pharmacy Clinician /GP Sites Free-Standing ED Ambulatory Procedure Center Hospital Inpatient Rehab Acute Care Acuit y Home Wellness and Fitness Center Urgent Care Center Diagnostic/ Imaging Center Post- Acute Care GP Outpatient Rehab Home Care

19 There is real value in Health Supply Chain Management A dollar saved is a dollar invested somewhere else in healthcare When we allow personal preference guide decisions we pay more When we don t have standards we pay more When we don t leverage our scale we pay more Quality does not mean spare no expense Product and process variation is not clinical excellence Brent Johnson, VP Supply Chain, Intermountain Healthcare, Utah, November 2013

20 IT STARTS WITH (GOOD) DATA 20 Health Purchasing Victoria Working with Victoria s health sector to achieve best-value supply chain outcomes

21 A supply chain vision Capturing usage at the point of care is the one of the central components of the vision Actual Cost of Products/ Procedures Reporting and Budgeting Cycle Supply Chain Management Point of Use Capture Patient Record Sourcing Beyond Price Recall Management/ Product Quality Surveillance Comparative Effectiveness Outcomes-Based Analyses (e.g., Registries)

22 A single, accessible catalogue? 22 Health Purchasing Victoria Working with Victoria s health sector to achieve best-value supply chain outcomes

23 A group of US hospitals produced a video for the industry to promote data standards What if data standards in grocery stores worked like they did in the healthcare supply chain?

24 Critical Success Factors for Supply Chain Leadership Engagement (especially clinicians) Information / evidence Catalyst for change Communication

25 Why improve? Inventory Control Supply Integrity Enterprise Confidence in Supply Chain 15-30% Implement metrics & performance management tools Streamlined Material Flow 15-30% inventory reduction 15-25% Reduced Operating Cost 15-25% labor efficiency >20% Improved Patient Care > 20% improvement time with patient Demand & Replenishment Planning Transportation Mgmt Centralize Inventory in Service Center Optimize Logistics Process Excellence Source: US health provider analysis

26 Why improve? 75 year old goes to hospital for a hip replacement Wrong prosthesis delivered No surgery Impact on patient? Cost to health system?

27 Thank you 27 Health Purchasing Victoria Working with Victoria s health sector to achieve best-value supply chain outcomes