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Partnering with IDNs for Efficiency and Innovation

Partnering with IDNs for Efficiency and Innovation. Moderator Patrick Carroll, President, Patrick E. Carroll & Associates, Inc . Panelists David McCombs, VP ERP/Supply Chain Operations, Bon Secours Health System Tony Benedict, CPIM , CIO, Vice President Supply Chain, Abrazo Healthcare

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Partnering with IDNs for Efficiency and Innovation

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  1. Partnering with IDNs for Efficiency and Innovation Moderator Patrick Carroll, President, Patrick E. Carroll & Associates, Inc. Panelists David McCombs, VP ERP/Supply Chain Operations, Bon Secours Health System Tony Benedict, CPIM, CIO, Vice President Supply Chain, AbrazoHealthcare Raymond J. Seigfried, MA, Senior Vice President Administration, Christiana Care Health System

  2. Healthcare Reform • Federal health care reform is the result of the March 2010 enactment of the Patient Protection and Affordable Care Act (PPACA) as amended by the Health Care and Education Reconciliation Act • These two laws are commonly referred to together as PPACA, the Affordable Care Act (ACA) or health care reform • Mandates become effective over several years. While health care reform is now law, many implementation details remain unanswered and will be clarified by future regulations and guidance

  3. Reform Impact on Providers • Insurance Coverage • Bundled Payments for Episodes of Care • Pay for Performance • Market Basket Updates • Expansion of Medicaid • Primary Care Funding • Disproportionate Care • Accountable Care Organizations • Hospital Acquired Infections • Preventable Readmissions • Device Taxes

  4. The Response from IDNs • Improve operational performance • Changing decision-makers and influencers • Physician consolidation and integration • IDN/Hospitals mergers and consolidations • Significant changes in the Care Model to create value • Capital/Cash investments redirected • Elevate role, responsibility and expectations of Supply Chain Management 4

  5. The Healthcare Supply Chain • Extremely heterogeneous marketplace • The playing field is not level • Advanced Supply Chain Executives • Focus on Value • Focus on partnerships with suppliers • Middle Level Supply Chain Executives • Focus on Cost • Preliminary discussion of partnerships with suppliers • Lower Level Supply Chain Executives • Focus on Price • The supplier is “tolerated” 5

  6. Value Based Competition

  7. Bon Secours Health System, Inc. IDN Panel: Partnering with Suppliers for Efficiency and Innovation

  8. Presentation Objectives Review four major issues that will impact our future Supply Chain model and relationship with Suppliers: Physician Preference Item (PPI) procurement will move from Contracts to more disciplined Formulary Models to insure optimal clinical outcomes and cost predictability Supply Chain Logistics and Value Optimization Strategies must be integrated across the entire continuum of care Supply Chain must directly support optimizing the Provider’s performance under Value Based Purchasing models Progress toward Global Data Synchronization is critical for provider/supplier transaction efficiencies and data transparency

  9. Profile of Bon Secours Heath SystemGood Help to those in Need

  10. Key Trends for Bon Secours Health System Continued movement to centralization and standardization of all support functions With EPIC installation nearing completion, movement toward standardized care and “hard wired” process/protocols in all locations Aggressive participation in ACO and population health risk • Medicare Shared Services Plan • Covers all BSHSI Acute Service markets in five states • 57,000 beneficiaries as of January 2013 • Partnership with Aetna, community and employed Physicians, other acute non-BSHSI hospitals

  11. Key Issues for BSHSI Supply Chain Partnering with Suppliers for Efficiency and Innovation

  12. 1. Physician Preference Item (PPI) procurement will move from Contracts to more disciplined Formulary Models to insure optimal clinical outcomes and cost predictability Implant Formulary Definition: The main function of the Implant Formulary is to specify specific implant products that are approved for physician use within a facility . Implant products are grouped into functionally equivalent classifications. Within the classification implant products are authorized for use based on evaluation of efficacy, safety, patient outcomes and cost-effectiveness. Differences of a Formulary and Contract Model:

  13. ImplantFormularyDesignexample – Spine hardware; other PPI products include Total Joint, Biologics, Cardiovascular products, Specialty Surgical devices

  14. Implication of Formulary on BSHSI Vendor Relationships • Approved Formulary Vendors – Strategic Partner relationship • Continuous update of all purchase transaction data and priority Accounts Payable and SPS customer service response • Collaborative efforts to streamline transactions, reduce vendor inventory and minimize SGA expense • Collaborative clinical outcome studies • Vendor Access Level 1 to approved clinical areas • Direct Participation in periodic Clinician new product reviews, CVA process • Non-Formulary Vendors – Exception-based relationship • Per case exception approval of all product used • No access to utilization data, clinical outcome data or collaborative studies • Vendor Access Level 3 – restricted access, appointment only • No direct participation in Clinician product reviews, CVA process

  15. Acuity Hospital Community-Based Care Acute • Care Free - Standing ED Ambulatory Procedure Center IP Rehab Retail Physician Pharmacy Practice Sites SNF Post-Acute Care OP Rehab Urgent Care Center Diagnostic/ Wellness and Imaging Center Home Fitness Center Care Home 2. Supply Chain Logistics and Value Optimization Strategies must be integrated across the entire continuum of care

  16. Areas of Focus for Healthcare Continuum Supply Chain Integration Key Activities for Integration: Tracking utilization, cost and correlated outcomes of key supply products across the continuum Focus on cost/utilization management of products/equipment that “follow” patient and support the patient through the continuum Issues • Multiple and non-integrated product distribution processes • Need for Standardization of products across continuum • Expansion of Formularies to covered population • Elimination of waste, duplication in care transition • Pricing models/cost predictability –item, bundled, per acute episode of care, per patient across continuum • Logistical support, distribution, procurement, patient-level customer service • Clinical Value Analysis – New technology assessment, outcomes • Equipment – Total Cost of Ownership, inventory management

  17. Medicare Value Based Purchasing FY’16 Measures 3. Supply Chain must directly support optimizing the Provider’s performance under Value Based Purchasing models Core Measures = 10% HCAHPS = 25% Efficiency = 25% Outcomes = 40%

  18. Impact of VBP Measures on Supply Chain HCAHPS – 25% • Unacceptable for patient to experience changes of direct supplies during care transitions ( trach, lines/ports, Ortho soft goods, etc.) 2. Core Measures – 10% • Supply Chain logistics must support 100% compliance to care process protocols (timeliness of intervention, supply packs, etc.) 3. Outcomes – 40% • Only products that have evidenced-based support for optimal clinical outcome will be utilized 4. Efficiency – 25% ( cost per beneficiary) • Cost measured from pre-acute, acute and 30 day post acute time period • Requires suppliers to directly assist with utilization management and support predictive capped cost per episode of care

  19. 4. Progress toward Global Data Synchronization is critical for provider/supplier transaction efficiencies and data transparency Key Data standards and benefits: A. GLN: Global Locator Number The GS1 Identification Key used to identify physical locations or legal entities. Requires conversion from provider/supplier unique “ship to” identifiers and required crosswalks to standardized GLN Critical to insure right item gets to right location and minimize any transaction or accounting errors B. GTIN: Global Trade Item Number an standardized identifier for trade items developed by GS1 requires conversion from unique provider/supplier item identifiers Critical to support tracking/analysis across many transactional and clinical databases as well as to support transaction efficiencies ( barcode/RFID data capture, etc.)

  20. BSHSI Global Data Synchronization Plan and Status GLN Implementation Plan • Complete internal ERP build and test of GLN for all BSHSI locations – FY 2013, complete • Implement GLN with major BSHSI suppliers and Distributors – FY 2014 Status: Limited Suppliers ready to transact Distributors maintaining legacy “ship to” General lack of urgency GTIN Implementation Plan • Implement as first priority the FDA UDI for Class III High Risk items, including implement process changes in all phases of business transactions and device documentation • Identify high-value categories of products for next phase of Implementation Status: In early stages of assessment Challenge of supporting multiple processes as GTIN adoption progresses

  21. Partnering with IDNs for Efficiency and Innovation Tony Benedict, CPIM, CBPP CIO, Vice President Supply Chain Tenet/Abrazo Healthcare

  22. Biography 2010-Present - Tenet/Abrazo Healthcare, CIO, VP Supply Chain 2010-Present – Association of BPM Professionals, (abpmp.org), President, Director, Board of Directors 2003-2010 – Association of BPM Professionals, VP Relationships, Director, Board of Directors 2006-2010 – Tata Consultancy Services, Senior Manager, Strategy & Operations Management Consulting/Outsourcing 1997-2006 – Intel Corporation, Supply Chain Management, Technology Manufacturing Group 1988-1997 – GlaxoSmithKline, Medical Center Sales

  23. “The New” Tenet Healthcare

  24. Tenet Healthcare

  25. Service Line Feeders to Care Delivery Settings Wellness/Prevention Acute Care Post Acute Care Ambulatory Continuum of Care Clinical Standards Critical Care Hospitalists Emergency Medicine Surgical Services Lab/Pathology Services Imaging Rehab Palliative Care Drive Volume Service Lines Primary Care Cardiovascular Oncology Women Services Neurosciences Orthopaedics Bariatric / Sleep Psych Care & Service Delivery Sites 25

  26. Tenet/Vanguard Integration Challenges Vanguard 28 hospitals GPO – Premier (just switched from HPG 1/13) Similar VAT structure/processes Supply Chain insourced and “regionalized” Low C-Suite Accountability Market based “fiefdoms” Tenet 49 hospitals GPO – MedAssets Similar VAT structure/processes Supply Chain outsourced, not “regionalized” High C-Suite Accountability Geographical regions Imperative to drive $200+ million of cost out of new organization What is best way to structure Supply Chain in the “new” Tenet? There are best practices in each organization, plan is to merge best, drop worst GPO will play role in commodities, PPI strategy going forward?

  27. Healthcare Reform Challenges Tsunami of Baby Boomers beginning transition to Medicare Cost of Healthcare increasing 2x faster than inflation Fee for Service model is obsolete Implications of declining reimbursement on case cost and profitability • Medicare provider payments will face a cut of 2%/yr over nine years (2013-2021). How to bend the cost curve to remain profitable Supply base (PPI) stuck in dollar/margin/market share growth paradigm

  28. Bending the Cost Curve Several opportunities in combination exist to bend the cost curve: • Reduce acquisition costs • Bundled Payments • Disease management/Care Reliability • Medical homes

  29. IT Market DynamicsLeading Software Supplier Market Share (2000 – 2010) 67.5% 2000 2010 50.2% 50% 40% 38.2% EMR Vendors 29.6% 30% Enterprise Software 20% EMR Vendors Enterprise Software 10% Source: Dorenfest Institute & HIMSS Analytics Database (2011) HIMSS, “The Clinical Systems Hospital IT Market, 1998 – 2005” (2006) Scott Weiss, “The Enterprise Software Massacre” (2011)

  30. Risk Platform – Future StateComprehensive portfolio of discrete, integrated assets Aggregate Data Identify Opportunities Deliver Care Demonstrate Outcomes Acquire Customers / Manage Business Experience Analyze Populations Physicians Biometric Lab Avoidable Events Precision Marketing MedicalClaims Utilization Sustain Health Extended Clinical Team Quality Social Footprint Pharmacy Claims Remote Monitoring Cost Reduction Mitigate Risks Communications Extended Care Team PHR Registry Clinical Gaps Manage Conditions & Events Scheduling CRM EMR Risk Management External Referrals Internal Referrals CCD Revenue Cycle HIE Employer Enable Multi-Modal & Multi-Site Interactions Social Communities Web Email Mail Telephonic IVR Face-to-Face Home Care Text/Mobile 30

  31. Individualized Longitudinal Analytics Performance / Payment = Value Creation / Value Demonstration Illustrative Care Episode (2) AllowedDollarsPaid Additional acutephases may beavoided or delayed Surveillance/Risk mitigation AcutePhase Risk mitigation PostAcutePhase Longitudinal analytics

  32. Cost Prediction AnalyticsAnd this model – chasing historical claims data – is all wrong Medical and Pharmacy Costs Diabetics with Heart Failure Event Quarters before and After High Cost Event Months before and After High Cost Event

  33. The Healthcare Supply Chain • The future is a volume based game for supplies, the intention of ACA is to commoditize healthcare • Suppliers need to think long term and redefine what “partner” means to IDNs and themselves • Suppliers need to design for safety, predictable outcomes and cost, not just margin 33

  34. Christiana Care Health System Wilmington, Delaware Raymond Seigfried Senior Vice President Administration

  35. Paradigm Change “The current system is not a health care system; it is a sickness and disability-care system. Getting rid of illness, what we don’t want, is not the same as maintaining wellness, what we do want.” Russell Ackoff 2003

  36. Value formula that sustained volume and profit Value = ProductQuality Price

  37. New World Value Formula Value = Patient

  38. Innovation that supports health Adds value Improves quality of care Improves quality of life

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