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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

Partnering with IDNs for Efficiency and Innovation


Patrick Carroll, President, Patrick E. Carroll & Associates, Inc.


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

healthcare reform
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
reform impact on providers
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

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



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”


bon secours health system inc

Bon Secours Health System, Inc.

IDN Panel: Partnering with Suppliers for Efficiency and Innovation

presentation objectives
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

key trends for bon secours health system
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

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:


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

implication of formulary on bshsi vendor relationships
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



Community-Based Care


  • Care



Standing ED


Procedure Center

IP Rehab




Practice Sites










Wellness and

Imaging Center


Fitness Center



2. Supply Chain Logistics and Value Optimization Strategies must be integrated across the entire continuum of care

areas of focus for healthcare continuum supply chain integration
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


  • 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
medicare value based purchasing fy 16 measures
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%

impact of vbp measures on supply chain
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
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.)

bshsi global data synchronization plan and status
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

partnering with idns for efficiency and innovation1

Partnering with IDNs for Efficiency and Innovation

Tony Benedict, CPIM, CBPP

CIO, Vice President Supply Chain

Tenet/Abrazo Healthcare


2010-Present - Tenet/Abrazo Healthcare, CIO, VP Supply Chain

2010-Present – Association of BPM Professionals, (, 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

service line feeders to care delivery settings
Service Line Feeders to Care Delivery Settings


Acute Care

Post Acute Care


Continuum of Care

Clinical Standards

Critical Care


Emergency Medicine

Surgical Services

Lab/Pathology Services



Palliative Care

Drive Volume

Service Lines

Primary Care



Women Services



Bariatric / Sleep


Care & Service Delivery Sites


tenet vanguard integration challenges
Tenet/Vanguard Integration Challenges


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”


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?

healthcare reform challenges
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

bending the cost curve
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
it market dynamics leading software supplier market share 2000 2010
IT Market DynamicsLeading Software Supplier Market Share (2000 – 2010)








EMR Vendors



Enterprise Software


EMR Vendors

Enterprise Software


Source: Dorenfest Institute & HIMSS Analytics Database (2011)

HIMSS, “The Clinical Systems Hospital IT Market, 1998 – 2005” (2006)

Scott Weiss, “The Enterprise Software Massacre” (2011)

risk platform future state comprehensive portfolio of discrete integrated assets
Risk Platform – Future StateComprehensive portfolio of discrete, integrated assets

Aggregate Data

Identify Opportunities

Deliver Care

Demonstrate Outcomes

Acquire Customers /

Manage Business


Analyze Populations




Avoidable Events

Precision Marketing



Sustain Health

Extended Clinical Team


Social Footprint

Pharmacy Claims

Remote Monitoring

Cost Reduction

Mitigate Risks


Extended Care Team



Clinical Gaps

Manage Conditions & Events




Risk Management

External Referrals

Internal Referrals


Revenue Cycle



Enable Multi-Modal &

Multi-Site Interactions

Social Communities







Home Care



individualized longitudinal analytics performance payment value creation value demonstration
Individualized Longitudinal Analytics Performance / Payment = Value Creation / Value Demonstration

Illustrative Care Episode



Additional acutephases may beavoided or


Surveillance/Risk mitigation


Risk mitigation




cost prediction analytics and this model chasing historical claims data is all wrong
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


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


christiana care health system wilmington delaware

Christiana Care Health System Wilmington, Delaware

Raymond Seigfried

Senior Vice President Administration

paradigm change
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

innovation that supports health
Innovation that supports health

Adds value

Improves quality of care

Improves quality of life