Describe the challenge or problem you/your system experienced that motivated change or improvement. Please also identify the personnel, departments, any suppliers, distributors or GPOs involved in this process.

In January 2010, a collaborative team from nursing, procurement, information systems, and the IDN's CEO, used Lean Methodology to reduce wasteful time and motion required for nurses and other clinical staff to source and gather supplies for patient care.

 Problems identified included:

• defects in inventory levels
• hoarding of supplies by nurses
• inaccurate inventory levels
• unnecessary rework

Using a Value Stream Analysis, the team demonstrated that Lost Revenues in the engaged department exceeded $4100/week. Spaghetti diagrams confirmed that nurses spend 8% of their time, walking on average, 10.1 miles/shift/unit, to find and gather supplies.

Characteristics of a "Desired State", which could be replicated in other nursing units, were defined; key factors included:

• leverage point-of-use technology for supply use
• employ standard locations and nomenclature for supplies
• limit touch points by consolidating supplies
• locate high volume supplies in ergonomic zones
• establish a clear standard of work for replenishment

Goals were set for 50% reductions in Lost Revenue and in time and motion spent by nurses finding and gathering supplies. Using "Gap Analysis", deficiencies between the "As Is" and "Desired State" were mapped. A "Solutions Approach" was developed; proposed solutions were validated and results measured.

By mid February 2010, the VSA team developed and implemented a "Completion Plan" that could be replicated throughout the IDN. Work was done to validate the achieved results, which included Lost Revenues savings of 79.2% and a greater than 50% reduction in time and distance required for nurses to source and gather supplies.

What was the initiative you implemented? When did you start the implementation process? How did those involved impact the desired results? Who was involved in the review process? Please identify by listing individual names and appropriate teams.

Beginning in 2005, Dale Locklair, VP of Procurement & Construction, began the initiative to reinvent McLeod's supply chain from a transactional, paper and sticker-driven department to an automated, service-focused department that could support the institution's mission and strategic vision.

In 2006, Carmen Winfield, Director of Procurement Services, advanced this work to free personnel from wasteful, burdensome work and enable them to focus on work that supported patient-centered care. With C-Suite support from Rob Colones, CEO, Fulton Ervin, CFO, and Marie Segars, Sr. VP and Hospital Administrator, a multi-disciplinary team consisting of supply chain, nursing, clinicians, information systems, and finance representatives worked collaboratively to leverage technology and automate the req-to-pay process, integrating point-of-use systems with MMIS, AP and Charge Master.

By 2010, savings from elimination of manual processes resulted in savings of over 20,200 hours/year. With no terminations, personnel were reassigned to bigger opportunities, as a part of McLeod's focus on continual improvement. Using Lean Methodology, these teams employed Rapid Improvement Events (RIE) to free nurses from time spent sourcing and gathering supplies to focus on providing safe, efficient, patient-centered care. Work has also resulted in reductions in Lost Revenues of over 30% and warehouse inventory by 39.8%, while increasing turns from an average of six/year to nineteen.

In 2011, the department's advanced use of the point-of-use technologies has resulted in a collaborative partnership with Omnicell and GHX to leverage their technologies to improve OR Bill-Only processes to reduce transactional costs and improve efficiencies for manufacturers and Providers.

Describe any challenges you encountered during the improvement process and how you overcame them.

Organizations are not machines that can be engineered and re-engineered. They are complex ecosystems organized around foundational values and rule sets (Whipple, 2009). How people interact with each other influences what emerges, both negatively and positively. We saw our institution, not as a conglomeration of systems or processes but as interconnected webs of living, evolving organisms (Lewin & Regine, 2000).

Recognizing the limits of our control as leaders, we focused on the development and nurturing of relationships as the best means for guiding our work. Our greatest challenge was to find ways in which our department could add value for patients. We chose to do this by seeking ways to align our work with the work that takes place every day in support of frontline caregivers, and not simply by managing to financial reports but through collaborative relationships that helped streamline the layers of work that occur within our institution, making incremental improvements that supported our institution's mission, vision and values.

By helping to improve organizational agility, alignment and adaptability in incremental steps, we have been able to sustain these small improvements through and across the institution, further leveraging each small step to achieve and sustain greater objectives.

What have been the tangible results thus far? Please provide estimates of future results. Please identify how you determined and measured your results.

As automation has replaced manual processes, caregivers have been afforded more time to focus on safe, efficient, patient-centered care. Since this work began in 2005, Lost Revenues were reduced by over 66%; PO exception rates declined from 51.3% to 3.76%. EDI transactions have reduced manual processes by 52.2%, and electronic payments have reduced labor requirements by 41.7%. Labor once required to manage bulk supplies on nursing floors has been reduced by 54% through the use of order scanning at PAR locations. Time once required by nurses to find and gather supplies for patient care has been reduced by 8% - the average nurse now has 3.2 more hours/week to provide patient care than before!

As trust for the department has grown among nurses and clinicians, responsibilities have grown. From serving only medical surgical locations in 2005, the department now manages supplies in the emergency room, operating room, specials, radiology and respiratory therapy.

Work, which began in late 2010 on managing operating room supplies, has progressed. Once all manual processes, the department is working with vendors to integrate surgical supply systems with physician preference cards, implant logs, charge master, and supply replenishment and to build algorithms that will help maintain more accurate physician cards.

A single scan of a product used will populate the implant log, reorder a product, create a purchase order and adjust the patient bill. The implications of this are a potential savings of over 7500 labor hours, a 17.5% reduction from what are now completely manual processes.

Describe the challenge or problem you/your system experienced that motivated change or improvement. Please also identify the personnel, departments, any suppliers, distributors or GPOs involved in this process.

Parkview Health's vision was to create a state of the art healthcare campus embracing technology in order to provide our patients the highest level of care and exceptional service experience.

The challenge was to transform a very transactional materials management department to an organization that embraced end-to-end management of the entire acquisition pipeline. This needed to be done while simultaneously implementing a major capital construction to create a Centralized Distribution Center (with a Virtual Inventory Management network capability), support two additional capital hospital construction projects (Whitley Community & multiple disciple Regional Medical Center) and support a major CFO cost initiative within an 18 month window.

What was the initiative you implemented? When did you start the implementation process? How did those involved impact the desired results? Who was involved in the review process? Please identify by listing individual names and appropriate teams.

Implemented initiative included a major capital construction of CDC and creation of a Virtual Inventory Management system while simultaneously cutting costs within an 18 month window.

In fall of 2009 Parkview Health made a decision to locate our CDC off site and leased a gutted warehouse. The physical external structure was solid, but the internal portion lacked everything from lights to a HVAC system. The team prepared a detailed project plan with the physical construction elements (design, architectural RFP bid, etc.). Donna Van Vlerah, VP Supply Chain,acted as overall project manager.

Simultaneously, the materials management team recognized in order to become an "end-to-end supply chain" (vs traditional transactional materials group) major organizational change must occur. The purchasing and contracting was consolidated into the Supplier Relationship Management section with products or consumable goods; capital medical and purchased service elements.

Another vital section was establishment of an internal Customer Relationship Management section, lead by MRN with 4 additional seasoned RNs, a demand planner, financial analysts and project manager.

Monumental implementation occurred: demand forecasting and planning, value analysis program, physician preference reduction, internal customer needs assessments and standardization. The Supply Chain Logistics section was revamped to handle throughput from dock to patient bed side in a new and innovative manner.

We enhanced the already robust TECSYS WMS solution to include a point of use system, but these tied it back to the CDC stock for a "virtual" picture. Clinicians use a point of use system with RF barcode technology to record item usage.

Describe any challenges you encountered during the improvement process and how you overcame them.

The team faced an aggressive 18 month implementation schedule, including a departmental reorganization, build-out of the distribution center and creation of a new software concept.

Challenges included:

• scope of change required significant change management with C-Suite, COOs, and the entire IDN structure
• warehouse had to be completed and operational by October 2011 to support 2 new hospital openings. Stocked inventory assets location were eliminated so the warehouse not only needed to be constructed, it needed to be functional
• simultaneous major departmental reorganization was aggressive
• also supported 2 other major construction projects with completely new buildings at Whitley Community and Regional Medical Center (400 private bed multiple disciplined)
• CFO needed major cost cutting as well, with targeted of $5M

Simply stated, these challenges were overcome by excellent project planning, solid leadership and excellent team execution. Everyone within the department played a major role in these efforts. Team mates were provided with a vision, implementation details and empowered to execute their portion of the plan. When obstacles presented themselves we "adapted, overcame and improvised".

What have been the tangible results thus far? Please provide estimates of future results. Please identify how you determined and measured your results.

Tangible results: It is difficult to capture all the accomplishments and a detailed list can be provided. At a very high level here are the major accomplishments: 

1. Successfully completed a complex reorganization aligning personnel, processes and technology within 12 months.
2. Completed capital construction project for the distribution center on schedule and $1.8M under budget.
3. CRM section completed 100% customer needs assessment for 1,000 of internal customer transitioning them to point of use systems, creation of purchasing templates, and massive standardization all contributing to our cost savings efforts.
4. The above coupled with the SRM team saved $13M in this timeframe.
5. We created a "Virtual Inventory Management" network which has the potential to capture $17M in gross revenue.
6. Driven down physician preference items to fewer than 800.
7. Established a robust Value Analysis for product and equipment contributing to our cost savings.
8. SCORe has a comprehensive Business Plan with line item detail for each initiative and cost savings measure linked to a behavior changing metric. These are physically posted on a wall and "wall walk" to review performance and identify constraints are checked monthly (along with quarterly CFO reviews).

Describe the challenge or problem you/your system experienced that motivated change or improvement. Please also identify the personnel, departments, any suppliers, distributors or GPOs involved in this process.

As the largest freestanding medical center (767 licensed beds) in a highly competitive suburban environment with a highly competitive Cardiology program, it is necessary to be on the front end of change. Health reform and financial pressures lead to Health Care Reform Drivers and Goals: 

1. Driver: 46 Million Uninsured Goal: Expand Coverage 
2. Driver: Wide Variation in Quality & Costs Goal: Improve Quality 
3. Driver: 17% of GNP rising to 20% by 2017 Goal: Reduce Cost  

Both physicians and the medical center sensed a need to develop a true partnership to accomplish strategic goals and objectives:

1) Partnership - Tighten clinical and financial alignment between providers and medical center

2) High Quality - To be ranked among the top 10% of hospitals in the US on cardiovascular indicators

3) Multidisciplinary Care - Develop a more strategically integrated, operationally coordinated Heart & Vascular Institute

4) Patient Friendly Service - Immediate access to care, links to technology

5) Rapid Service Delivery - Access to physicians, highest quality, lowest cost guidelines

6) Care continuum - Seamless care

In an effort to address the high cost of care, medical center physicians partnered with Supply Chain to lead an initiative to reduce cost while enhancing outcomes to be a Top 10 Cardiology Center of Excellence. The Cardiology Supply and Contracting Committee was established and driven by physician representatives from Cardiology, Interventional Radiology, Electrophysiology, and Peripheral Vascular. Other members of the committee included the Director Supply Chain, Business Director of Cardiology, and key clinicians.

What was the initiative you implemented? When did you start the implementation process? How did those involved impact the desired results? Who was involved in the review process? Please identify by listing individual names and appropriate teams.

This initiative began in early 2011 and since we are a large freestanding facility, we had a need to move quickly. The Supply and Contracting Committee set out to address the following critical success factors:

1) Challenges: 

• Rising cost per case
• Contract compliance
• Fragmented product usage  
• Lack of relationship between physicians and Supply Chain  
• Lack of physician direction
• Vendor free-for-all 

2) Steps or processes implemented: 

• Physicians commitment and planning  
• Multidisciplinary team support including data analytics  
• Vendor participation and controls
• Contracting process and product transition
• Physician Supply Chain education 

3) Success factors and/or pre-requisites included:   

• Achieve benchmark best decile pricing  
• Sole source supplies in top 3 product categories (CRM, Stents, Leads & Accessories)
• Reduce vendors and supply lines  
• Maintain physician support and program compliance 

4) Key targets: 

• Physician engagement  
• Product standardization both inter and intra departmentally
• Reduction in supplier replication/duplication
• Inventory management
• Improve process efficiency  
• Establish a strategy to leverage and control new technology
• A thorough review process including an RFP and vendor presentations were key to the process 

Products were broken down into seven categories:   

• Cardiac Rhythym Management
• Drug Eluting Stents
• Non-Drug Eluting Stents
• Diagnostic & Interventional Cardiology
• Diagnostic & Interventional Radiology
• Electrophysiology
• Peripheral & Biliary Stents 

A committee chaired and driven by the Medical Director of the Heart Specialty Center including specialty physicians and clinicians/non-clinicians from all key areas.

Describe any challenges you encountered during the improvement process and how you overcame them.

The challenges incurred are basically a good news/bad news scenario. The good news is that the SAMC management staff and physicians recognized a significant need for partnership.

Challenges needing to be addressed included a lack of physician direction, a lack of supply chain vision in Cardiology, a lack of infrastructure, a lack of medical center focus, and a lack of teamwork.

Being the third largest hospital in St. Louis and the largest independent hospital, our physical structure alone presented challenges. Right away we needed to eliminate the potential risk of vendors attempting to counter-detail our initiative.

Therefore, our number one priority was to send a strong message to our vendor community that the hospital and physicians were standing together on this project. By inviting the major vendors to present to the newly formed Supply and Contracting Committee and letting them see the physicians sitting in unison with the hospital representatives, this sent a strong message to the community.

Our physicans were also very careful to send the same message when contacted outside of the committee meetings. Most physicians would refer vendors to the Director of Supply Chain to maintain continuity. This in itself, threw some of the the vendors off. They no longer had someone they could depend on to "fight their battle with Administration".

It was also very important to keep all physicians in the loop throughout the process. Our Medical Director and Committee Chair was very diligent in communicating to all physicians pre and post sole source award.

What have been the tangible results thus far? Please provide estimates of future results. Please identify how you determined and measured your results.

Current and projected results have been dramatic:   

• PHYSICIAN DRIVEN INITIATIVE!!  
• Committee developed, chaired, and driven by the Medical Director of the Heart Specialty Center.  
• The committee was 70% physicians based including members from Cardiology, Interventional Radiology, Electrophysiology, and Peripheral Vascular.  
• Supply Chain and key clinicians/non-clinicians involved.  
• Sole source award for all major product catergories.  
• Achieved top decile pricing.  
• Reduced Cardiac Rhythym Management and Cardiac Stents to a sole source vendor with a projected first year savings exceeding $2M.  
• Standardized diagnostic products across Cardiology. Interventional Radiology, Electrophysiology, and Peripheral Vascular with savings yet to be projected.
• Physicians actively working with Supply Chain to reduce cost per case.
• Physicians more educated and interested in facility purchasing strategies to include Group Purchasing.
• Physicians working directly with contracted vendors verses non-contracted vendors.
• Vendors no longer allowed to counter-detail.
• Significantly reduced the number of vendors and therefore, the amount of inventory on-hand, throughout all departments involved.
• Working with sole source vendor to develop six sigma process improvement initiative across Cardiology, Interventional Radiology, Electrophysiology, and Peripheral Vascular.
• In the process of implementing RFID inventory management system across continuum.
• A TRUE PARTNERSHIP HAS BEEN BORN BETWEEN THE PHYSICIANS AND THE FACILITY!!

Describe the challenge or problem you/your system experienced that motivated change or improvement. Please also identify the personnel, departments, any suppliers, distributors or GPOs involved in this process.

The Supply Chain at UCSF Medical Center was facing two distinct challenges when our initiative began. The first was our separation from the Nursing Units on the various floors. They viewed the Supply Chain department as a necessary link, rather than a willing and collaborative partner.

Along with our healthcare professionals, we wanted to work together to create shared ownership of patient needs. Our goal was to deepen our relationship among nursing and support services to foster collaborative problem solving, and help all of our staff find a sense of meaning and purpose in their work through patient-focused goals.

The second challenge stemmed from our Procurement department. Our purchase order submission process was largely tedious, manual, and unsophisticated. It required a dedicated labor component that added little value to this process. We had almost no standardization; which manifested itself in exorbitantly high freight costs, high invoice discrepancy rates, poor fill rates, and inconsistent customer service.

What was the initiative you implemented? When did you start the implementation process? How did those involved impact the desired results? Who was involved in the review process? Please identify by listing individual names and appropriate teams.

Steered by our Supply Chain Director, Kevin Pattison, we launched our Environment of Care Optimization (EOC) initiative in June of 2010. (Slides 2-10 in our collateral Power Point Presentation).

The first step in our diagnostic EOC approach was to listen to our nurses and support staff. Being on the front lines of patient care, they knew what they needed immediately and what areas of concern could wait. Thus, we enacted a tiered approach, which honed our focus to higher priority areas, for example, respiratory and safety. We increased pars, which eliminated unnecessary turns and allowed departments to feel more autonomous. We partnered with Clinical Engineering to replace outdated telemonitors and convinced Hospitality to give up a rarely used storage room in favor of storing our critical BIPAP/Hi Flo respiratory equipment.

On the procurement side, we strove to drive costs and waste out of the supply chain by limiting rote tasks. The PO submission process was largely fax and phone based. Working with GHX (Global Healthcare Exchange), we established EDI connections with over 100 vendors. For those not capable of EDI, we directed our POs to either a customer service email address or fax number. As a result, 97% of our Purchase Orders transmit automatically.

To squelch our inflating freight costs, our Business Development and Analytics team invested considerable resources in gathering information on vendor shipping points. After discussing desired receipt thresholds with end users, our team established default shipping methods for over 300 vendors and published this information on our website.

Describe any challenges you encountered during the improvement process and how you overcame them.

The main challenge we faced with our Environment of Care initiative was determining how to enable a long-standing Rapid Process Improvement (RPI) capability once each individual project ended. We were concerned with departments feeling passed over, as word spread of our improvement implementation.

To combat any exclusion, we established and published a comprehensive timeline and project list to keep us focused and alert departments as to when they can expect our involvement. The challenges surrounding automating and standardizing the procurement side of our supply chain were myriad in nature and many in number.

Firstly, we had to invest a healthy amount of time in establishing either an EDI (electronic data interchange) or MetaTrade (email) with our highest volume vendors. This required account clean-up, vendor outreach, and online PO confirmation training.

Secondly, in order for these purchase orders to transmit automatically, we had to catalog over 2000 of our most frequently ordered items. We established contractual pricing, verified item information with vendor reps, and alerted end users that their products now had item numbers. This fostered relationships with requisitioners and endeared us to many departments throughout the Medical Center, as their ordering process became more streamlined.

We also had to develop a way to manage our results and new schematics going forward. Thus, we created two procurement dashboards, detailing our discrepancy rates, PO count, and buyer productivity. All this information can be viewed quickly and accurately with the click of a button.

What have been the tangible results thus far? Please provide estimates of future results. Please identify how you determined and measured your results.

Our EOC initiative has been roundly lauded for its tangible and immediate results and ability to generate excitement. As a result of our EOC initiative, the Supply Chain Department has become a trusted and valued partner throughout the Medical Center.

Our relationship with department heads, nurses, and support staff is vastly improved. We strive to continue this partnership so we can enable the highest quality of care possible. We are now seen as a department who gets things done.

Going forward, we will relish this opportunity to enact meaningful change. On the Procurement side, our primary accomplishments are best viewed via hard data.

Highlights include: 

• 97% total PO automation (97.5% confirmed automatically)
• 310 GHX automated vendors
• 35 Labor weeks saved during Q1 of FY 2012 (Labor reallocated to continual automation and customer service outreach)
• 12% year-over-year reduction in Fedex Spend, while enabling 82 additional vendors with our Fedex Freight Program. 
• UCSF Pricing is now benchmarked against current pricing and a national dataset in one consolidated dashboard.
• Total Supply Chain savings achieved in FY10 & FY11: $3.2M 

Describe the challenge or problem you/your system experienced that motivated change or improvement. Please also identify the personnel, departments, any suppliers, distributors or GPOs involved in this process.

After identifying an opportunity for cost savings and efficiency in supply chain processes, senior leaders at the University of Mississippi Health Care (UMHC) tasked the Supply Chain Department with developing an innovative solution to address the issue.

UMHC's annual commodities budget was approximately $140 million including an annual expenditure of $8 million for purchased medical-surgical supplies and utilized equipment from a single major manufacturer. In alignment with UMHC's strategic aims, which include becoming the provider of choice in the state of Mississippi, while delivering high quality care at the lowest total delivered cost, Supply Chain leadership implemented a new plan for the organization.

The first step in the process involved identifying key stakeholders, including the Chief Supply Chain Management Officer, Director of Purchasing, Associate Director of Purchasing, Director of Value Analysis, Value Analysis Manager and Clinical Analyst.

The subsequent steps in the process are detailed in the following sections.

What was the initiative you implemented? When did you start the implementation process? How did those involved impact the desired results? Who was involved in the review process? Please identify by listing individual names and appropriate teams.

The Supply Chain Leadership Team initiated a strategic partnership with one of UMHC's major suppliers in 2006 in an effort to improve communication, achieve savings and streamline the Value Analysis process with a specific manufacturer. UMHC established quarterly business reviews in which representatives from each clinical division participated and provided feedback for their respective product lines. Savings opportunities were identified during these reviews and pressing issues were addressed.

As the partnership grew, the Value Analysis Program served as an internal consultant for purchasing and clinical utilization decisions. The objectives of the Value Analysis Program included implementing new procedures to streamline the evaluation and selection of new products and technology, improving the purchasing process to reduce inappropriate orders, improving and establishing relationships with departments to identify new opportunities, developing Value Analysis committees and focusing on quality and patient outcomes.

Following these progressive changes in the Supply Chain Department, the targeted manufacturer began readily collaborating on projects focusing on UMHC's fiscal goals and healthcare reform studies. In addition, the vendor began producing Value Analysis Committee Product Information Kits complete with a product overview, product diagram, FDA clearance, instructions, technical data, reimbursement information, competitive product overview, packing information, order codes and ordering information.

Describe any challenges you encountered during the improvement process and how you overcame them.

The most vital steps in establishing the strategic partnership program for the UMHC Supply Chain Department were the creation of processes and guidelines, engaging senior leadership throughout the institution and ensuring buy in from front line clinical managers. This was accomplished by including these stakeholders in the planning and implementation processes and participating in regular meetings with clinical front line staff.

In addition, the Value Analysis team provided consumer education to each department for clinical best practices and fiscal responsibility and the Supply Chain developed a super users program, where super users trialed products and provided feedback. As a result of the involvement of super users, clinical staff were more readily accepting of decisions and felt empowered by having a voice in the decision making process.

Executive support was also imperative for an initiative of this magnitude.

What have been the tangible results thus far? Please provide estimates of future results. Please identify how you determined and measured your results.

In the current economic climate, it is imperative that hospitals deliver high quality care at the lowest total delivered costs. The innovative and transformative efforts UMHC's Supply Chain has undergone over the past four years has resulted in strong strategic partnerships, enhanced communication, a streamlined Value Analysis process and an astounding $2,137,686 in savings.

UMHC Supply Chain's remarkable plan has reinvigorated many processes throughout the institution and better prepared the system for future improvements.  Moving forward, this strategic partnership plan will continue to focus on resource utilization and operational excellence.

Describe the challenge or problem you/your system experienced that motivated change or improvement. Please also identify the personnel, departments, any suppliers, distributors or GPOs involved in this process. Two years ago, Supply Chain Operations (SCO) at Indiana University Health, then Clarian Health Partners, realized the need to improve contracting, operations, and data management and reporting. Our focus needed to be on our patients and the end-users of our supplies, equipment, and services for patient care. This would involve all divisions of SCO, and collaboration with other service departments, GPOs, distributors, and supply partners.

What was the initiative you implemented? When did you start the implementation process? How did those involved impact the desired results? Who was involved in the review process? Please identify by listing individual names and appropriate teams. Many initiatives across all divisions in the SCO have been implemented. These have included process improvements, technologies, leadership development and staff education. Overall, the expectation has been to always provide exceptional customer service and responsiveness.

Describe any challenges you encountered during the improvement process and how you overcame them. During this time of change, IU Health has continued to grow. New partnerships and facilities have been developed. At each phase through our journey, the efficiencies new processes and technologies have continued to allow SCO to keep pace with the demands of our organization's growth.

What have been the tangible results thus far? Please provide estimates of future results. Please identify how you determined and measured your results. Through improved data management, metrics development, and expanded reporting, SCO has continued to reduce costs, improve customer service and solidify supplier partnerships. The development of a custom data warehouse will further our efforts in physician engagement and product standardization.

Describe the challenge or problem you/your system experienced that motivated change or improvement. Please also identify the personnel, departments, any suppliers, distributors or GPOs involved in this process.

"Do more with less!"

Our health system continues to be challenged with reductions in expenses, additional affiliation responsibilities, staff reductions and the largest healthcare construction project in the country. These challenges forced us to find innovative ways to successfully cope with the current environment.

We are a self-contracting procurement department and it was evident we needed innovative assistance to remain competitive in the market as well as save much needed expenses as we faced this dilemma. We enlisted a new technology, E-sourcing. We partnered with Medpricer to assist us in our bidding methods.

Prior to Medpricer, with the lack of resources needed to successfully process manual and paper-based Requests for Proposals, we were inefficient and ineffective. Due much to the volume of bids, many times staff would renegotiate contracts leaving us in a non-competitive state. Many of our vendor partners remained stagnant as they were very comfortable that there was no competition.

However, with the inception of the Medpricer forum we found we were able to quickly and successfully bid product lines from clinical beds to miscellaneous services using less of our resources and having an astounding impact on our contracting process. We are now in our third year partnered with Medpricer with savings in the tens of millions of dollars and all with the same internal resources.

What was the initiative you implemented? When did you start the implementation process? How did those involved impact the desired results? Who was involved in the review process? Please identify by listing individual names and appropriate teams.

We engaged a third party internet based bidding forum. We began using Medpricer in 2008. Medpricer has assisted us in saving over $50 million at the latest count.

Our stakeholders, senior management, purchasing staff and clinicians have all been heavily involved in this process: 

• Betty Gibula
• Rick Kruelle
• Bill Kennett
• Catherine Woods
• Jeannette Marousek
• Deborah Basham
• Elizabeth Friedel
• Dawn Janicki CVAC
• Colleen Cusick
• Tom Galloway, Affiliate Directors of Materials Management
• Cath Lab - Kevin Hsu 
• Kelly Hagin

Describe any challenges you encountered during the improvement process and how you overcame them. I suppose one of the biggest challenges was skepticism. Our stakeholders are rather conservative and to think that this format would yield the results it has was unfathomable. However, after 3 years and I would have to say 98% success rate with this mechanism, it has proven well beyond any expectations.

What have been the tangible results thus far? Please provide estimates of future results. Please identify how you determined and measured your results.

Reference pricing, or current pricing, is used to determine the success of a bid event. Since 2008 and inclusive of our largest construction project to date, our savings have yielded an average of 23%.

In the attached powerpoint this savings total will be edited to reflect savings through October 2011. However, in August of this year, it was calculated at $44 million.

This process assists us in gaining agreement to contract language prior to the actual event as well, which is invaluable when viewing vendor responses to the bid event. Contract language is previously agreed to OR NOT, and in those cases, it is evident that a participating vendor could give pricing concessions, but submits unfriendly contract language. This is just as important as pricing, if not more important moving forward with a contract.

Describe the challenge or problem you/your system experienced that motivated change or improvement. Please also identify the personnel, departments, any suppliers, distributors or GPOs involved in this process.

In many hospitals, a significant percentage of overall supply inventory is managed by disparate clinical groups, often with manual processes and a lack of standardized controls. Nurses spend time away from clinical responsibilities monitoring and ordering supplies yet lack adequate tools to effectively manage inventory levels and reduction of costly special or "rush" orders.

At Northwestern Memorial Hospital, we recognized the reality of these risks to patients and staff and the substantial impacts on cost and efficiency:  

• Double digit supply cost growth rates
• Inventory values were increasing rapidly
• Insufficient visibility to track waste
• Manual replenishment processes
• Significant gaps existed in the billing process 

Compounding the problem was an inability to effectively manage product recalls, expiration dates, regulatory requirements, and the collection of utilization data. Faced with these concerns and the uncertainties of healthcare reform, we undertook a highly innovative approach to drive costs from supply chain while continuing to improve patient safety and quality of care. These improvements have focused on complete workflow redesigns, and fully integrated inter-disciplinary collaboration.

After an initial review of existing options, it was determined that the ideal technology solution was not yet available from our traditional vendors. We expanded our search and ultimately found a new partner from outside the healthcare industry. To ensure our success Supply Chain personnel partnered with each of the following:  

• Surgery: management, surgeons & nurses
• MedAssets (GPO): benchmarking and best practices
• CardinalHealth (Distributor): potential data integration
• Advanced Research: technology

What was the initiative you implemented? When did you start the implementation process? How did those involved impact the desired results? Who was involved in the review process? Please identify by listing individual names and appropriate teams.

In 2010 we created a project within our strategic Supply Chain Portfolio designed to address costs in the distribution channel. The chief goals of this project were to optimize inventory levels, eliminate waste, maximize charge capture, minimize nursing time spent on supply management, and automate inventory processes.

To be successful, this project required top down support from senior management through front line inventory and patient care staff. Gary Fennessy, Vice President of Operations was the executive sponsor and Brian Stepien, Director of Supply Chain and Eric Hartlauf, Manager of Supply Chain were the key improvement leaders. Collectively with leaders from patient care and our medical teams, Northwestern Memorial Hospital was able to successfully develop a series of new inventory controls, centralize supply management processes and implement a fully customized RFID supply tracking solution.

Some of the key highlights from this project include the creation of a centralized "Implant Store", a partnership with caregivers to drive down inventory and waste, a charge capture reconciliation process and a customized RFID platform, all co-developed with nursing and tailored around their existing workflow.

Supply Chain along with nurses and surgeons partnered in all aspects of design and implementation of new workflows and technology. The resulting RFID platform is robust, scalable and has been designed with multiple modules to accommodate different environment and workflows including: 

• Self service kiosks 
• Remote cabinetry 
• Existing storage RFID retrofitting 

These unique platforms allow for the implementation of controls and automation across multiple disciplines and geographies.

Describe any challenges you encountered during the improvement process and how you overcame them.

The key to the success of this project was to engineer a complete overhaul of existing processes. One principle concern was overcoming the culture changes associated with Patient Care relinquishing responsibility for supplies.

For many years this had been a clinical function and the caregiver shared a real sense of anxiety around supply availability and potential impacts on patient care. To manage concerns and develop trust, Supply Chain partnered with key clinicians to build and implement a detailed transition, ensuring their involvement and input throughout the project.

Other key challenges included a general lack of industry benchmarks and a clear roadmap for improvement. Very little data related to inventory turns and waste was available. Additionally, a universal understanding of the role and importance of effective inventory management presented a real challenge.To date, cost containment has traditionally focused on unit pricing with little regard for costs generated through mismanagement of supplies or the impacts of surplus inventory on cash flow.

The last major hurdle was addressing Northwestern Memorial's lack of automation and dependency on outdated processes. At the outset, any ability to retrieve critical product information (i.e. lot numbers, expiration) meant physically surveying the shelves. We now have product visibility at the touch of a button through implementation of RFID. Product information is housed on a chip that is retrievable in a real time fashion for replenishment, charging, and general inventory management, allowing us to:  

• Reduce inventory
• Minimize waste
• Automate replenishment
• Streamline patient charging

What have been the tangible results thus far? Please provide estimates of future results. Please identify how you determined and measured your results.

In a short period of time Northwestern Memorial has realized significant cost savings and workflow improvements in surgical services alone:  

• $4.1M or 23% reduction in on-hand inventory (carrying costs) 
• 25% increase in inventory turns 
• $900K or 57% decrease in asset write-offs associated with waste 
• $3.3M increase in charge capture (based on product cost) 
• Supply Chain now manages 99% of the targeted OR inventory, up from 46%  

These accomplishments represent substantial gains from a financial management perspective. The true benefit, however, is the multi-disciplinary approach that has fundamentally improved Northwestern Memorial's entire supply chain delivery model. Nurses have more time dedicated to patient care and the appropriate inventory is always available preventing delay of treatment and potentially improving throughput.

Cutting-edge technology from outside of the healthcare spectrum has brought innovation, efficiency, and scalability to our overall program. Planning already is underway to expand into the clinical laboratories, central sterile supply and pharmacy again with an expectation of dramatic cost reductions and improved workflow.

As the industry prepares for the changes and pressures that healthcare reform will no doubt bring, these types of efforts ensure that Northwestern Memorial Hospital is well positioned to provide the best possible outcomes in a manner that is both effective and efficient.

Describe the challenge or problem you/your system experienced that motivated change or improvement. Please also identify the personnel, departments, any suppliers, distributors or GPOs involved in this process.

We needed to develop a successful inventory planning methodology that supported our key performance metrics for our new self-distribution model (CSC) at Orlando Health. Our goal was to maintain and then exceed clinical expectations and vendor requirements during the transition from conventional distribution.

Our goal was achieved by the collection of procurement and consumption data which was then analyzed not only by our inventory experts but by an electronic tool to achieve higher-than-ever fill-rates and lower back-orders while attempting to achieve the Perfect-Order with our manufacturers.

This process included members of our operational and logistic teams with support from our vendor partners, as well as our self-contracting (HPA) business unit. Reduction of overall inventory levels, increased inventory turns and a scientific way to monitor daily inventory planning activities further supported the increased customer service levels achieved.

After collecting one year of data, we were then able to utilize this information to exceed our KPI goals and increase customer service levels, while also moving appropriate surgical and cath lab inventory from the hospital supply areas to the CSC where they could be managed and monitored utilizing our demand-forecasting process.

This has provided a formalized process to decrease obsolescence, rotate soon to expire products and decrease waste within our multiple surgical arenas. Inventory planning in our environment works best when cross-functional processes of human and technical resources are used.

What was the initiative you implemented? When did you start the implementation process? How did those involved impact the desired results? Who was involved in the review process? Please identify by listing individual names and appropriate teams.

The decision to invest in a demand forecasting tool was made before we fully realized the future benefit the software would offer. As a novice in the distribution environment, we knew that managing inventory levels in the scope of a consolidated service center was different than a hospital central supply and also knew the risks would be higher, so the decision in 2009 to invest in the future was warranted and validated by our VP/CIO executive sponsor on the advice and input of our supply-chain executives.

The warehouse management system was implemented with data collection fed to the demand forecasting tool for a year before our operational team had a comfort zone to value the data and know how to utilize it in daily operations. For the first year of operation our inventory planners (Buyers) utilized a traditional method to order supplies which was largely based on what was used during a select period of time, their personal knowledge and working relationship with the vendor.

Instinctively more products were ordered than needed so that the fear of "running-out" did not become a reality. Our evolution included many training sessions with our operational team so they understood the way the system calculated the data, how it was collected, and the accuracy of the output - they had to trust the data before they could use it routinely.

Currently they have been able to achieve more realistic inventory levels and ordering patterns that support our internal/external customers while also supporting our fiscal goals.

Describe any challenges you encountered during the improvement process and how you overcame them.

As we started the data-collection process the team had to develop a way to look at inventory management differently. A change in their normal buying activities and relationship with the vendors had to support the process that was now being designed and this was difficult for some since the software was an unknown entity.

The ability to calculate bulk purchases that are largely based on low unit of measure consumption as well as the various lead times from manufacturers, independent shippers, substitution/conversion and seasonality requirements are usually enough to cause havoc to a normal day for an inventory expert, but now to have to also use an unproven tool that may affect customer service levels was a little too much for some.

Constant reinforcement of the data elements and functionality of this tool supported by frequent training sessions and a dedicated resource to help manage the data output, as well as testing the data on real Buyer decisions (without support from the tool) validated the accuracy, which slowly helped change the culture of the team.

They now feel very comfortable using this new process on a daily basis and have all demonstrated proficiency using the software. They have also seen the value of the data with a documented reduction in idle inventory and increased fill-rates. Back-orders have been kept at a minimum and their inventory turns have increased, which all support the corporation's clinical and financial strategies.

What have been the tangible results thus far? Please provide estimates of future results. Please identify how you determined and measured your results.

Our use of the demand forecasting tool has allowed us to meet our clinical and financial goals with our internal and external customers. Balancing the needs of our clinical teams and our vendors can now be achieved by using data driven on true consumption with projections based on variable parameters.

Ongoing use of this data will allow us to maximize the space within the CSC as well as allow us the ability to continue to absorb more inventories from areas that have space constraints and inventory management challenges. We believe that our core competency is to manage inventory and when we reduce the amount of time our clinical teams have to spend doing so, this definitely gives them much needed time for patient-care activities.

As we evolve into providing other services, we expect to utilize demand-forecasting data to make our operational and logistical functions more effective as well as help us develop unique relationships with our vendor partners so that we can achieve the Perfect-Order.

This tool gives us a new way to partner with our industry partners as visibility and data-sharing lead to trust which are qualities that can make us both successful. Using data to accurately forecast what your consumption will be can offer valuable production information to our vendors which ultimately helps to keep both of us in stock without tying-up needed dollars and providing our clinical teams with the right product at the right time for the right price.

Describe the challenge or problem you/your system experienced that motivated change or improvement. Please also identify the personnel, departments, any suppliers, distributors or GPOs involved in this process.

Banner Health incorporated Supply Utilization as one of their Strategic Initiatives in 2010. In accordance with Banner's Operating Model, Banner works with our clinicians and physicians in an effort to reduce cost by eliminating utilization variances and misalignments specific to supply consumption.

The initiative is seeking to achieve cultural transformation such that utilization management is an ongoing daily focus for everyone within Banner Health.

What was the initiative you implemented? When did you start the implementation process? How did those involved impact the desired results? Who was involved in the review process? Please identify by listing individual names and appropriate teams.

The Strategic Initiative is to work collaboratively with physicians to decrease supply utilization per procedure by reducing physician-sensitive procedurally related supplies.

The 2011 Base Target is $2M and the Stretch Target is $2.8M in supply savings in the Cath Lab and OR supply expense. The supporting and implementing teams are:

• Senior administration
• Facility Leadership including C-Suite
• OR and Cath Lab leader across all facilities
• System value analysis teams 

The system reviewed the case cost and supply variation of Laparoscopic Cholecystectomy, Laparoscopic Appendectomy, Laparoscopic Incisional and Inguinal Hernia and Laparoscopic Bowel Resection. Along with numerous supply reduction ideas from the various facility OR and Cath Labs.

Describe any challenges you encountered during the improvement process and how you overcame them.

The review work is being done by two groups: general surgery clinical subject matter experts and a general surgeon work group.

The Surgeon Work Group found it challenging when a recommendation was required to standardize to a sole source product or recommend a physician preference product as a best practice product. The surgeons wanted a peer oversight body and larger representation of Banner general surgeons along with a process for system product recommendations.

The General Surgery Surgeon work began their work under Supply Chain Management Supply Utilization Strategic Initiative then moved under the Banner Surgery Clinical Consensus Work Group as an ad hoc team.

The Physician Participation in Supply Selection ad hoc work group was created, which has ten general surgeon members and lead by the Banner SCCG physician chair. They created three supply process flows; one for products that come into the system, a second for product trial and validations and a third for physician communication.

The physician supply process flow is selecting its first product to move through the process. The result is having a physician created process that is reliable and can be repeated for various surgeon specialties to review and recommend supply selection.

What have been the tangible results thus far? Please provide estimates of future results. Please identify how you determined and measured your results.

Supply Utilization has met the 2011 Base Target and is on track to meet their Stretch target. The Banner Health's 2012 Strategic Initiative for Supply Utilization base target is $14M up from $2M and stretch target of $17M up from $3M in 2011.

The three regional VP CFOs were added as core team members and a 2% supply reduction was removed from the 2012 budget.

Describe the challenge or problem you/your system experienced that motivated change or improvement. Please also identify the personnel, departments, any suppliers, distributors or GPOs involved in this process.

Healthcare reform is forcing health systems, especially large, complex organizations to look at operations from a totally new perspective.

The list of challenges is extensive:

• mandated changes in recent healthcare legislation
• trends among private payers to reduce reimbursement
• more focus on transparency and patient satisfaction
• potential increase in volumes
• likelihood that all payers will sink to rates on par with current Medicare rates 

Like many other healthcare organizations, Memorial Hermann is facing additional financial challenges that are negatively impacting operating income. To achieve this work, the Supply Chain Management (SCM) department needed to become even more instrumental to creating more accountable and sustainable processes regarding supply spend in the organization.

What was the initiative you implemented? When did you start the implementation process? How did those involved impact the desired results? Who was involved in the review process? Please identify by listing individual names and appropriate teams.

Memorial Hermann engaged with VHA to take a cross collaborative approach to reducing supply expenses. Dubbed the "30 in 2" project, the project targeted a $30 million identified savings guarantee to be achieved within a 24 month period, placing both parties at risk if the savings goal was not achieved.

Within only 11 months, the team met their desired goal and pushed the successes much further. Currently, the team has already achieved identified savings of over $45 million, of which $30 million has already been implemented.

Describe any challenges you encountered during the improvement process and how you overcame them.

There were several primary challenges listed below: 

1. Work with and listen to various stakeholders across the system to understand their needs and construct a creative solution and drive to execution with collaborative partnership.
2. Ensure stakeholder alignment for all parties involved (Physicians, C-Suite, Department Directors, VHA and Suppliers) with a consistent and easy to understand goal.
3. A centralized adaptable supply chain must be customer centric coupled with collaboration and sourcing expertise can drive substantial financial results.
4. Dynamic communication methods and means must be used to reach all levels in the organization.
5. Organization must be culturally ready and the initiative must be supported at all levels throughout the organization.

What have been the tangible results thus far? Please provide estimates of future results. Please identify how you determined and measured your results.

Within only 11 months, the SCM team met their desired goal and pushed the successes much further. Currently, the team has already achieved identified savings of over $45 million, of which $30 million has already been implemented.

Collaboration within the system coupled with the clinical and contracting resources of VHA allowed SCM to drive Supply Expense as a percentage of net operating revenue to the lowest levels within the last decade, which is currently less than 13.5%, down from 18% just 5 years ago. Additionally, Supply expense and supply expense per adjusted admits beat prior year performance.

External comparison has shown that the system is leading the country within the Supply Chain arena as seen with consultations with Barnes Jewish Healthcare from St. Louis, MO and Ochsner Healthcare from New Orleans, LA and winning the SURE award from Healthcare Purchasing News.

While many of these initiatives were decentralized and fragmented SCM used project management and financial review to streamline the above process as they all create operational cost reduction. SCM continues to drive down cost amidst $45 million of the supplies used on uncompensated patients.

Describe the challenge or problem you/your system experienced that motivated change or improvement. Please also identify the personnel, departments, any suppliers, distributors or GPOs involved in this process.

Rampant non-labor supply expense, changes to reimbursement from health care reform and impaired visibility to product usage at the point of care are serious issues confronting health care providers today.  These factors caused Mercy to impose a system-wide mandate to reduce operating expenses by $400 million and increase margin by 3% over five years.  Determined to drive cost out of the supply chain, ROi, Mercy's supply chain division, looked both externally and internally for solutions. ROi looked at other industries to determine best practice solutions, and  benefited by having one of the best examples in our own backyard: Walmart Corporation, headquartered in Bentonville, Arkansas — one of Mercy's communities. Walmart makes significant use of scanning technologies in almost all aspects of their business and requires product data synchronization with all trading partners. These practices set the stage for our GS1© Standards-enabled Perfect Order project.  Perfect Order, a standard prevalent in many industries, including retail, is a “purchase order processed electronically (from order to payment) without human intervention, delivered to the correct location, on time, undamaged, at the right price, with the desired quantity, on the first attempt.”  The process started as a joint effort between Mercy as a provider and BD as a direct supplier.  The effort quickly grew to include the GPO, distributor, software providers (Lawson, TECSYS, Omnicell/Optiflex) and supply chain middle players like GHX and GS1.

What was the initiative you implemented? When did you start the implementation process? How did those involved impact the desired results? Who was involved in the review process? Please identify by listing individual names and appropriate teams.

The initiative was to improve Mercy's technology infrastructure and implement use of GS1 data standards well ahead of industry sunrise dates to enable end-to-end Perfect Order processes through true system-to-system transactional processing.

Through a collaborative effort, Mercy/ROi and BD (Becton, Dickinson and Company) implemented GS1 Standards at each step from manufacturing to patient bedside, realizing significant benefits along the way, including those associated with patient safety initiatives and an optimized supply chain.  This end-to-end global data standards integration represents the first time a U.S. health care provider and manufacturer used the Global Location Number (GLN) and Global Trade Item Number® (GTIN®) in both supply chain and clinical processes.  BD and Mercy leveraged the usage of GTIN identification from product conception to patient use and utilized GLNs to synchronize account and location information. 

The collaboration between Mercy/ROi and BD began in February 2009 and took two years to complete. Both organizations are redesigning business processes, modifying business rules and leveraging  investments in information technology to better serve patients and enhance operations.  Key Team Members Include:  Alex Zimmerman and Curtis Dudley, Mercy/ROi, Dennis Black, BD, and a long list of individuals who made this collaborative project possible. 

Describe any challenges you encountered during the improvement process and how you overcame them.

The biggest challenge encountered was the absence of technology support in our ERP system.  In order to transact using GS1 Standards the system needed to store new data elements, search and find values differently, order, issue and receive differently.  We were fortunate to work with a progressive organization that was well aware of GS1 data standards and willing and able to apply them. Working together with Keith Lohkamp from Lawson Software on the GS1 Application & Enablement Workgroup led to our participation as a lead adopter in the alpha development of their new software build.

Another challenge involved reconciling information with our trading partners. In order to replace proprietary customer numbers with GLNs we had to crosswalk existing codes to new ones.  Facility locations our supplier thought were Mercy’s turned out to be a different health system and vice versa. The same issues arose with GTIN reconciliation, requiring exhaustive research and analysis to overcome.

Coordinating activities presented another challenge. Setting up EFT/ACH requires working with banks for routing numbers, treasury and accounts receivable departments for contacts and capabilities and coordinating with IT departments about remittance advices.                             

A final challenge was supporting parallel processes in every day production activities.  Our master item file team must know to load GTINs for respective suppliers, IT must support two different sets of EDI maps, the master data management team must support a parallel GLN roster, and our quality team must manage another set of SOPs.

What have been the tangible results thus far? Please provide estimates of future results. Please identify how you determined and measured your results.

Mercy enjoys positive, tangible results from this process.  First is a 30% reduction in days payable outstanding (DPO).  Reductions in DPO result from complete automation of processes, most notably including use of EFT/ACH with remittance advice.  This affects how quickly suppliers receive funds paving the way for improved early pay discount capture and strengthened future contract negotiations. Measuring this result was easily calculated by averaging the number of days from invoice date to payment.

Second is a 73% reduction in purchase order discrepancies.  These discrepancies halt automated processes requiring manual intervention by Purchasing or A/P.  This reduction is a direct result of switching to GS1 Standards because use of GTIN causes vendor part # and units of measure to be irrelevant. Measuring this result was observable by comparing differences between PO and confirmation.

Mercy experienced perhaps even greater, albeit less tangible, results in the area of patient safety.  Patients and clinicians at Mercy are benefiting from the same technology, data standards and processes utilized by other industries worldwide.  Mercy utilizes bedside scanning to ensure the right patient has received the right product at the right time. When a nurse scans a product barcode at a patient’s bedside, that product has been scanned and tracked at multiple points from the factory to the patient.  Scanning leads to the ability to manage specific lot numbers, manage expiration dating, and improve product tracking during product recalls, when the product has been logged into the patients EHR.

Describe the challenge or problem you/your system experienced that motivated change or improvement. Please also identify the personnel, departments, any suppliers, distributors or GPOs involved in this process. HHC is facing extraordinary financial deficits. Specifically, we will have a budget shortfall of more than $1 billion in fiscal year 2011 (which begins July 1, 2010) and in the following years thereafter. What does this mean to us as an organization? It will mean that there is not enough money in the budget to continue to work the way we do. This will require us to re-think the way that we operate our facilities and provide much of our care. The Road Ahead is a restructuring initiative that HHC is undergoing to become a more cost-effective, more efficient, and stronger organization. To meet new economic demands, to rise to the challenges of delivering healthcare today, and to plan for the future, HHC must act now. Depatments and staff are enagaged at all levels on various projects. Note that projects specific to Supply Chain will be addressed here. HHC partnered with Cardinal as a prime distributer, GHX for technology solutions, Premier for its GPO and GNYHA for the care and feeding of implemented techology and contract maintenance. Through these partnerships HHC has been able to drive product starndardization, standard work and savings.

What was the initiative you implemented? When did you start the implementation process? How did those involved impact the desired results? Who was involved in the review process? Please identify by listing individual names and appropriate teams. In 2009, the Restructuring Steering Committee leaders from across HHC began analyzing, planning, and working to identify options to be considered as part of The Road Ahead, HHCs restructuring strategy. The Restructuring Steering Committee met often, consulted with outside experts, and established a broad agenda for change. In the spring of 2010, the Restructuring Steering Committee deliberated, reviewed, and evaluated a range of very specific options, some of which have been selected, some of which were rejected. The decision-making process balanced the need for deep cost-containment actions with concern and consideration for HHC employees, targeted opportunities for growth, and the importance of preserving HHCs historic mission to care for all.

Describe any challenges you encountered during the improvement process and how you overcame them. Resistance, compliance and technology posed challenges to our success. We enaged our COO and other senior leaders to endorse the work we were doinng. Significant efforts were made by our Corporate Office to communicate better with the field. And extreme technology utilization has helped to flush out issues.

What have been the tangible results thus far? Please provide estimates of future results. Please identify how you determined and measured your results. Savings to date total $8m with the expectation to hit $21m by june 2012.

Describe the challenge or problem you/your system experienced that motivated change or improvement. Please also identify the personnel, departments, any suppliers, distributors or GPOs involved in this process.

St. Joseph Health System (SJHS) is committed to three goals: 

1. Perfect care
2. Sacred encounters for their patients
3. Building healthy communities in the areas in which they serve 

In continuing to achieve these goals, SJHS realized the need to reduce overall costs by a significant amount over the next 5 years.  The effort to achieve Medicare breakeven was termed as  “Value Imperative” (VI) to accomplish this goal.  Of the many value imperatives identified, the Supply Chain Value Imperative calls for the reduction of supply cost by $27.4 million in the first three years. 

The Supply Chain VI transforms a traditional model to a clinically driven model that will increase clinical effectiveness, ensure appropriate product utilization and create standardization. The Supply Chain Imperative uses physician engagement, commitment and follows through from local hospital executives and department heads and collective buying power to drive down pricing of physician preference, clinical and commodity products. The Clinical Effectiveness Committee  (CEC) was established to drive physician led decisions. This Committee oversees the process, approves the initiatives and validates the savings.  The CEC consists of practicing physicians and CMOs from each SJHS Ministry. 

SJHS has established the Department of Clinical Effectiveness (DCE) to work in conjunction with the Clinical Supply Chain Department. In addition to the traditional materials management focus, the DCE is responsible for communication, service line expertise, oversight of implementation, research of new technology and validation of savings.

SJHS’s GPO (MedAssets) and Distributor (Cardinal) also have significant roles as partners in this newly designed Supply Chain.

What was the initiative you implemented? When did you start the implementation process? How did those involved impact the desired results? Who was involved in the review process? Please identify by listing individual names and appropriate teams.

Twenty-eight product lines were identified, prioritized, scheduled for implementation, and documented on an “Opportunities List”. Highest priority items included high dollar opportunities, mainly physician preference items (PPI) and opportunities for high dollar commodities savings, such as Office Supplies. It is important to note the opportunities List is a living document with bi-weekly updates.

In July, to move forward with the VI, the first order of business was to appoint the CEC membership. The CEC included the Chief Medical Officer (CMO) a practicing  physician, a named “Ministry Executive” and members to support activities, including Clinical Supply Chain leadership.

Next was to establish the infrastructure of the new Clinical Supply Chain Department.  A VP of Clinical Supply Chain was hired; job descriptions were written and posted.  A Director of Clinical Service Lines and a Director of Non-clinical Service Lines were hired and engaged in the process.  Required standards of work were identified and developed using LEAN methodology. 

This process includes clinical research, review of the product categories, analysis and validation by the Clinical Supply Chain.  These opportunities are then reviewed by the CEC for action.  Since the process is driven by the CEC and clinical staff, product acceptability and buy-in is gained up front.The CEC approves the Clinical Supply Chain Department manages the RFP process. 

Communication to the hospitals is vested with the CEC. The CMO and the ministry work with hospital executives to implement any changes. 

Describe any challenges you encountered during the improvement process and how you overcame them.

The number one challenge was communicating to and educating the physicians, department heads and staff on the new processes.  Roles for communication have been formalized and tools for communication have been built.  Members of the CEC are conscientious and have made fully vetted decisions,created opportunities for consensus, thereby creating solutions that are sustainable.

A short time frame was given to establish the CEC and hiring for the Clinical Supply Chain infrastructure. Savings on the initial opportunities needed to be reported, starting on July 1, 2011.  The supply chain staff at the time had to take on the new responsibilities from analysis, to meeting with clinicians, to contracting and tracking the savings by the 15th of each month.   Reporting savings termed “realized benefits” is done via Sharepoint in a pre-established template.  Preliminary analysis to establishing baselines, and reporting realized benefits  has been challenging.  Solid data is always challenging and the available data sources are not always completely reliable. 

SJHS has hired internally as much as possible.  This brings both clinical and organization expertise to the team. 

What have been the tangible results thus far? Please provide estimates of future results. Please identify how you determined and measured your results.

The tangible results in the 1st quarter of the VI have been significant.  SJHS has established 28 savings opportunities with a projected savings of over $27 million.  They have prioritized the opportunities and have identified additional savings opportunities to back fill any shortfall. 

SJHS has implemented 12 of the initiatives and has realized $1.9 million in actual savings in the first quarter of the VI.  This is especially impressive since the savings measurement is based on actual usage and the new price paid each month against the established baseline.  This monthly measuring of actual savings is painstaking, but keeps the progress in front of all involved and allows for quick adjustments if savings are not hitting expectations. 

Based on current results and the pipeline established, SJHS believes it will exceed its supply savings goal of 27.4 million over the next 3 years. 

In addition to the realized savings, more important, SJHS has establish a process that involves physicians, clinicians, materials management staff and executive management at the ministry and system level to drive savings while increasing clinical outcomes.  This process and cooperative effort will lead to success not only in supply chain savings, but in the establishment and execution of other Value Imperatives that will be established to meet the overall savings goals of the system.  This process is unique and offers an alternative to full vertical integration.

Describe the challenge or problem you/your system experienced that motivated change or improvement. Please also identify the personnel, departments, any suppliers, distributors or GPOs involved in this process.

UPMC faced significant challenges related to managing and controlling Services based spend. And, according to a recent study from the University of Tennessee, we were not alone - many organizations fall prey to a similar lack of consistency and clarity regarding the definitions, tools, and processes used in managing Services spend. In fact, Procurement Leaders magazine estimates that nearly 50% of corporate procurement spending is for services, and for even the most proficient enterprise, services spending can still be an abyss of unsourced buying and lost savings opportunities.

As UPMC spends over $500,000,000 on services, the opportunity for improved compliance was enormous. At UPMC, invoicing and other payment-related issues for services were prevalent-match exceptions required rework and unnecessary delays in payments to suppliers. Blanket purchase orders were being abused both internally (across a variety of clinical and non-clinical departments/business units) and by vendors, limiting spend visibility and appropriate controls. Most invoice activity for Services was not automated, as the invoice approval process for Services was either paper-based and cumbersome or did not occur at all.

We had virtually no options within our existing system to handle progress payments driven by milestones or the percentage of a total dollar value. It was difficult to control costs for Services, as there were no methods were available to capture or define rates and ensure that the rates were correctly applied to each order and related invoice.

What was the initiative you implemented? When did you start the implementation process? How did those involved impact the desired results? Who was involved in the review process? Please identify by listing individual names and appropriate teams.

UPMC implemented and customized the PeopleSoft Services Procurement module, developed related business process and deployed an externally-facing Supplier Portal to increase control over services spend, reduce the need for blanket orders, decrease related match exceptions and realize efficiencies for internal staff and suppliers alike.

A cross-functional, cross-organizational team (comprised of staff members from UPMC Strategic Sourcing/Purchasing, Systems Support, Software Development, Consulting Services, Accounts Payable, Project Costing, General Finance/Accounting, Construction & IT Project Accounting, General Ledger an external consultant and select IT end users) led by Kim Madden (Senior Process Consultant) was formed to address the problem.

The implementation process began with initial proof of concept testing with Services Procurement and the Portal, related gap analysis, and business process/functional/technical design in 2010.

In early 2011, customizations/software development, build, testing and pilot deployment followed. The high-performance nature of the project team enabled close collaboration and nimble software development as new requirements surfaced based on integrated testing. Involvement from Strategic Sourcing (Mike Ferguson, Rick Greiner, Kelly Hetrick) and internal end users (Jason Vollero, Howard McEachern) in the pilot stage provided important feedback that has been leveraged to continuously improve the business process and overall solution.

Systems Support team members (Marianne Rolin and Jeff Fabus) were instrumental in translating test results and end user feedback into meaningful, actionable requirements that the software development team could use to further enhance the stability and usability of the product.

Describe any challenges you encountered during the improvement process and how you overcame them.

Most challenges were related to the Services Procurement software itself, which did not function adequately as delivered to address UPMC's requirements. Intensive testing revealed that a relatively large patch was needed from Oracle in order for a critical component (deliverable-based Work Orders) to function properly. This entailed a fair amount of additional development and testing that was not anticipated. A substantial development effort and time investment was required to complete all required customizations and address issues identified in integration and regression testing. The team compensated by adding resources and revising the timeline.

Few organizations have deployed Services Procurement in the manner that best met UPMC's needs (Deliverable-based Work Orders/Progress Logs) and there were virtually no opportunities to compare notes or benchmark. Few Healthcare organizations with whom we have benchmarked have even begun to pursue a spend management program for services such as this. The team addressed this by leveraging technical resources to "pick apart" and understand the application and executing comprehensive proof of concept and integration testing related to the detailed functional requirements, resulting in what we believe is a best-of-breed solution.

Services Procurement configuration offers an overwhelming number of options - determining the appropriate setup for UPMC was time-intensive and involved a great deal of "trial by error" investigation. By involving the proper stakeholders/team members, defining detailed business/functional/technical requirements, leveraging good communication tools such as a prioritized issues log & team meetings the team was able to deliver a superior product while minimizing the impact of issues experienced.

What have been the tangible results thus far? Please provide estimates of future results. Please identify how you determined and measured your results.

UPMC has already begun to realize the following benefits from this implementation: 

• leveraged our existing eProcurement (online requisitioning) application and SOX-compliant approval workflow for Services orders
• increased use of contracted rates and suppliers
• improved control by introducing "invoice" approvals that are performed by the original requester of the service
• eliminated match exceptions and related rework
• automated formerly manual invoice processes for both UPMC and the suppliers
• provided self-service inquiry capability to help suppliers apply payments for services correctly (and reduced payment inquiries to SCM staff)
• reduced use of/need for blanket orders 

UPMC has implemented Services Procurement and related processes with 4 suppliers to date, with an additional 20 suppliers planned by the end of our fiscal year in June.

End user feedback is extremely positive, with one commenting, "Thank you all for the assistance in creating the progress logs and set up that made paying the supplier such a painless process. Very nicely done!"

Our estimates, based on the non-compliance metrics around existing spend indicate that on average, for every 50 suppliers onboarded, UPMC can expect $3.5 Million in annualized hard dollar savings.

Describe the challenge or problem you/your system experienced that motivated change or improvement. Please also identify the personnel, departments, any suppliers, distributors or GPOs involved in this process.

Cooperative Services of Florida (CSF) members spend over $40m annually on Cardiac Rhythm Management (CRM) implants. Member(s) quarterly bulk buy savings opportunities were forgone based on cash flow and/or inefficient inventory management.

All stakeholders believed greater efficiencies were obtainable through a comprehensive re-engineering of the traditional model. Stakeholders included CSF negotiators, LeeSar Distribution infrastructure, Cath Lab Leadership & Physicians and CRM implant manufacturers.

What was the initiative you implemented? When did you start the implementation process? How did those involved impact the desired results? Who was involved in the review process? Please identify by listing individual names and appropriate teams.

CSF endeavored to contract for routine bulk purchases of high volume CRM implants and self distribute to members through sister company LeeSar Regional Service Center. Begining with the initial stocking order of $10m on October 2, 2009, the CRM logistical reengineering process was officially underway. CSF negotiated dual source manufacturers to secure pricing considerate of future efficiencies generated for all parties' individual and collective benefit. 

The LeeSar Distribution Infrastructure provided a secure climate controlled environment and established an accountable ordering, receiving, inventory management, and delivery execution assuring no interruption in clinical services. Quality and sustainability was achieved through dedicated personnel and adoption of formal Policy & Procedure for high value Physician Preference Items (PPI). Cath Lab Leadership & Physicians were engaged for their support and to assure uncompromising clinical process performance.

The implant manufacturers were integral in establishing baseline inventory & par levels, appropriate technology selection and subsequent optimization of inventory replenishment. The threefold review process is CSF-Vendor, LeeSar-Vendor and Member-Vendor. CSF oversees contract value, LeeSar assures procedural quality control and Member interacts with vendor to maintain current technology within pricing constraints.

Describe any challenges you encountered during the improvement process and how you overcame them.

The greatest challenge following the process reengineering was establishing and implementing Distribution Policy and Procedures necessary to assure high quality service and program sustainability. Key stakeholders worked together to remove existing products, revise down end point inventories, modify member product replenishment ordering, delivery through secured pathway and reconcile to assure optimum product utilization.

Major change can result in a return to the previous model. This can occur through a process breakdown at any one of mulltiple intersections. Critical step reviews expose opportunities for further value including the discovery of vendor seven figure savings from reduced trunk stock and product expiration. By exposing value to all stakeholders through concientious review, everyone's buyin is spontaneously compounded. The Policy and effective execution over the first few months delivered forcasted value and secured the PPI projects long term adoption.

What have been the tangible results thus far? Please provide estimates of future results. Please identify how you determined and measured your results.

All parties to the PPI category recognize the significant impact implant costs represent to the health care industry. CSF, believing waste existed in the current model, began with a multi-year baseline analysis of CRM implant costs and sought out opportunities to expand upon our alternate LeeSar distribution model.

The traditional consignment model which included a multi-month par level was replaced with a substanially reduced product inventory. Bulk Buys, while offered quarterly, were not consistently advantaged by members. The new model rendered them the routine method of inventory acquisitions. Previously, implant invoices were managed through individual members and vendors vs. LeeSar assuming financial responsibility for the purchase and settlement of vendor CRM invoices.

The major and minor savings collectively resulted in a value creation of over $10 million dollars in year one. This savings continues to be improved upon in year two assuring continued support for the model and stimulating expansion into additional PPI categories.

Describe the challenge or problem you/your system experienced that motivated change or improvement. Please also identify the personnel, departments, any suppliers, distributors or GPOs involved in this process.

Spanning 11 health system, the Texas Purchasing Coalition (TPC) is a member-owned supply chain partnership that functions as a virtual IDN and represents hospitals across the state of Texas.

The TPC saw an opportunity to realize cost reductions in five historically problematic supply categories: 

1. Suture
2. Endomechanicals
3. Trocars
4. Mesh
5. Topical Skin Adhesives 

Pricing is historically controlled by the suppliers with annual price increases common. The Texas Purchasing Coalition's (TPC) Council (Member Supply Chain Executives) decided to pursue these categories as standardization opportunities after extensive data and market review, a competitive bid process (RFP), and clinical input from the TPC Perioperative Clinical Value Analysis Team.

The TPC Corporate staff partnered with their GPO, MedAssets, and Aspen Healthcare Metrics to develop the contracting strategies and then followed with collaborative implementation across the membership. After review by the TPC Council and Perioperative Clinical Team, the best value was offered by Covidien in these five categories and the decision was made to standardize to Covidien across the TPC. The TPC worked closesly with Covidien to ensure that ample clinical and economic evidence supported the conversion strategy and ensure all stakeholders received adequate training.

Strategic and logistical planning included the teams already referenced and also included Covidien, the Med/Surg Distributor, Cardinal, physician champions at each facility and the support and active engagement of the C-Suite.

What was the initiative you implemented? When did you start the implementation process? How did those involved impact the desired results? Who was involved in the review process? Please identify by listing individual names and appropriate teams.

The categories were identified in 2010 and extensive data and market analysis was conducted. Three of the 11 members had previously successfully converted to Covidien. The TPC Council voted to move forward with the release of an RFP in late 2010. The bid responses were analyzed and the data was presented to the TPC Council and they voted to proceed pending input from the TPC Perioperative Clinical Value Analysis Team.

The Perioperative Team met in January 2011 and supported the strategy and helped refine the categories and evaluation criteria. Additionally, the TPC Board of Managers (Member CEOs) validated the decision to move forward with standardization to Covidien across the TPC.

Sandy Wise, Director, Clinical Resources, TPC was selected to be the TPC champion for this project. Stacey Campbell, Aspen Healthcare Metrics, was the subject matter expert working collaboratively with the stakeholders. Administrative support was provided by Geoff Brenner, CEO, Healthcare Coalition of Texas/TPC, Jon Pruitt, VP, TPC, and Roger Nolan, Sr. Vice President, Aspen Healthcare Metrics. Tripp Edwards, Covidien, was the project lead for the evaluation and implementation.

Strategic planning and pre-implementation administrative/physician meetings began in May and actual evaluations began at various times during June and July. The clinical recommendation vote (for Covidien) was completed in August and then taken to the TPC Council for a vote to contract with Covidien in all five categories (Suture, Endomechanicals, Trocars, Mesh and Topical Skin Adhesives).

Describe any challenges you encountered during the improvement process and how you overcame them.

The key to our success was the collaboration between all stakeholders to include the C-Suite. As with any standardization project there were challenges and many lessons learned.

One significant challenge was the need for eight of our eleven members to conduct evaluations simultaneously over a span of 2 months with resources that were often shared. Covidien deployed additional resources and members worked together to stage the evaluations to ensure that each member had representation from their primary sales representative. One member was unable to participate due to a competitor's manufacturing plant being a major employer in their city.

There were challenges with data validation based upon actual utilization. The data required re-validation after physician practice patterns were observed and product usage numbers revised.There were also issues with products that did not have cross references available.

These discrepancies altered the savings potential, however, the savings was still significant and with communication the TPC was able to mitigate the issue. While the our Med/Surg distributor (all members are standardized to Cardinal) it would have been beneficial to engage them earlier in the process and provide a forum for ongoing communication to ensure adequate inventory availability and a seamless process for returns, pricing discrepancies, back orders, etc.

It was also imperative to have physician to physician interaction and would have been helpful to have engaged a broader base of "Covidien" surgeons.

What have been the tangible results thus far? Please provide estimates of future results. Please identify how you determined and measured your results.

The TPC signed agreements with Covidien for each of these five categories. Nine of the eleven TPC members are now committed to trocars/endomechanicals; eight are committed to sutures; eight are committed to topical skin adhesives; six are committed to mesh with two in the evaluation process.

The cumulative clinical acceptability across the system was over 95% with many comments of clinical superiority. The spend in these categories among the TPC members is an estimated $14 million and the savings across the system is approximately 20% on a recurring basis.

Members validated their pre-conversion spend and then validated their post-conversion spend including the impact of price increases where competitive product was still utilized. Covidien and the TPC champion continue to monitor the conversion process and work closely with member organizations.

The first business reviews will be scheduled for January, 2012. Quarterly business reviews will be ongoing and Covidien representatives continue to support the members onsite and continue to work with the few physicians that did not convert initially.

The TPC analytics team will continue to monitor contract compliance and validate the spend and savings realized throughout the life of the agreement. This project was pivotal to the TPC not only in these categories but was a success to demontrate the ability of the members to truly come together and standardize on historically difficult categories. The message to the supplier community and within the TPC membership is powerful and solidifies the ability of diverse IDNs to function as one.

Describe the challenge or problem you/your system experienced that motivated change or improvement. Please also identify the personnel, departments, any suppliers, distributors or GPOs involved in this process. Many of the hospitals in the Upper Midwest region were facing sharply increasing pressures to reduce supply expenses. These pressures were coming directly from the Board, CEO, and CFO offices. This was driven by continued rising supply costs and declining reimbursement. Adding to this was the belief that significant supplier price variability existed for the same products across the region. Though hospitals benefit from utilizing GPO contracts, it was difficult for a GPO to guarantee providers commitment to a supplier in order to harvest stronger contract value; this difficulty reduces the GPO's contracting leverage with the vendor community. In addition, it was challenging for providers, in many categories, to obtain enough contract value to justify supplier standardization. Without supplier and product standardization, providers are forced to pay higher prices for medical/surgical products. It was evident that something had to be done. It was apparent that hospitals and IDN's needed to come together to aggressively attack these problems. To address these significant challenges, leaders from seven IDNs began meeting in 2007 in Edina, Minnesota with the VHA Upper Midwest Office to discuss forming a regional purchasing model. These leaders included CFOs, CMOs, CEOs, and SCM executives. After many brainstorming meetings and numerous discussions with legal counsel, the UMCSC alliance opened on July 1, 2008. The founding members were Sanford Healthcare, MeritCare, North Memorial, Allina Healthcare, ProHealth, CentraCare, and Mayo Clinic. The corporate headquarters of these IDNs are based in North Dakota, South Dakota, Minnesota, and Wisconsin.

What was the initiative you implemented? When did you start the implementation process? How did those involved impact the desired results? Who was involved in the review process? Please identify by listing individual names and appropriate teams. The challenges described in section one were addressed in 2007 and 2008 with the scoping and legal formation of the Upper Midwest Consolidated Services Center (UMCSC). Architecture of the UMCSC was achieved by senior executive leadership from seven Founding Members and supported by VHA Upper Midwest. An effective governance structure consisting of a Board and three committees (Finance, Operations, Clinical) has enabled UMCSC to exceed its objectives in savings, contract portfolio growth, and expense management in each year since inception (2008). Three classes of membership provide opportunities to large, medium, and smaller spend members. Board and Clinical Committee involvement have proven to be difference makers in the implementation of Physician Preference Item contracts. Sourcing and Contracting in three common areas (Commodities, Clinical Preference, Physician Preference Items) was the initial focus activity with a deliberate plan from the founding to expand past this function into other additional areas. Additional Products contracting and a freight management program are areas of expansion in 2011. Members have developed a strategic roadmap extending to 2014. A Business Development committee was established in 2011 and will be vetting additional program opportunities.

Describe any challenges you encountered during the improvement process and how you overcame them. Key challenges have included enhancing the Physician Preference Item (PPI) contracting process, setting a strategic roadmap, and promoting effective communication. In 2009, the PPI contracting process was enhanced to include subject matter experts (SMEs) from though out the UMCSC membership that are selected via a formal application process. These roles include clinical subject matter experts (primarily surgeons) and contracting experts who provide an advisory role to the primary contracting team. Other enhancements at this time included a more active role from the clinical committee in reaching out to physicians within the UMCSC, and the establishment of a coordinated “quiet period” regarding new product demand between members and suppliers. The net impact of these changes in the PPI contracting process was that more value was delivered to members and suppliers. Members achieved greater savings and suppliers grew their business. At a strategic level, the members needed to begin defining what would be addressed next after sourcing and contracting. The outcome of this effort was the formation of a Business Development Committee (staffed by select members from the existing committees and Board) and a multi-year strategic roadmap. Communication has been enhanced through extensive use of an internal member website and expansion of communications and cc’s via email. The member website allowed the UMCSC to automate several processes that had once been manual.

What have been the tangible results thus far? Please provide estimates of future results. Please identify how you determined and measured your results. The results have exceeded member expectations. Highlights include: - the UMCSC has negotiated and aproved over 200 product agreements - contracts consist of 84 physician preference, 79 clinical preference, 29 commodity and 10 additional product agreements - realized member first savings have surpassed 75 million - to date members have averaged 12% savings per agreement. many of the smaller to midsized members have a higher average than 12%. - the initial membership of 7 members has grown to 37 - the regional landscape of the UMCSC has grown from hospitals in 8 states to 18 states - in 2011, a Business Development committee was created to focus on other areas of opportunities for collaboration. Approval was given to move into the additional contracting categories of Capital Medical Equipment, Purchased Services, Pharmaceuticals, and Information Technology. Other areas under review are for-profit ventures, procurement operations, materials ERP platforms, and distribution. - members have shared best SCM practices with each other resulting in greater efficiencies and improved processes - an annual UMCSC Supplier Forum event is held each fall. The 2011 Supplier Forum had 400 supplier representatives in attendance. The first year member financial savings is calculated by the UMCSC Data Team at the VHAUM offices. Financial savings are only calculated for the first year of a contract. Savings include line item price savings, loyalty rebates that cover all sales, and any new, custom GPO admin fees that are earned. The UMCSC Finance Committee oversees and approves all financial savings