Transcript Embracing the Cost-Quality

Embracing the
Cost-Quality-Outcomes
Movement
The Future of Healthcare Supply Chain
April 18, 2013
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Healthcare Landscape 2012:
Changing Times
Under reform, fully phased-in hospital cuts (2019):
– At BEST, baseline payment MINUS
14% (across-the-board cuts only)
– At WORST, baseline payment
MINUS 20% (across-the-board
PLUS quality cuts)
Hospitals need a comprehensive strategy
to minimize costs while maximizing
quality patient outcomes
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Supply Chain Can Drive that Strategy
Clinical
Costs
Supply
Chain
Revenue
Operations
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Transformational Events
The economic downturn (cost driver) and healthcare reform
(quality driver) are events with far-reaching implications for
supply chain executives and serve as the driving force in the
transformation of the supply chain executive role
Source: HHN Magazine, 11/29/10
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The Evolution of Healthcare Supply Chain
Cost-QualityOutcomes
Utilization &
Standardization
Price Controls
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What is the CQO Movement?
The CQO Movement looks at the intersection of
CQO meaning the relationships between:
• Cost (how it relates to the cost of services,
products, supplies)
• Quality (how it relates to the quality of patient
care, the services provided) and
• Outcomes (how it relates to patient outcomes,
patient care, patient experience, reimbursement)
It is important to consider these relationships together
rather than in separate silos.
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How AHRMM is Reinventing Itself Around CQO
• Education Initiative with three areas of focus:
(A) Quality & Cost
(B) Reimbursement & Outcomes
(C) Continuum of Care
•
Webinars and FAQs
•
Committees
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When Supply Chain Owns
the CQO Intersection:
Case Study Examples
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CQO Movement Asks:
What is unique about its
clinical performance to justify its
cost?
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Challenging Hernia Patient
• Ability to rapidly
revascularize
• Ability to integrate into
host tissues
• Resistant to infection
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Abdominal Wall Reconstruction
Hernia patients with major
complications & comorbidities
account for about 7% of all hernia
repairs
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Potential Economic Impact to Hospital
Potential cost of post-op complications related
to ventral/incisional hernia repair
Hernia Post-op Complication
Potential average cost 1
Infected mesh explant
$30,721
Infection
$11,739
Small bowel obstruction/
other GI complication
$16,069
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Sample Case Costs
SYNTHETIC MESH
BIOLOGIC MESH
Cost of product $2000
Cost of product $13,000
100% Reimbursement -$2000
$32.25/sqcm Reimbursement -$10,240
Cost of treating infection $11, 739
Cost avoidance $0
Total = $11,739
Total = $2760
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Cost Justification
•
•
•
•
Consistent outcomes
Single stage
Decreased complication rates
Avoidance of further surgery
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CQO Asks:
How Do We Reduce Needlestick
Injuries in Healthcare?
•
•
•
>800,000/yr in US
Risk of blood borne pathogens
Education only means of addressing
CQO Asks:
How Do We Reduce Needlestick
Injuries in Healthcare?
• New syringes with improved safety mechanisms
CQO Asks:
What is Unique About its Clinical
Performance to Justify its Cost?
Safety Syringes
• 1 Needlestick
injury/6000 injections
• Average cost of
testing/treatment after
injury equals $3000
• Additional costs of
treatment can add up to
hundreds of thousands
Case Costs: Conventional Safety Syringes
Actual Historical Spend
Average purchase
price
Units
$ 0 .2207
158,700
Purchase Cost
$ 35, 027.00
Needlestick Injury Benchmark
Needlestick Injuries
37
Per Needlestick Cost
$ 3000.00
Total Needlestick Cost
$111,000.00
Total Cost of
Needlesticks/Needles
Total Cost of
Needlesticks/Needles $146,027.00
SUPPLY CHAIN INTERVENTION: DECREASE SAFETY SYRINGE PRICE BY 15%
Average purchase
price
Units
Purchase Cost
Total Savings
$ 0.1876
Needlestick Injuries
37
158,700
Per Needlestick Cost
$ 3,000.00
$ 29,772.95
Total Needlestick Cost
-15%
Total Cost of
$ 111,000.00 Needlesticks/Needles $140,772.95
0%
-3.60%
Note: * Negotiate minimum reduction of $3,500 mesh per unit cost
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Case Costs: New vs. Conventional Safety Syringes
Actual Historical Spend
Average purchase
price
Units
$ 0 .2207
158,700
Purchase Cost
$ 35, 027.00
Needlestick Injury Benchmark
Needlestick Injuries
37
Per Needlestick Cost
$ 3000.00
Total Needlestick Cost
$111.000.00
Total Cost of
Needlesticks/Needles
Total Cost of
Needlesticks/Needles $146,027.00
SUPPLY CHAIN INTERVENTION: CONVERT TO IMPROVED SAFETY SYRINGES
Average purchase
price
Units
Purchase Cost
Total Savings
$ 0.3112
Needlestick Injuries
27
158,700
Per Needlestick Cost
$ 3,000.00
$ 49,387.44
Total Needlestick Cost
41%
Total Cost of
$ 81,000.00 Needlesticks/Needles $130,387.44
-27%
-10.71%
Note: * Negotiate minimum reduction of $3,500 mesh per unit cost
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Case Costs: Conventional vs. New Safety Syringes
Actual Historical Spend
Average purchase
price
Units
$ 0 .2207
158,700
Purchase Cost
$ 35, 027.00
Needlestick Injury Benchmark
Needlestick Injuries
37
Per Needlestick Cost
$ 3000.00
Total Needlestick Cost
$111.000.00
Total Cost of
Needlesticks/Needles
Total Cost of
Needlesticks/Needles $146,027.00
SUPPLY CHAIN INTERVENTION: OBTAIN PERFORMANCE GUARANTEE
Average purchase
price
Units
Purchase Cost
Total Savings
$ 0.3112
Needlestick Injuries
18
158,700
Per Needlestick Cost
$ 3,000.00
$ 49,387.44
Total Needlestick Cost
41%
Total Cost of
$ 54,000.00 Needlesticks/Needles $130,387.44
-51%
-29.2%
Note: * Negotiate minimum reduction of $3,500 mesh per unit cost
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Substantiating Evidence
Tuma SJ, Sepkowitz KA. Efficacy of safety-engineered device implementation in the
prevention of percutaneous injuries: a review of published studies. Clin Infect Dis
2006;42:1159–1170.
Elder A, Paterson C. Sharps injuries in UK health care: a review of injury rates, viral
transmission and potential efficacy of safety devices. Occup Med (Lond) 2006;56:566–574.
Adams D, Elliott TSJ. Impact of safety needle devices on occupationally acquired
needlestick injuries a four-year prospective study. J Hosp Infect 2006;64:50–55.
Whitby M, McLaws ML, Slater K. Needlestick injuries in amajor teaching hospital: the
worthwhile effect of hospital-wide replacement of conventional hollow-bore needles. Am J
Infect Control 2008;36:180–186.
Jagger J, Perry J, Gomaa A, Kornblatt Phillips E. The impact of US policies to protect
healthcare workers from bloodborne pathogens: the critical role of safety-engineered
devices. J Infect Public Health 2008;1:62–67.
Lamontagne F, Abiteboul D, Lolom I, et al. Role of safety-engineered devices in preventing
needlestick injuries in 32 French hospitals. Infect Control Hosp Epidemiol 2007;28:18:23.
Cost Justification
• Consistent outcomes
• Improved quality of hospital experience
• Best practice medicine
Supply chain is perfectly positioned at
the intersection of cost, quality,
and outcomes to take the lead on
responding to the demands of health
reform.
AHRMM is leading the way.
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