Transcript Maximizing Cost Savings through Effective Process

Maximizing Cost Savings Through Effective
Process, System, and Contract Management
Melissa Amell
Director, MMIS and Value Analysis
Brian Mikel
Director, Materials Management
Saint Thomas Health Services
Nashville, TN
Overview
 Saint Thomas Health Services Background
 Organization Structure
 Materials Management Information
Systems (MMIS) Background
 Value Analysis Background
 Relationship and System Management
Saint Thomas Health Services
(STHS) System Structure
 St. Thomas Health Services
 4 hospitals in middle Tennessee
 $200 Million supply budget
 Over $1 Billion annual revenue
 Baptist Hospital
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600 beds
6,500 babies delivered each year
Largest total-joint hospital in the area
Official healthcare provider for the Tennessee Titans
and Nashville Predators
Saint Thomas Health Services
(STHS) System Structure
 St. Thomas Hospital
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571 beds
One of the top five cardiac programs in the nation
More than 245 heart transplants
52,000 open heart procedures performed
 Middle Tennessee Medical Center
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286 beds
30 different medical specialties
Over 55,000 patients visit the ED
2,500 babies delivered each year
Saint Thomas Health Services
(STHS) System Structure
 Hickman Hospital
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Critical Access Hospital
Senior Care program
Local home health program
Nursing home
STHS Previous State
 System-level value analysis teams did not exist
 Each facility operated independently
 Separate materials management systems
 Limited corporate sponsorship
 Limited accountability for cost savings and
contract compliance
Previous Value Analysis
Team (VAT) Structure
 Prior to development of current structure, VAT
program made little progress
 Prior structures allowed for little interaction between
hospitals
 Limited Clinical Representation
 Representation in the past restricted the ability to
“standardize” across all hospitals
Supply Chain Structure
Vice President
Logistics Services
& Support
Environmental
Services
(Contractor)
Bio-Med
(Contractor)
Food & Nutrition
(Contractor
Materials Director
Purchasing Director
MMIS / Value
Analysis Director
Mailroom Supervisor
(1)
Operations Manager
(3)
(one per hospital)
Purchasing Agent
(2)
Senior Supply
Analyst
(3)
Mail Clerk
(4)
Supervisor
(5)
Buyer
(8)
Supply Analyst
(3)
Materials
Management Team
Lead
(7)
Materials
Management
Specialist
(52)
Value Analysis
Assistant
Materials Management Information
System (MMIS) Structure
Vice President
Logistics Services
& Support
Director
MMIS
& Value Analysis
Senior Supply
Analyst
Surgery Items
Senior Supply
Analyst
Contract Management
Senior Supply
Analyst
Item Master
Product Conversions
Supply Analyst
Item Master
Approval Process
Supply Analyst
Vendor Master
Item/Contract Research
Supply Analyst
Item Master
Product Conversions
Value Analysis
Assistant
MMIS Structure
Responsible for maintaining these master files:
 Item
 Vendor (AP and PO)
 Location
 Vendor item
 Contracts
 Approval Process and
 Requesters
MMIS
Through the establishment of MMIS:
 Data is standardized and accessible
 Item, vendor, and contract master files are only
accessed/maintained by the MMIS group
(changes are logged in audit trails)
 Contract pricing is evaluated (audited) against
actual purchases
 Contracts and/or purchasing patterns are
modified as discrepancies are identified
Value Analysis Team (VAT)
Structure
Vice President
Logistics Services
& Support
Cardio-Vascular
E.P.
Director
MMIS
& Value Analysis
Surgical Services
Medical/Surgical
Medical Imaging
and Cath. Lab
Support Services
Pharmacy
Lab
Value Analysis Team (VAT)
Structural Importance
 Current structure promotes system standardization
 Multi-disciplinary participation
 Clinical representation is key to
selection/implementation success
 VAT priorities supported by senior leadership
(i.e., system CEO, COO, CFO)
 Appoint key clinical leaders and ask leaders to
select operational representatives (clinicians are
required for success)
VAT Purpose
 Reduce non-wage expenses while providing
quality products and services
 Create a structure that supports product and
service utilization
 Standardize vendors, products and services
 Manage new products and technology
 Identify and convert to best practices and
protocols
VAT Objectives
 Provide a strong, system-wide VAT framework
 Increase management, employee and physician
awareness, while increasing participation and
accountability for decision making and
management of non-wage costs
 Communicate product utilization guidelines
VAT Objectives
 Communicate system-wide policies and
procedures
 Assure timely, consistent processes for vendor
selection, product introduction, trial/evaluation
activities, and conversion
 Monitor and measure product and service
utilization
 Document and track savings
VAT Meeting Structure
 Meetings are facilitated by the MMIS/VAT
Director, and initiatives/topics are updated via the
assigned task leader
 Each VAT meets monthly or as determined
necessary by the group (e.g., bi-monthly)
 Meeting minutes are recorded, published, and
reviewed by team members
 Initiatives/topics identified during meetings are
assigned to hospital representatives
VAT Meeting Structure
 New initiatives are added/discussed as required
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Contract expiration
Corporate direction
GPO decisions
Clinical preference (physician/nursing)
Product effectiveness/quality
Conversion timing, buy-outs, and obstacles
Safety
VAT Meeting Structure
 Executive Sponsorship/ Leadership from
the C-Suite
 Future agenda items include updating the team
on initiatives/topic progress
 Meetings are scheduled for 2 hours
 MMIS/VAT Director reassigns tasks as required
and follows-up with contracted vendors
VAT Process
 Identify opportunity
 Discuss product requirements
 Identify vendors
 Conduct cost comparison
 Evaluate/select products
 Convert
 Document savings
Cross Reference Cost Analysis
Current Items
Current
Current
MFG
Conversion
Annual Current Extended
Facility Facility ID# Location Distributor Manufacturer Description Product #
Factor
Packaging UOM Usage
Cost
Cost
Proposed Items
MFG
Law son
Product Conversion
Each
Annual
Manufacturer Num ber Description
#
Factor
Packaging UOM Price Cost Savings Savings
Standardization
 Standardization examples
 Orthopedic implants (3 vendors) over $1 million
savings on $15 million spend
 CRM/CRT products (2 vendors) $859,000
savings
 Spinal implants (3 vendors) $400,000 savings
 Cochlear implants (2 vendors) $291,000 savings
 Peripheral Products (2 vendors) $462,000
savings
Standardization
 Limited vendor benefits include cost savings
and reduced O.R. time (e.g., setup)
 General medical supplies – 90 percent contract
compliance – single distributor
 Moving to direct shipments where appropriate
 Current direct conversion will result in $60,000
annual savings (one vendor)
Savings Documentation
 A project sheet is maintained by the MMIS/VAT
Director for each team (templates can be sent upon
request)
 After conversion, savings are tracked for 12 months
 Potential opportunities are listed
 Realized savings are reported quarterly to VAT and
system leadership
VAT Project Sheet
Project
Drug Eluting Stents-Price
Reduction
Baptist Hospital
St. Thomas Hospital
Middle Tennessee Medical Center
Closure Devices
Baptist Hospital
St. Thomas Hospital
Middle Tennessee Medical Center
Baptist Hospital
St. Thomas Hospital
Middle Tennessee Medical Center
Ablation Catheters (per AH doc)
Baptist Hospital
St.Thomas Hospital
Middle Tennessee Medical Center
Nat'l / Team Launch
End Date
Local Leader Date
Projected
Annual
Savings
Projected
Projected
FY08
Qtr 1 FY07
FY07 Savings
Savings Savings
Impact
Impact
N
Cline Jul-06 Jun-07
$ 504,710
$ 504,710
N
Cline Jul-06 Jun-07
$ 236,420
$
46,800
$ 117,300
$
27,610
$
630
$
44,080
$ 236,420
$ 46,800
$ 117,300
$ 27,610
$
630
$ 44,080
N
$
4,123 $
4,123
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
23,125
2,325
20,800
13,890
2,000
600
270
11,020
-
Qtr 2 FY07
Savings
Qtr 3 FY07
Savings
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$ 25,320 $ 16,100
$ 4,350 $
725
$ 20,970 $ 15,375
$
- $
$ 2,100 $
500
$ 1,500 $
500
$
- $
$
- $
$
- $
$
600 $
$
- $
$
- $
$
- $
$
- $
$
- $
-
$ 86,615
$ 900,891
22,070
2,185
19,885
12,619
1,000
600
11,019
-
Qtr 4 FY07
Total YTD
Savings FY07 Savings
$ 29,109
$
-
Pacemakers and Defib's
Baptist Hospital
MTMC
St. Thomas Hospital
L
Cline Jul-06 Jun-07
$ 900,000
$ 900,000
$ 242,889
$ 117,577
$
670
$ 124,642
$ 162,467
$ 62,343
$ 1,080
$ 99,044
$ 245,269
$ 59,823
$ 2,757
$ 182,689
$ 250,266
$ 71,193
$ 7,699
$ 171,374
Heart Failure Devices
Baptist Hospital
St. Thomas Hospital
Coronary Stent Pricing
Baptist Hospital
St. Thomas Hospital
MTMC
Cardiac Grand Total
L
Cline Jul-06 Jun-07
$ 450,000
$ 450,000
L
Cline
$ 200,000
$ 200,000
$ 81,000
$ 28,000
$ 53,000
$
$
$
$
- $ 360,904
$ 89,000
$ 33,000
$ 56,000
$
$
$
$
$ 286,156
$ 39,000
$ 30,000
$ 9,000
$
$
$
$
$ 311,689
$ 35,000
$ 244,000
$ 23,500
$ 11,500
$
$
$
$
$
$ 301,866 $ 1,260,615
$ 2,295,253 $ 2,295,253 $
VAT Success
 Annual Savings:
 FY2005 - $12.8 million
 FY2006 - $10.15 million
 FY2007 - $14.5 million
 FY2008 (Projected) - $11.2 million
VAT Success
 FY07 (by VAT):
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Cardiac - $1.260 Million
General Medical - $1.552 Million
Pharmacy - $2.310 Million
Surgery - $1.841 Million
Lab - $430,736
Support Services - $6.979 Million
Imaging - $213,455
Managing Relationships
 MMIS works with the vendor community and
inventory managers to insure
 Proper cross-referencing
 Adherence to contracts
 Coordination of buy-outs
 MMIS maintains conversion schedules and
communicates timeline/manages project plans
 MMIS team reminds inventory managers when
conversions have not been completed
Managing Relationships
 Hospital leadership must support VAT decisions
(even if physicians disagree)
 C-suite involvement from system president to
department managers
 Physician liaison required
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Vice President of Logistics for STHS
Meets with physicians
Coordinates initiatives with senior leaders
Participates on each VAT
Works through issues between vendors, VAT, and
physicians
Contract Management
 Centralized contract management provides tools
for pricing resolution
 Purchasing agents can research confirmations
against contract pricing, but cannot update
contract prices
 Properly maintained contracts are compared to
actual purchase orders to determine pricing
discrepancies
 Centralized maintenance provides the ability to
examine contract compliance with each vendor
System Requirements
 Systems must be able to support centrally
managed contracts, masters, audit trails, and
security
 System security restricts access within master
files, contracts, and other functions
 Restrict accounts payable and purchasing from
master file maintenance
System Requirements
 STHS allows access to the MMIS group
(8 associates)
 Purchasing/AP associates must also submit
requests for new items/vendors
 Contract start/end dates and related pricing
must be maintained
Keys To Success
 Establish policies and procedures for system
processes (MMIS and customers)
 Restrict access to systems and master files
 Make effective use of audit trails
 Obtain organizational leadership support
 Ensure research is performed on each vendor,
item, and contract addition (reduce duplicates)
Vendor Master Form
Vendor Master Form
Vendor Master Form
Vendor Master Form
Item Master Form
Item Master Form
Item Master Form
Item Master Form
Contact Information
Melissa Amell
[email protected]
(615) 222-3030
Brian Mikel
[email protected]
(615) 222-6864