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New England Society for Healthcare Materials Management

New England Society for Healthcare Materials Management. Ken Peterson, Vice President System Logistics Management Aurora Health Care. April 16, 2004. A **. 2. Committed to Finding a Better Way. Making Health Care a Competitive Advantage for Wisconsin Companies and Citizens. 3.

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New England Society for Healthcare Materials Management

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  1. New England Society for Healthcare Materials Management Ken Peterson, Vice President System Logistics Management Aurora Health Care April 16, 2004

  2. A ** 2

  3. Committed to Finding a Better Way Making Health Care a Competitive Advantage for Wisconsin Companies and Citizens 3

  4. Using Web Based Technology & the Internet as a Driver Agenda Aurora at a Glance Focus on Operating Margin Materials Goals to Support Aurora Strategy Aurora’s Use of the Web & Internet Improvements & Successes Lessons Learned 4

  5. Aurora Health Care at a glance Largest community owned, not for profit, integrated network in Wisconsin Largest private employer in State of Wisconsin: Employees: 27,162 Hospitals: 13 Acute Care and 1 Psych hospital Clinics: 113 Retail Pharmacies: 143 Revenue: $2.4 billion Supply Expense: $571MM Total Certified Beds: 2,598 Adult Inpatient Days: 430,973 5

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  7. The Three Part CommitmentTo the People of Eastern Wisconsin • Whatever the national benchmarks are for price increases for 2003 through 2005, Aurora Health Care will be below • Aurora Health Care will initiate actions to moderate total community health costs while demonstrating improved community health • Aurora Health Care will be accountable to the community and transparent in its success in meeting its commitments 7

  8. Focus on Improving Operating Margin Moderate Total Community Health Costs Maintain Growth to meet needs of Community Replace Aging Capital Support New Technology (Speed/Cost of Change from an IS as well as from a Clinical stand point) 8

  9. Effectively make use of Web-enabled technology and the Internet Increase/Enhance Customer Service(s) 1. Web Based Requisitioning Tool Improve Productivity 1. Transmitting Transactions via Internet 2. Automating the Capital Process • Reduce Costs/Improve Productivity • 1. Contract Management Program • (Premier’s e-Sourcing Program) • See and Identify Opportunities to Reduce Costs 9

  10. Web Based Technology & the Internet Increase/Enhance Customer Service(s) 1. Web Based Requisitioning Tool • Automated Single User Interface for procurement • Vs use of multiple (proprietary) platforms • (Aurora’s tool is IREQ -Intranet Requisitioning) • (Global Healthcare Exchange (GHX)’s tool is “Catalyst” ) • Centralized all transactions through MMIS • Means to support Outlying Users • From 200 Users to 2700 Users (Began Implementation 2001) • Lock Down/Approval features to assist departments’ control costs 10

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  12. Web Based Technology & the Internet Improve Productivity 1. Processing Transactions via the Internet: Aurora: Using XML (Extensible Markup Language) to process the 3 major ordering sets over the Internet via GHX to suppliers or direct to Cardinal Health --- (PO (850), Confirmation (855), Invoice (810) (Began Implementation Oct 2001) • Consolidates transactions through single intermediary vs. using numerous EDI systems • Facilitates accurate transmission of electronic purchase transactions by comparing data • (catalog format: description, units of measure) that provider transmits with supplier data • and flags discrepancies) (GHX “Content Intelligence) GHX… more than an Internet Intermediary! 12

  13. Web Based Technology & the Internet 2. Automating the Capital Process • Web Based Capital Approval Tool (completed and fully deployed) • Increase the processing speed for submission/approval • Improve accuracy of data & capturing full project costs • Track processing times and data for bundling • Web Based Capital Request Tool (under development -- estimated completion Fall 2004) • Quote/RFP Tool (GHX) (working development with GHX) • Web Based Transactions via Internet (GHX) (working development with GHX & shopping for supplier to pilot program) 13

  14. Authorization For Expenditure Request 14

  15. Web Based Technology & the Internet Reduce Costs & Improve Productivity • 1. Contract Management Program • (Premier’s e-Sourcing Program) • Initiate Rapid Contract Implementation and Establish Accurate Pricing • Act as central repository for all contracts • Ensure accurate and timely contract pricing from day 1 • Contract/Pricing Activation on line with Suppliers & Distributors (Active) • Facilitates Accurate Data Transmission • Transmission of accurate nomenclature and pricing from Premier Contract File • to users’ MMIS via GHX(Under Development) • Pricing Confirmation via GHX during confirmation and invoicing(Under Development) • Reduce Healthcare Costs by Increasing Visibility/Availability of Data • Enabling higher levels of contract compliance: Analytics: Contract Utilization- By Supplier, by Contract, by Product, by facility, by department…(Under Development) • Verify Purchase/Contract Volumes: Rebate Calculator (Under Development) 15

  16. Lessons Learned • 1. Establish a Vision: • Why/what benefit am I trying to • accomplish • Involve your IS Dept Early • Involve users as part of • development process • 2. Establish Current State Basis for Benchmark/Metrics Early • Capability to prove value of Systems and Processes • Credit for increases in productivity • 3. Automation Requires/Be Prepared for Process Change: • Change for Customers • Change for your Staff & other Departments • Change for Suppliers • 4. Be Prepared to Commit Your Time and Resources • Hold your staff, suppliers & intermediary accountable to meet agreed upon expectations • Participate in User Groups 17

  17. Improvements/Successes Purchasing Transactions via Web Based Technology & Internet • 1. Intra/Internet Requisitioning Tool (IREQ): Productivity Gains • From Manual to Web Based: (Estimated) • From 200 to 2700 users connected to MMIS • Buyers: 17 Min per PO processed = 54,085 hr/yr equates to 26 FTE’s Savings • Users: 19 Min per Req processed = 66,262 hr/yr equates to 31.8 FTE’s Savings • From FY 2000 to FY 2003 Expanded Central Purchasing Function with minimal staff increase FY 2000- 3 Hospitals FY 2003- 14 Hospitals FY 2000- 0 Clinics FY 2003- 42 Clinics 2. Productivity gains for Users and Staff increase as Aurora uses more Web Technology & continues to connect with more suppliers via GHX • Connected with 25 Suppliers on 850/855’s through GHX or direct with Distributor-Cardinal Health & Live with 3 Suppliers on 810’s and growing: (Volume = 43,750 PO’s/yr = $50MM/yr) • Reduction of pricing errors (Reduced 50% of open invoices w/Cardinal Health from $1.7M in Mar 02 to $26K today -- Continuous Pricing Verification) • 3. Productivity gains with Automated Capital Request Process • Decrease processing (approval/coordination/negotiations/order from 11 weeks to 7 weeks) 18

  18. Improve Order EfficiencyPurchasing Staffing Levels 19

  19. Cost to Implement Aurora’s Web-Based Requisitioning Tool Hardware $ 60,000 Software $147,000 Consulting $400,000 Staff Time $ 30,000 1 FTE Full-Time Trainer Note: The hardware and software were purchased for this project but were then the foundation for all Web-based projects that followed. 20

  20. Web Based Technology & the Internet Questions?? 21

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