O F F I C E S U P P L I E S I N T E R I O R S & FURNITURE P R I N T & D O C U ME N T S FA C I L I T Y R E S O U R C E S T E C H N O L O G Y

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2 Impact of Health Reform & Regulation on Non Acute Health Care Supply Chain 2 OFFICE SUPPLIES INTERIORS & FURNITURE PRINT & DOCUMENTS FACILITY RESOURCES TECHNOLOG Y

3 AGENDA Introductions The Present and Future of Non Acute Healthcare Healthcare Reform and Non Acute Supply Chain Responding to Healthcare Reform Group Purchasing Organizations (GPO) and Non Acute: Market Shifts and Driving Savings Conclusion 3

4 Presenters Fred Brandon, National Manager Healthcare [OfficeMax] Sue Cummings, Sr. Director Healthcare [OfficeMax] Brent Wiseman, Sr. Director - Continuum of Care [Premier, Inc.] 4

5 The Present and Future of Non Acute What is Non Acute? Healthcare Reform Non Acute Expected Growth How Non Acute Buys Today Future Considerations Supply Chain Changes 5

6 What is Non Acute Smaller, Clinic-type Healthcare Organizations Sample Organizations: Long Term Care Continuing Care Rehabilitation Centers Specialty Services 6

7 Healthcare Reform Impact Operating Costs Challenged Reimbursement Declines/Medicare and Medicaid Non Acute: Translating Cost Compressions within Operations Staff Reductions Seeking Efficiencies Internally Best Pricing Partners 7

8 How Non-Acute Buys Today Regional Relationships In Flux Product Selections/Choices Streamlined The Amazon Effect Ease of Use Suppliers With Strong Web Platforms Delivery Centric Relationships 8

9 Future Considerations Learning from Acute Facilities Utilizing and Morphing Supply Chain and Logistics Partnering with Suppliers to Form Expectations Work with Supplier Knowledge Base within Acute Synergistic Goals Macro to Micro Service Changes 9

10 Non Acute Supply Chain Trends The Good News Up to 15% Savings: Healthcare Providers Reduce Supply Chain Costs. Total Cost of Ownership: Essential to Better Execution and Compressing Costs Improving the performance of the healthcare supply chain will be a core element of reducing the cost of healthcare in the U.S. Mike Duffy, EVP Operations, Cardinal Health 10

11 Responding to Healthcare Reform Success Starts By Streamlining: Efficiency Cost Savings Control 11

12 Efficiency Simplifying Processes: Consolidating Suppliers Calibrate buying disciplines Consolidate suppliers/orders/deliveries Grade your vendors with SLA s Decrease invoices/administrative costs EFFICIENCY 12

13 Cost Savings Focusing Spend: Hard & Soft Costs Standardize and Focus Reduce off-contract purchases Dive into the unknown/hidden costs Go generic COST SAVINGS 13

14 Control Reshaping Costly Purchasing Behaviors Gaining Visibility Into Total Spend Leverage Compliance Tools Correct Supply Program Leakage Reduce Off-Contract Spending Identify Key Savings Areas Get Transparency Across the Organization CONTROL 14

15 Brent Wiseman Group Purchasing Organizations and Non Acute Care: Market Shifts and Driving Savings 15

16 GPO Market Dynamics: The Flow of Funds Purchases GPO members (buyers) GPO Vendors (sellers) Distributions Admin. fee Rebate (sometimes) Role Purchase products/ services for use in patient care Negotiate contracts with vendors on behalf of members Manufacture/sell/ market products/ services

17 Market Shifts and Driving Savings Market Shifts Declining Reimbursements - More Focus on Cost Savings Acquisition of Non-Acute Care Sites by Acute Care/IDN (ACOs) EMRs Fee For Service vs. Pay for Performance (ie. Quality) Finding Ways to Increase Buying Power (Aggregation) Healthcare Informatics Using Data to Determine Best/Cost Efficient Products for Best Possible Healthcare Outcomes

18 Market Shifts and Driving Savings Driving Savings Contract Utilization Contract Standardization Tier Maximization Value-Based Purchasing Value Analysis: a systematic, objective process for evaluating and reducing expenses by considering alternate products and practices which meet, but do not exceed, the need while maintaining or improving quality patient care.

19 Final Thoughts ACA and Value Based Purchasing Supply Chain Loose Ends Contract Control 19

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