Purchased Services Areas of Opportunity:

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1 Purchased Services Areas of Opportunity: How Texas Children's Hospital Achieved Significant Cost Savings For Its Contract Staffing Purchased Services Presented by Edward M. Lewis, C.P.M., CMRP Supply Chain Services

2 Identified Savings Opportunities Annual contingent labor (temps) spend estimated at $15 Million No queries on A/P system for contract labor spend Contractor badges exceeded 1000+, unable to verify High administrative burden time & costs Invoice processing Credentialing gathering, tracking, audit, management On-boarding & Off-boarding of contract labor Timesheets / Timekeeping Reporting and departmental budgets difficult to capture No centralized staffing technology Relied on agencies for The Joint Commission compliance no audit process On Site clerical supplier with variety of rates for same position

3 Identified Savings Opportunities (cont d) Over 40 Suppliers providing contract staffing services Varied rates, terms, timekeeping, and processes TCH processing over 2000 invoices per year from staffing suppliers Potential for errors with rates, time, units, duplicate payments Top 10 Suppliers provide 85% of services (based on spend) Contract process for new staffing suppliers was cumbersome and time-consuming Departments often found candidates, however supplier was not an approved vendor On boarding processes were separate and inconsistent Desire to streamline all processes

4 Solution RFP for Vendor Management Solutions Vendor Management Solutions (VMS) A dedicated partnership for the procurement & on-going management of the contingent labor workforce and their staffing suppliers in a vendor neutral solution.

5 VMS Program Goals Achieve hard dollar savings Lower Bill Rates Payrolling Gain efficiencies through the consolidation of staffing processes Achieve compliance for contract staff credentialing Standardize rates, processes, approvals, reporting, and service delivery Streamline the process via single point-of-contact for contract staff management Gain visibility and reporting capabilities via implementation of advanced technology Maintain key existing supplier relationships Minimize or alleviate risks 1099/Independent Consultants, contracts, insurance management, on and off boarding

6 Extensive RFP and Presentation Process Identified 40 suppliers 50 Responses Narrowed field down to 5 presentations to procurement team Finalists presented to leadership team Nursing Finance IT Accounting Risk Management Clinics

7 Chose Firm with Vendor Management Expertise Selected industry leader in hospital whole house VMS solutions Vendor neutrality was very important to TCH VMS had experience with acute, pediatric, government, and large health systems Partnership for success with suppliers approach Supported by a national network of over 300 suppliers Trusted advisor with compliance

8 Implementation Overview

9 Hard Dollar Savings Analysis by Position 12.0% 2009/2010 Average Savings Non Clinical 8.4% Nursing Registry 8.0% Nursing Travel 10.0% 8.0% Total 8.1% = $1+ Million Cost Savings 8.0% 6.0% 4.0% 2.0% 0.0% Q Q Q Q NON CLINICAL 7.8% 9.0% 9.1% 9.1% NURSING PRN 7.4% 8.3% 8.3% 8.0% NURSING TRAVEL 6.4% 8.7% 9.1% 10.5%

10 Contract Spend Analysis by Division $227K savings Contractor Conversions to TCH Staff $900,000 $800,000 $700,000 Division Total Nursing $3,784,358 Non-Clinical $2,492,291 Allied $1,524,005 Payroll Service $96,013 Independent Contractors $33,857 Total $7,930,524 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Independent Contractors $5,124 $3,428 $1,468 $3,880 $5,542 $3,817 $3,701 $6,897 Payroll Service $2,688 $11,312 $11,545 $8,702 $10,409 $10,030 $9,949 $8,854 $9,019 $4,887 $3,636 $4,984 Allied $96,838 $137,387 $157,818 $142,823 $120,442 $137,146 $129,628 $120,932 $130,638 $117,489 $119,395 $113,468 Non-Clinical $134,500 $121,708 $144,501 $159,517 $154,597 $157,326 $187,819 $219,549 $246,952 $266,563 $334,890 $364,370 Nursing $502,168 $499,394 $437,270 $381,530 $367,207 $384,279 $278,630 $213,080 $218,379 $191,864 $171,683 $138,873

11 Additional VMS Program Benefits Achieved savings while increasing fill ratio: 98% fill ratio Reduced staff time to focus on other priorities: VMS Program provided dedicated on-site support for management of contract labor Leveraged VMS partner s national network of trusted suppliers to staff large EPIC Project Decreased number of invoices from 2,000 to 52 per week and increased accuracy of invoices Reduce federal and state potential liabilities via 1099 / Independent Contractor compliance

12 Additional VMS Benefits (cont d) Gained visibility across all contract spend via web-based technology enabling advanced reporting metrics, tracking, and process control of job order fulfillment Achieved high program adoption maintained existing suppliers Customized solution to scale with TCH s growth Mitigated risks Shifted contracts, insurance management, Joint Commission standard credential maintenance and tracking responsibility to VMS Vendor

13 Customized and Supported Technology System

14 Additional Services from VMS Credential Tracking Services (CTS) Audit & management of credentialing for outsourced employee populations or internal staff Payroll Services Significant savings over traditional recruited staff Your Source allows managers to view previous contingents that have completed assignments for client to re-engage for contract at discounted rates Independent Consultants/1099 screening of 1099 consultants to ensure compliance with IRS requirements and risk assessment review for existing 1099 staff

15 Questions?

16 Contact For any additional information, please contact: Edward M. Lewis, C.P.M., CMRP Assistant Director, Supply Chain Services

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