How Banner Health Used a Supply Chain Blue Book to Lower Costs

Transcription

1 How Banner Health Used a Supply Chain Blue Book to Lower Costs Claire Agnew, CFO AZ East Region, Banner Medical Group Raymond Davis, SCM Director, Banner Gateway Medical Center, Banner MD Anderson Cancer Center, Banner Ironwood Medical Center, Banner Medical Group

2 23 Acute care hospitals Medical group with 917 providers Behavioral / home care Outpatient surgery $5 Billion in revenue 36,725 employees 76% of revenue in Arizona 2

3 Overview Learn how one organization created and implemented a Supply Chain Blue Book to improve supply expense reporting and benchmarking to achieve supply savings. 3

4 After this session, you will be able to: Identify the benefits of a Supply Chain Blue Book. List useful reports and charts to be included within the Blue Book. Plan a successful implementation of a Supply Chain Blue Book. 4

5 Step 1: Identify the benefits of a Supply Chain Blue Book. Unlike Paul Newman, who seems to think that salad dressing is the cure-all to America s ills, I m a man of action. -- Stephen Colbert 5

6 Supply Expense 17-23% of Net Revenue* 15-21% of Hospital Operating Expense* Before After % Change Net Revenue $100.0 $ % Supply Expense % Total Operating Expense % Operating Margin $5.0 $ % Operating Margin % 5.0% 5.2% *Sources: Supply Chain Benchmarking Presents Opportunity for Added Cost Savings, HFM, November 2012 & Berger, Steven Back to the Basics: 5 Ways to Pick Low-Hanging Fruit, HFM, August

7 Original State Identification of the need Timeliness of external benchmarking. Lack of internal benchmark reports by service line or account in Supply Expense. Existing variability in accounting by facility. Limited Supply Expense reporting. System strategic initiative to decrease supply expense. 7

8 Functional Intent Create an actionable tool to identify further savings within supply chain. Provide internal benchmark reporting by service line. Present differences in utilization by service line through volume-based metrics. Identify opportunities in inventory management. Address differences in accounting practices. Supply detailed reports to identify variances and opportunities on a monthly basis. 8

9 Target Audience Senior Management Supply Chain Leadership Finance Accounting & CFOs Department Directors and Managers Clinical Discipline Teams: OR, Pharmacy, ED, WIS, Culinary, Supply Chain, Imaging, etc. Anyone who has impact in supply charges/utilization. 9

10 Construction Homegrown SSAS from Lawson GL to Excel Exempt employees ROI 10

11 Supply Chain Blue Book Creates a new transparency in supply expense reporting. Empowers a financial, supply chain or clinical leader to identify variances in total or per unit of service basis. Supports a new relationship dynamic between supply chain and clinical leadership from push to pull. 11

12 Step 2: List useful reports and charts to be included within the Blue Book. I love the truth. It s the facts I m not a fan of. -- Stephen Colbert 12

13 Useful Reports & Charts Service Line reports Budget variances for total expense Statistic variance Cost per UOS variances Rate versus volume variances By account Graphical representation of trends and comparisons Internal benchmarks 13

14 Trended Cost per Unit of Service 14

15 Trended Cost per Unit of Service 15

16 Trended Cost per Unit of Service 16

17 Trended Cost per Unit of Service 17

18 Budget Variance Report 18

19 Budget Variance Report 19

20 Budget Variance Analysis 20

21 Budget Variance Analysis 21

22 Graphed Cost per Unit of Service Medical Supply Cost per ED Visit 22

23 Graphed Cost per Unit of Service Office Supply Cost per ED Visit 23

24 Useful Reports & Charts Inventory Reports Inventory Turnover reports & comparisons Inventory Turnover = YTD Medical Supply Expense per department annualized Inventory balance for the department 24

25 Inventory Turnover 25

26 Useful Reports & Charts Supplies per Adjusted Admission Stacked graphs by expense category Medical Devices Blood Pharmaceuticals Commodities Food Other Nonmedical Benchmarked by internal Adjusted Admission peer group 26

27 Supplies per Adjusted Admission 27

28 Useful Reports & Charts Executive Summary Key Service Line cost per UOS comparisons to budget Trended Supply Expense per Adjusted Admission 28

29 Executive Summary Graphs 29

30 Executive Summary Graphs 30

31 Executive Summary Graphs 31

32 Useful Reports & Charts Hospital Summary Select Service Line cost per UOS comparisons to budget Supply expense variances Supply per Adjusted Admission variances by expense category Supply as % of Net Revenue by expense category 32

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34 Hospital Summary 34

35 Hospital Summary 35

36 Hospital Summary 36

37 Hospital Summary 37

38 Hospital Summary 38

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40 Step 3: Plan a successful implementation of a Supply Chain Blue Book. Making a better tomorrow, tomorrow. -- Stephen Colbert 40

41 Implementation Reports Development Team CFO & SCM Director Supply Chain & Finance Draft approval Feedback Clinical Discipline Teams Presented to each clinical team Explained concept Answered questions In-Action demonstration Refined Completed in final format Global production Identified need Gained Executive conceptual approval Began the build 41

42 Implementation CFO & SCM Director Identified need Gained executive conceptual approval Began the build 42

43 Implementation Feedback: reactions comments criticism advice opinions views Supply Chain & Finance Presented to Supply Chain Board & Hospital CFO Groups Draft approval Feedback 43

44 Implementation Clinical Discipline Teams Presented to each clinical team Explained concept Answered questions In-Action demonstration More feedback 44

45 Implementation Reports Development Team Refined reports & tool Completed in final format Global production 45

46 The Final Word = 46

47 The Final Word I report, I decide. -- Stephen Colbert Ctrl-C Fun in Finance Like maybe a life? CFOs unleashed 47

48 Supply Chain Blue Book Tools and Takeaways Tools and internal benchmarks for achieving supply chain savings Service Line reports Budget variances for total expense Statistic variance Cost per UOS variances Rate versus volume variances By account Graphical representation of trends and comparisons Internal benchmarks Inventory reports Inventory Turnover reports & comparisons Supplies per Adjusted Admission Stacked graphs by expense category Medical Devices Blood Pharmaceuticals Commodities Food Other Nonmedical Benchmarked by internal Adjusted Admission peer group Executive Summary Key Service Line cost per UOS comparisons to budget Trended Supply Expense per Adjusted Admission Hospital Summary Key Service Line cost per UOS comparisons to budget Supply expense variances Supply per Adjusted Admission variances by expense category Supply as % of Net Revenue by expense category

49 Sample report pages and graphs

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