Medical supply chain sourcing optimization initiative update
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Medical Supply Chain Sourcing Optimization Initiative Update. Presented to: Navy Medical Logistics Symposium Nancy Richardson Team Lead, Joint Implementation Team Medical Customer Operations Directorate DLA Troop Support Forward Cell June 6 th , 2012. Agenda.

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Medical Supply Chain Sourcing Optimization Initiative Update

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Medical supply chain sourcing optimization initiative update

Medical Supply ChainSourcing Optimization InitiativeUpdate

Presented to: Navy Medical Logistics Symposium

Nancy Richardson

Team Lead, Joint Implementation TeamMedical Customer Operations DirectorateDLA Troop Support Forward Cell

June 6th, 2012


Medical supply chain sourcing optimization initiative update

Agenda

  • Background and Overview of Sourcing Optimization Initiative

  • Realized cost reduction update 2nd Qtr FY 2012

  • Business Intelligence Plan prior to and during Gen IV transition

  • Business Intelligence Plan post Gen IV transition

  • Lessons Learned

  • Approach To Future Cost Reduction Initiatives


Optimization time saving

Optimization & Time Saving


Background

Background

  • Genesis: FY 2010 Joint Logistics Board proposal

  • Follow on initiative: “Sourcing Optimization”

    • Determine opportunities to reduce delivered costs of medical materiel

      • Pharmaceuticals (Brand Name/AB-rated Generic)

      • Med/Surg Consumables (Identical)

  • Joint Medical Team developed proposal containing 8 initiatives to reduce costs by $254M over the 2012-2016 FYDP

    • 2 cost elements: Administrative and Product

  • Approved by OSD and Services/Agency POMs adjusted accordingly

  • Joint Medical Team implemented plan to realize cost reductions and report success

  • Effort proceeding as planned…First and Second Quarter, 2012 results on target

4


Medical supply chain sourcing optimization initiative update

Sourcing Optimization – 8 Initiatives

High Probability of Full Implementation

Medium Probability of Full Implementation

Low Probability of Full Implementation

*Note: Anticipated Realization Of Reductions: Year 1—10%; Year 2—15%; Year 3—25%; Year 4—25% and Year 5—25%


Realized cost reduction tracking tool

Realized Cost Reduction Tracking Tool

  • Initial Cost Tracking Prototype up and functioning as designed

    • Base: 4th Quarter, FY2011…data loaded

    • Target: 1st Quarter, 2012…data loaded

  • Process produces 6 key “excursions” to aid in tracking cost reductions

    • 1. Pharm Cost reductions 5% or greater based on CPOC* recommendations

    • 2. TMOP Cost reductions 5% or greater based on CPOC recommendations

    • 3. Pharm Cost reductions of 5% or greater based on independent actions

    • 4. TMOP Cost reductions of 5% or greater based on independent actions

    • 5. Med/Surg cost reductions of 5% or greater based on eZSAVe

    • 6. Med/Surg cost reductions of 5% or greater based independent actions

  • Reports available at various levels from DoD to individual DODAAC

  • Drill down capability to DODAAC/order level

  • Cost reduction logic is very conservative leaving room for adjustment based on Service/TMOP confirmation

* CPOC: Customer Pharmacy Operations Cell

6


Medical supply chain sourcing optimization initiative

Medical Supply Chain Sourcing Optimization Initiative

2nd Quarter 2012 Realized Cost Reductions

1ST QTR

Realized

Reductions

$9.9 million

High Probability of Full Implementation

Medium Probability of Full Implementation

Low Probability of Full Implementation

7

* Anticipated realization of reductions: Year 1—10%; Year 2—15%; Year 3—25%; Year 4—25% and Year 5—25%


Medical supply chain sourcing optimization initiative cost reductions projected vs actual to date

Medical Supply Chain Sourcing Optimization InitiativeCost Reductions Projected vs. Actual To Date

High Probability of Full Implementation

Medium Probability of Full Implementation

Low Probability of Full Implementation

8

* Anticipated realization of reductions: Year 1—10%; Year 2—15%; Year 3—25%; Year 4—25% and Year 5—25%


Medical supply chain osd cost reduction initiative

Medical Supply Chain OSD CostReductionInitiative

1st and 2nd Quarter 2012 Cost Reductions By Service


Medical supply chain sourcing optimization initiative update

Business Intelligence Tools

Prior to and During Gen IV Transition

  • All users continue to use Best Pharm and National Contract Compliance reports for pharmaceuticals

  • Sites transitioning in June and beyond

    • Review eZSAVe recommendations through month prior to transition

    • Validate key recommended items using Medical Master Catalog (MMC) portal to confirm availability in GEN IV post transition

  • All sites

    • No eZSAVe Med/Surg recommendations available the month of and month after transition to Gen IV

      • Allow GEN IV catalog and receipt data to be collected and analyzed

  • MedPDB will continue to be available before/during/after Gen IV transition

    • MedPDB useful to research items for:

      • Product Sourcing Requests for items not in Medical Master Catalog

      • Commercial items pricing benchmarks

      • Functional equivalents

      • Available items at other sites

      • Packaging and pricing data


Medical supply chain sourcing optimization initiative update

Business Intelligence Tools

Post Gen IV Implementation

  • All users continue to use Best Pharm and National Contract Compliance reports for pharmaceuticals

  • DMLSS users: DMLSS-Retail Sourcing Optimization tools

    • Best Med Report for Med/Surg items

      • Identifies lower priced PVON for identical item

      • Recommends equivalent items (requires clinical review)

      • Phase I … manual build of sourcing record upon selection

      • Phase II…system automatically builds sourcing record upon selection

    • DLA Sourced NSN – Commercial Sourcing Pending Action

      • Identifies commercial sources for NSN items

        • Automatically builds sourcing record upon selection

    • eZSave provides supplemental sourcing optimization functionality

  • TEWLS users continue to use eZSAVe for Sourcing Optimization of Med/Surg items

  • MedPDB will continue to be available after Gen IV transition


Osd cost reduction lessons learned

OSD Cost Reduction – Lessons Learned

  • Data-driven, Collaborative Effort

    • DLA - Enabled, Service - Executed

  • Proactive, Forward-leaning Engagement

    • Services empowered to focus efforts where greatest potential returns

  • Clinically-driven Decisions

    • No decrement to quality of medical care

  • Transparency in Data and Processes

    • Mission partners enjoined in achieving unified goals

  • Goals based on empirical data versus theoretical projections

    • Set realistic expectations early in the process

  • Measure and publish actualized results to leadership

    • Maintain Accountability, Grow Credibility, Prepare Responsibly for next budget challenge

Leading the effort allows us the opportunity to control our own destiny

12


Approach to future cost reduction initiatives

Approach To Future Cost Reduction Initiatives

  • Prepare now

    • Formalize Joint Medical Team…Expand current strategies/explore new

    • Continue to invest in and leverage Business Intelligence tools to identify opportunities to further reduce costs

    • Assign best and brightest to the DLA Customer Optimization Office to refine its capabilities and effectiveness and return expertise to Services

  • Further reduce DoD materiel costs

    • Maximize use of Ecommerce

    • Optimize transition to less expensive equivalents

    • Increase agility to exploit market changes…expiration of patents, etc.

    • Optimize pharmaceutical channel bandwidth (retail, mail order, MTF)

    • Improve, track and recognize discipline, accountability and management

      • Level spending across the fiscal year

      • Manage and use of Prime Vendor credits

DLA…your mission Partner for quality optimized Medical Supply Chain solutions

13


What to do at mtf

What to do at MTF

  • eZ SAVe

    • Follow eZ SAVe SOP on NMLC Web Page

    • Take action on monthly eZ SAVe recommendations, top 20 or all >$1,000 PPR

  • Best Pharm Report

    • Have pharmacist download, review, and make changes, top 10 recommended changes

  • National Contract Compliance Report,

    • Realign item or sourcing for non-compliant purchases, top 10 PPR recommendations


Medical supply chain sourcing optimization initiative update

Questions


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