1 Advancements in Supply Chain Management Our Cost Savings JourneyJereme C. Sutton, MBA Administrator, Supply Chain Management, Vidant Health
2 Objectives Attendees will:Know progressive strategies for supply cost savings Define projects within each strategy Understand the keys to success in our cost savings journey
3 Real Objectives Learn from each other Have fun! Build a hospital
4 Vidant Health System of Care12,000+ employees 8 hospitals 80 physician practices Outpatient, home health and hospice services Critical care transport Serving 1.4 million people in 29 counties of Eastern NC Net operating revenue $1,500,000,000+ Affiliation with Brody School of Medicine at East Carolina University 4
5 Vidant Health System of Care
6 Vidant Health by the numbers (VMC)Licensed Beds: 1447 (900) Cardiac Cath procedures: (5342) Admissions: 64,388 (44,517) Open Heart surgeries: (853) Outpatient Visits: 330,836 (277,888) Employees: 11,889 (7,000) ED Visits: 273,688 (117,508) Level 1 Trauma Facility Surgeries: 46,544 (21,453) Net Operating Revenue: $1,581,069,000 Air/ground transport: 12,345 Births: 6,019 (3,591) The numbers for VH are based on FY 2015 VMC in parenthesis and is our Flagship facility in Greenville Just wanted to give you a sense of scale
7 Vidant Health Growth and expansion
8 Our cost savings journey
9 VMC Savings Potential to 25th PercentileProduct Line Savings to Internal 25th Percentile Benchmark General Surgery $5,234,765 Spine Surgery $4,669,646 General Medicine $4,097,674 Pediatrics $2,585,803 Cardiac Procedures $2,578,508 Cardiac Surgery $2,370,092 Orthopedics Surgery $2,316,761 GI Medicine $1,524,724 Cancer Medicine $1,522,423 GI Surgery $1,437,425 Neuro Medicine $1,022,425 Cardiac Medicine $877,649 All Other $6,136,141 Grand Total $36,374,035 * Supply includes Supply, Implant, Drug and Non-Charge
10 Decision matrix and quality factorValue = Quality / Cost Decision Matrix Quality Higher Same Lower Cost Decision Analyze Accept Reject
11 Objective 1 Attendees will know progressive strategies for supply cost savings Audience participation Pricing Standardization Utilization
12 Where do you believe the strategies fit?Pricing - Standardization - Utilization High Do last Do first Reward Low Effort High
13 General location of strategiesHigh Utilization Pricing – (PPI) Standardization Reward Pricing - (Commodities) Low Effort High
14 Objective 2 Attendees will be able to define projects within each strategy
15 Pricing Pricing – (PPI) Reward Pricing - (Commodities) Effort High Low
16 Pricing Let’s build a foundation for our hospital AdvantagesType of projects can vary largely Effort can range from low to high Benchmarking typically available Disadvantages Limited over time Pressures increasing on vendors Need structure in place for PPI
17 Pricing project examplesPPI cost reduction (Implants) Hip/Knee ($1 Million) Trauma ($500,000) Biological Mesh ($200,000) Commodities cost reduction Correct Tier Assignments Purchased services Service contracts Instrument/scope repairs Utilities Managed Print Services Freight Management
18 Standardization High Standardization Reward Low Effort High
19 Standardization Let’s build the walls of our hospital AdvantagesMedium effort Items are already being used Staff education and care process standardization Disadvantages May require clinical evidence Requires broad engagement Difficult to measure “votes”
20 Standardization project examplesStrategic Vendor partnership ($1.3 Million) Trocars ($450,000) Orthobiologics ($300,000) Patient cleansing products ($40,000)
21 Utilization High Utilization Reward Low Effort High
22 Utilization Let’s put the roof on our hospital AdvantagesHigh rewards Opportunity to engage clinical staff Wide range of projects Disadvantages Differing opinions Evidence is not always readily available May require order set and care pathway changes
23 Utilization project examplesBlood (> $1 Million) BMP - Infuse ($600,000) Linen utilization reduction ($250,000) Antibiotic Cement to non-antibiotic cement ($75,000) Pricing transparency to help reduce ($?)
24 Stumbling blocks Fragmentation Physician engagement Speed to value
25 Fragmentation solutionCreation of structure Vidant Health CQVA Committees Cardiac Perioperative Medical Equipment Vidant Coordinating groups Nursing practice council Commodities Utilization Team (CUT)
26 Physician Engagement SolutionRehabilitation Pathology Cardiovascular Behavioral Health Children’s Hospital Women’s Cancer Adult Medicine Emergency Services Surgery Neurosciences OR/Anesthesia Radiology Creation of dyads Medical Executive Committee Administrative Council
27 Speed to value solutionFocus on finance and quality Presentation to physician group for review Business Case Presentation Recommendations on product and vendor selection and preference and utilization guidance Facilitated Discussion (2 weeks) Vendors provided < 30 days to respond to RFI Physician agreement to refrain from communication Vendor Bidding (30 Day) Final decision and recommendations Physician Decision (2 weeks) Decision published Execution of decision by stakeholders Implementation of Decision 1 2 3 4 5
28 Results - Total VH Savings since January 2014As of 4/1/2017 Savings rate of over $10,000,000/year
29 Results
30 Results – details and trending
31 Q4 2017 results by facility Ranking Hospital Name Value RankingParkland Health & Hospital System - TX $1,568 2 Beaumont Hospital - Royal Oak - MI $1,781 3 UMASS Memorial Medical Center - MA $1,819 4 Vidant Medical Center - NC $1,834 5 Baystate Medical Center - MA $1,835 6 Wake Forest Baptist Medical Center - NC $1,885 7 University of Mississippi Medical Center - MS $1,929 8 Shands Jacksonville - FL $1,947 9 MedStar Washington Hospital Center - DC $1,954 10 SUNY Syracuse, University Hospital - NY $2,140 11 NYU Medical Center - NY $2,160 12 Brigham and Womens Hospital - MA $2,171 13 Shands at University of Florida - FL $2,250 14 University of Alabama Hospital - AL $2,301 15 Stony Brook University Medical Center - NY $2,303 16 University of Cincinnati Medical Center. - OH $2,305 17 Saint Luke’s Hospital of Kansas City - MO $2,360 18 Barnes - Jewish Hospital - MO $2,361 19 University of Iowa Hospitals & Clinics - IA $2,447 20 Medical Univ Hospital Authority of S Carolina - SC $2,471 21 Duke University Medical Center - NC $2,519 Ranking Hospital Name Value 22 Thomas Jefferson University Hospital - PA $2,545 23 The Nebraska Medical Center - NE $2,548 24 Froedtert Memorial Lutheran Hospital - WI $2,589 25 Cedars-Sinai Medical Center - CA $2,651 26 University of Chicago Hospitals, Chicago - IL $2,728 27 University of Kentucky- corporate - KY $2,749 28 University of Utah Hospitals & Clinics - UT $2,750 29 OSU Medical Center – Academic Medical Center - OH $2,779 30 University of Virginia Medical Center - VA $2,805 31 Virginia Commonwealth Unversity Health System - VA $2,862 32 Vanderbilt University Medical Center - TN $2,921 33 UCSD - Health System, San Diego - CA $2,941 34 University of Kansas Hospital - KS $2,961 35 Robert Wood Johnson University Hospital - NJ $3,021 36 University of Kentucky Hospital - KY $3,088 37 MedStar Georgetown University Hospital - DC $3,098 38 University of Colorado Hospital - CO $3,187 39 University of Maryland Medical Center - MD $3,310 40 University of Minnesota Med Ctr Fairview Universit - MN $3,393 41 University of California Davis Medical Center - CA $3,468 42 University of Wisconsin Hospital & Clinics - WI $3,626
32 VH Cost savings results by typeCY 2016 CY 2017 Last 24 months Pharmacy 13% 32% 23% Pricing 38% 42% 40% Process Improvement 1% 11% 6% Purchased Services 24% 2% Standardization 0% Utilization 22% 12% 17% Total implemented savings $ 9,150,517 $ 8,898,830 $18,049,347
33 Objective 3 Attendees will understand the keys to success in our cost savings journey
34 Keys to success Urgency creation Executive leadership SupportPhysician engagement Structure creation Data driven decisions Tools Flexibility
35 In conclusion - Let’s buildPricing (the foundation) Standardization (the walls) Utilization (the roof) https://www.youtube.com/embed/-adB-7c6bXw Thank you for your time and participation today!