10/3/14. Streamlining Value Analysis: Accelerating Savings in the Face of Reform through Process Evolution and Redesign.

Transcription

1 Streamlining Value Analysis: Accelerating Savings in the Face of Reform through Process Evolution and Redesign Courtney Bohman, MHA, BSN GPO Lead Service Line Director LHP Hospital Group Plano, Texas Who is LHP? Company Overview & Joint Venture Model Supply Chain Overview Organizational Chart LHP Company Timeline Corporate Supply Chain Functions & Obstacles Value Analysis Best Practice Committee & Structure Committees & Memberships Committee Documents Committee Process, Strategy & Reporting Mission & Vision Supply Chain Cost Savings Goals & Tracking Value Analysis Process Flow Version 1.0 reviewed (2013) Version 2.0 implemented (2014) Version 3.0 in progress Sustaining Success Executive Leadership Support 1

2 LHP Hospital Group Ø Company started in 2008 Ø Privately held company Ø For- ProVit healthcare group Ø Currently 6 Hospitals Ø Acquisition mode Joint Venture Partnership q Percentage of Ownership q Board of Trustees Representation q Capital Investment q Hospital Name q Payer Mix Shared Contracting 2

3 Operations/Contracts q GPO Relationship Management LOC Tier Designation & Signature q q q Savings/Rebate Tracking Contract Compliance Tracking Performance Metrics Distribution: Days Sales Outstanding (DSO), Fill Rates, etc. EDI: 3 Way Contract Match, PO History, % EDI Orders, etc. q q Value Analysis q Best Practice Committee facilitation Strategic focus on committee initiatives based on MedAssets contract activity q System standardization Standardized item master q Executive/Physician/End User relationship management Clinical Oversight Committee Executive Oversight Committee q Vendor management Corporate/ Distribution Relationship Management Contract Negotiations National Accounts q New Product Request research & review Facilitate committee discussion q Contract Negotiations 6 Separate Item Masters and Charge Master No Unique Item Numbers No Centralized Purchasing 3 Different Materials Management Information Systems (MMIS) 5 Hospitals on same system but are not connected as a system Really 6 systems! All systems are antiquated 2 EDI Vendors No Transaction management visibility for non- MedAssets hospital (MMIS compatibility) Lack of data integrity No standard Item Numbers, Nomenclature, etc. Geographic diversity of hospitals 6 Groups of End Users 6 Groups of Vendor Representatives Requires National/Corporate Account involvement 6 Groups of Relationships Estimated FY savings potential based on limited product mix and Zinancial information The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy. Martin Luther King Jr. 3

4 Executive Oversight Committee Clinical Oversight Committee (Hospital CEO, CFO & CNO) (Hospital Surgeon Representation) Diagnostic Services Perioperative Services Cardio- vascular Specialty Nursing Products Critical Care Laboratory Services Radio- logy Pharmacy Services General Nursing 11 Membership Packet ConZlict of Interest Form Process Flow Chart New Product Request Form New Product Approval Form Clinical Evaluation Form Annual Acknowledgement Signature Required Annual Completion Required Inclusive of Procured Health >$5K annual spend <$5K annual spend; Director approval Multiple examples Piloting Procured Health 4

5 Member List Committee Charter Mission & Vision Committee Purpose Standardization Initiative Outline Purpose of Standardization Keys to Successful Standardization BeneVits of Standardization Standardization Process Model Committee Expectations Acknowledgement Signature Page Duties & Responsibilities The Value Analysis Best Practice Committee (VAC) is charged with establishing and subsequently following procedures through which New Supply Items Standardization Initiatives and Cost Savings Opportunities are evaluated for inclusion in the supply formulary. The committee will be responsible for reviewing all new product request valued at greater than $5,000 annually. The multidisciplinary committee is led by LHP Value Analysis, and includes input from the end users and clinical expertise at each facility. Participation on the VAC is by appointment. Representatives from the associated departments will be appointed by the nominated Committee Chair or the Director of Value Analysis. Ad Hoc representatives can be requested on a per meeting basis. Committee Membership: LHP Value Analysis Director Facilitator LHP Administration Hospital Voting Member Clinical End User Nominated Chair for each Committee Hospital Non- Voting Member Materials Management Ad Hoc Member (as required) 5

6 Clinical End User Member Ø Voting Member Ø All Votes Considered Equal Voting Standards & Requirements Ø 83% of Voting Membership must be present Ø 5 of 6 hospitals Ø Majority Vote will constitute a decision Ø Tie Breaker LHP Administration Member Ø Increased Supply Expense Initiatives Ø Executive Oversight Committee Vinal approval The LHP Value Analysis Department's mission is to facilitate the decisions recommended by various Best Practice Committees and Task Forces established to apply the Value Analysis Process to the daily practices of the hospital group. In most cases, standing committee's will be the primary forum for introducing new products to the supply chain formulary. The Corporate Supply Chain team will communicate the recommendations and outcomes from the established forums to the Senior Leadership Team, whose expectations shall include, but are not limited to: Demonstrating creative approaches to lowering overall logistic expense Maintaining a high quality standard of patient care and safety Improving the effectiveness and efviciency of each outcome Improving end- user satisfaction Increasing clinical quality satisfaction Reducing unit costs Reducing inventory Reducing product waste Driving standardization Monitoring utilization rates and appropriateness of supplies and equipment 6

7 With an increasingly competitive healthcare market and continuous focus on cost containment, it is imperative that LHP initiate value analysis methods through a Value Analysis Program to maintain our position as a low cost, high quality healthcare provider. The Value Analysis Program's vision is to Reduce costs and improve performance through cost- effective utilization and standardization of products, services, and equipment, or related processes while maintaining the upmost quality of patient care". TOTAL FY13 Savings Goal by Committee YTD Annualized Savings YTD Savings Goal Attainment $1,785,000 $2,331, % $2,295,000 $1,752,496 76% Laboratory Services $255,000 $309, % Specialty Nursing Products $765,000 $104,075 14% Pharmacy $900,000 $1,240, % $6,000,000 $5,737,926 96% Committee Perioperative Services Cardiovascular Services Radiology Services Total Savings Goal 7

8 GPO LOC Signatures At System and at Hospital Level 156 Signed in 2013 Estimated Annualized Savings of $1,015,000 Rebates FY13 Goal - $860,000 Actual Rebates Received - $1,762,239 % of Total Goal TOTAL FY14 Savings Goal by Committee Perioperative Services 40% $2,249,200 Diagnostics Services 25% $1,405,750 Laboratory Services 10% $562,300 Specialty Nursing Products 15% $843,450 Pharmacy 10% Committee Total Savings Goal $562,300 $5,623,000 8

9 Committee Perioperative Services Diagnostics Services Laboratory Services Specialty Nursing Products Pharmacy Total Supply Savings Goal TOTAL FY14 Savings Goals by Committee $ 2,249,200 $ 1,405,750 $ 562,300 $ 843,450 $ 562,300 $ 5,623,000 YTD Savings Goal Attainment 28% 20% 109% 36% 0% 32% YTD Savings $ 627,874 $ 282,296 $ 614,985 $ 299,926 $ - $ 1,825,081 This is only a rezlection of the initiatives completed by the Best Practice Committees through the end of August. Version 3.0 will explain why the shortfall at this point in the year! Additional savings & rebates have been achieved and are reported in the monthly savings/rebate tracker. Realized vs. Annualized Savings Realized is based on month initiative was implemented Annualized is estimated annual initiative savings Savings by Category Products/Services, Pharmacy & Capital Rebates Supply Chain Scorecard $ 3,500,000 $ 700,000 $2,923,960 $ 3,000,000 $ 2,500,000 $ 2,000,000 $502,703 $ 400,000 $ 1,500,000 $ 300,000 $ 1,000,000 $ 200,000 $ 500,000 $ 100,000 $ - $ R EALIZED YTD $633,681 $ 600,000 $ 500,000 $2,192,796 $1,830, T OTAL WITH PULL THRU REBATES 2014 G OAL SUPPLY CHAIN KEY SAVINGS DRIVERS ON TARGET 2013 R EBATE TOTAL NEEDS ATTENTION OFF TARGET PRODUCT CONVERSIONS/STANDARDIZATION SUSTAINABILITY/REPROCESSING OPTIFREIGHT PROCURED HEALTH COMPLIANCE (NEW PRODUCT REQUEST) Review new product request Standardization of product categories Strategic work plan development GPO contract work plan LHP Internal strategic plan Vendor management LOC Management Price Parity Distribution channel management 9

10 " " " Value Analysis Process v2.0 Tools & Resources added Standardization Initiatives 2014! December 2012: VA Director/ SC Operations Dir. Hired/Program Designed DESIGN January 2014: January 2013: Implement Value Analysis 2.0 Site Visits for Value Analysis 1.0 Program Roll Out Strengthen the program IMPLEMENT IMPLEMENT February- December 2013 December 2013: 28 Large Committee Initiatives Completed Value Analysis Version 2.0 Roll Out DESIGN November 2013: Committee Surveys/ CFO Feedback ASSESS LEARN/FEEDBACK 10

11 What did we learn. ü We understand the need (advantages) ü The process is not perfect (pain points) ü We have a lot of work to do to make it perfect ü It is going to take a total team effort to get it done! Membership Responsibilities Involvement Revised membership packet will be reviewed Signature of understanding is required for 2014 Continue to provide participation logs to Executive Leadership at each facility to promote participation Re- evaluate the committee membership on a quarterly basis to ensure accurate member designation Communication/Surgeon Involvement Provide Clinical Oversight Committee with Best Practice Committee meeting minutes at the end of each month Provide Nursing Education with Best Practice Committee meeting minutes at the end of each month Ask that each of you actively discuss all initiatives with your end users, physicians, educators, IT departments and Executive Leadership to identify any speed bumps at the beginning of the process 11

12 Surgeon Involvement/Geographical Practices Clinical Oversight Committee Surgeon/End User representation on the Best Practice Committee call Membership Packet (Page 4): Each facility will be permitted to designate one Ad Hoc member on a monthly basis. The appointed Ad Hoc member must be reported to the Director of Value Analysis at least Vive business days prior to the scheduled committee meeting. This member is not a voting member however should be a clinical expert resource on the agenda topic(s). New Product Request Process/Approvals State of Constant Evaluation/Change Procured Health implementation Standardization takes a lot of work Front end involvement Will slow down some in 2014 but will always be evaluation/change Vendor Relationships Should not be a relevant factor in making decisions Version 2.0 Updates Membership List (page 3) Committee Charter (page 4) Inclusion of Procured Health process Standardization Initiatives (Page 7) Inclusion of Procured Health process Committee Expectations (page 10) Communication expectations q Procured Health q CD Quick Contract Catalog q Healthcare IQ Data Mining Analytics q Pricing Benchmark Tools q Distribution Spend Analytics 12

13 Value Analysis Project Management Tool New Product Request Go Live January 2, 2014 End User Submission of New Product Request Real Time Status Review Available Stakeholder Assignments Approval Threshold and Request Routing <$5K Estimated Annual Spend - Approved via Request Format Spend will be monitored starting Q2 in Healthcare IQ >$5K Estimated Annual Spend - Reviewed via Project Format CFO NotiVication Approval Financial Review Best Practice Committee Review CFO Final Approval Total New Product Request = 80 Average Request per Month = 26.7 Request <$5K Annual Spend Total = 67 Approved = 41 Denied = 3 Still Open = 23 Request >$5K Annual Spend Total = 13 Archived = 5 Still Open = 8 88% of New Product Request are resolved in <14 Days * 58% are resolved in <4 days 13

14 Enhanced patient care Improved Asset/Inventory Management Contractual compliance Decrease supply/operating expense Streamlined logistics 40 Commitment Deriving the benevits of standardization requires sustained commitment at all management levels. Collaborative Approach Internal Communication/Awareness Multi- disciplinary committee members Standardization objectives, goals and results should be communicated to all management levels and affected end users Measurement Successful standardization is achieved only when signivicant levels of compliance with the standardization decision are achieved. 41 Planning & IdentiVication Clinical Evaluation Analysis Decision Conversion Results Measure 42 14

15 43 Visibility of Emotional Product Evaluation and Conversion Project Plan and Timeline Strategy for Decision Tools for Success Bi Weekly CEO/CFO Conference Call Supply Chain Update Monthly Update Value Analysis Best Practice Committee Meeting Minutes Quarterly WebEx Executive Oversight Committee review Quarterly activity Savings Implemented Next Quarter Initiative Review Initiatives for Approval Example: Current Stryker Ortho Trauma customers Increased supply cost associated with implementation System initiatives (ie. SurgiCount, CLABSI Prevention Products, 44 v End User Meetings Committee Members Executive Leadership Surgeon Support v Host Best Practice Committee Meetings v Visibility to end users and team members 45 15

16 " GPO Partnership for Supply Chain Management " Transaction Management GPO Reimplementation Strategic Sourcing Focus Value Analysis Process v3.0 implemented Salaries, Wages & BeneVits Supplies & Purchased Services Other Supplies & Labor Largest Expenses 2013/2014 Large Reduction in Force Initiatives completed Shifted focus to Supply Expense High Supplies as a % to net revenue as a system No three way match on pricing Disparate item masters Inconsistent processes and procedures Manufacturer shell game 16

17 Realigned structure Price Parity LOC Signatures Commodity Standardization Single Item Master Three Way Match Centralized Purchasing GPO Reimplementation No Process PPI Transaction Management New Products Contracted Services Strategic Sourcing Traditional Value Analysis Total Value of Care Current process state review Organizational complexities Readiness Assessment Process Maturity Assessment 17

18 Membership Packet v3.0 to be launched New Process Flow Charts Addition of Purchased Services Initiative Management New Product Request Increased responsibilities to the Materials Management Directors at the Hospitals Increased Hospital & Corporate CFO initiative engagement Single Item Master for pricing parity Single Purchasing Channel to reduce rogue purchasing habits New Product Request 6+1 Hospital Committees Pharmacy GPO Implementation Completed by 11/1/14 GPO Reimplementation Completed by 12/31/14 Single Item Master File Completed by 12/31/14 Centralized Purchasing Services Completed by 4/1/15 check in with me next year! J 18

19 The world as we have created it is a process of our thinking. It cannot be changed without changing our thinking. Albert Einstein 19