Presentation HSCN. Healthcare Strategic Sourcing More Than Just New Strategies. for Supply Chain Cost Containment

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1 Presentation HSCN Healthcare Strategic Sourcing More Than Just New Strategies for Supply Chain Cost Containment May 15, 2012 By Nicole Ruttan-Sims

2 How do you relate to the current procurement environment? - Firefighter-putting out fires? - Hunger Games -plot and main characters

3 Objectives To provide a view of sustainable procurement To discuss the concepts of strategy To explain two supply chain initiatives To share aspects of these initiatives that can be incorporated into any supply chain To understand the impact of the initiatives to any organization To look at the future To address any questions 3

4 SJHH Teaching hospital, three campuses, moving to 700 beds, Surgery (14+ OR s), medical, cardiology, nephrology/dialysis, respiratory/chest allergy, bariatric, mental health, various clinics,

5 What is Strategic Sourcing? Not just focusing on procurement, but rather thinking about: -what is bought, -why it is bought, -what is really needed, -can the cost impact be managed better, -shifting the risk to another, -getting positioned for the future.

6 Supply Chain Processes Standardization Value analysis Lean methodology JIT Vendor Managed Inventory Third party logistics Low PAR levels Minimizing touch points

7 To achieve what? Delivering the four rights: -right product, -right place, -right time, and -right price.

8 But something is still not working Healthcare Purchasing News, Jan 2012 Bringing retail strategy to healthcare supply chain. -to fill the gaps, looking at service line management to deal with the trend in inter-hospital competition and supply chain deficiencies,

9 What is wrong, specifically in the Canadian Healthcare Supply Chain Working harder and longer days for less benefit, Employing more technology, yet create more paper, more waste and less efficiency, Small fish in a big pond, Shy about challenging the status quo? Evidence!!!

10 The procurement goals that become the strategy 1) Sustainable supply that considered: - the availability of environmentally compatible alternatives to what the hospital was currently using, - the appropriate products and services, and - the true and whole life-cycle costs of the products and services. 2) Clinically acceptable supply that ensured: - quality control, reliability, sterility; - performance, met standards for PPE, degree of comfort; - unlimited access. 3) Integration into our operations

11 Debunking Assumptions BPSAA Procurement Directive, assumption that savings come from a process where mandatory requirements are adhered to. Tried and true methodology of volumes under a competitive process provide the best value, especially for groups of hospitals that come together (SSO, GPO). That negotiated, sole source, high volume organizations agreements provide the best overall value. That strategic sourcing, the latest concept, will miraculously find new savings and value adds (Procurement Magicians).

12 Focusing Focusing on short-term gain is not the answer. Looking at the big picture and meeting the future needs is not shortsighted. Planning for the next ten years should be uppermost on our minds. If this is true, then long-term gain and sustainability should be our focus.

13 Strategic Thinking Looking at creating financial opportunities out of healthcare expenditures supplement to Spring edition of Canadian Healthcare Manager (Health Research and Innovation)

14 Follow the path of one item Complex (req, PO, jit supply, carry inventory, hope for no supply chain interruption, delivery and receive at the hospital, distribute, manage the inventory, invoice, payment, removal, landfill) Supplier and Hospital (PD, logistics/materials management, Accounts Payable and waste management)

15 The surgical gown From reusable to disposable to reusable cycle Consumable-sulphate or regular pulp, laminate -polypropylene, polyethylene and polyester Reusable-micro-fiber, polyester laminate, resin or fluorocarbon finish Literature/research (vendor-sponsored, very little peer-reviewed, inconclusive). -178K spend 12 months

16 Looking for facts and not fiction Knowing that hospitals all by themselves are material and resource consuming, the impact of how this consumption affects us needs to be examined thoroughly. Key measurable values including the costs of acquisition, use/storage/inventory management, endof-life/disposal or reuse. Environmental factors and production costs (global warming, photochemical oxidation, eutrophication, carcinogens, land use, water use, solid waste, fossil fuel, minerals).

17 Strategy Environmental Cost containment Getting more from what is purchased True value (efficiency, service, 100% accountable) No back orders.

18 Two Initiatives Container Distribution System -supplies in one container for the length of stay, Wound Care Depot -a place to get preventative skin care products or treatment products.

19 CDS Container Distribution Hybrid System that is an assembly of products (100%) used for very procedure, limits waste and inefficiency.

20 The concept of CDS Began with a trip to the US and the exposure to a model of providing all of the required products to complete a procedure in one delivery system, A directive to undertake opportunities for cost savings and to combine that with environmental stewardship.

21 The Toy Box

22 Concept today A box designed for each procedure and follows the patient/ client(s) over the length of stay for C-section and vag delivery, A box designated for the care requirements of two people: mother and infant, but used and managed by the nurses/ healthcare professionals and housekeeping, Sub-assembly components make up the CDS box for use : -pre-admission and pre-delivery requirements e.g. IV and blood collection, patient gowns and linens -delivery requirements -recovery and duration of hospital stay

23 The process of moving forward-strategic Sourcing Review of current contracts Investigating the marketplace Business review and case Selling the concept to others Getting the initiative off the ground Moving the project forward.

24 The process of moving forward -Clinical and Logistics Dedicated resources that were not relieved of their normal responsibilities, embraced this initiative despite the added workload (Julie Pace, Educator Maternal Child Program, as well as many nurses from Labour- Delivery and Post Partum). Other resources from the hospital, Mohawk Shared Services and Medline Canada (SCORE analysis). The work involved: meetings, review of processes and products, sub-assembly revisions, troubleshooting, evaluation and pilot.

25 Struggles and successes Change and change management (both from the hospital s perspective and from industry re final sign-off of the bill of goods) Prescriptive opinions and decision-making Managing unforeseen circumstances or issues (e.g. the non-radiopaque balls, the placenta bag) Environmental achievements (box and plastic-wear sent home with family, or reused and recycled by other means within SJHH) Challenged by GPO and vendor community

26 The CDS IMPACT! 1) Process review and change: - supply chain, inventory control, touch points, simplification, - procedures such IV starts and blood collection to challenging a variety of historical practices that were part of our culture.

27 The CDS IMPACT! Before CDS more plastic wasted for Foley Catheter procedure After CDS all-in-one catheter system with one plastic package

28 The CDS IMPACT! 2) Savings: - Environmental disposal costs - JIT, reduced SKU s and on-hand inventory - Case cost or Cost per procedure reduction - Linen use reduction - Efficiency

29 Before CDS postpartum supply waste After CDS reduction of plastic packaging and adding reusable OR linens = less waste 29

30 Before CDS and after CDS 30

31 Before CDS Numerous disposable linens After CDS Reduced waste by converting to reusable linens 31

32 Before CDS (C-Section) After CDS All waste being thrown into biohazard bags Reduction to one biohazard bag and one regular garbage bag

33 The CDS IMPACT! New look at what we put in the waste stream, how we can minimize waste by the responsible use of linen and products. Helped identify gaps in process and through examination implemented a new and better way. Highlighted infection prevention and control opportunities.

34 The CDS IMPACT! Then there are all of those items that are difficult to measure: -staff satisfaction -increased productivity -cost containment -freed-up real estate -reduction in the number of PO s issued -room turnover time

35 Supply caddy does not meet infection control standards. All in one IV start kit was implemented. Extra supplies are kept in Nurse servers, thereby eliminating the need to run for more supplies.

36 Plastic bathtubs were re used and did not meet infection control standards. The ring basin in the CDS is used for placenta and eventually for baby bath. All basins that do not go home with parents, receive high level disinfection and get re used throughout the hospital.

37 Supply Chain Processes Value analysis Standardization Lean methodology JIT Vendor Managed Inventory Third party logistics Low PAR levels Minimizing touch points Ensuring 4 rights

38 Wound Care Depot Complex and expensive wound care products for active wounds and skin integrity promotion: - VAC dressings and equipment - Ostomy supplies - Pressure distribution surfaces, boots, supports - Unique items that cannot be stored in the clean cores - Sole source/single source products.

39 Wound Care Depot Issue with supply and demand created a need, Brainstorming, Yes, borrowed from retail (Home Depot, Business Depot, Water Depot, etc.), Accepting (scrutiny, not able to satisfy everyone s wishes, responsibility)

40 WCD

41 WCD

42 WCD

43 WCD

44 Creating a solution Requirement to have standardized products in the product category of complex and expensive wound care products, where clinicians have the knowledge to use the products appropriately. Requirement to have products available 24/7, in sufficient quantities (eliminating having to order, wait for delivery, perhaps only use one item in a case, minimize waste of expired product) for efficiency. Physical, process, access and cost controls.

45 WCD Concept Managed by the Purchasing Dept. 100% inventory count weekly, Sign-out items used, tracked and charged-out to dept., Room designed by clinicians, Depot accessible 24/7, Skin Care and Wound Prevention Committee

46 Results One Year Later Growing (needs, supply and demand), New location, 12 month savings over $75K (real), No waste, outdated, lost, etc. product, Standardized products.

47 Supply Chain Processes Value analysis Standardization Lean methodology JIT Vendor Managed Inventory Third party logistics Low PAR levels Minimizing touch points Ensuring 4 rights

48 Closing Statements Good strategy is like good leadership when the decisions made are proven to be the right ones because an idea was trialed and supported. Strategic direction comes from resourcefulness, common sense, engagement, trial and error.

49 Questions?