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 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


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


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


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

  • 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

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 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 CostReductionInitiative

1st and 2nd Quarter 2012 Cost Reductions By Service


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


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

  • 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

  • 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

  • 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


Questions


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