HFMA WEBINAR. How to Control Costly Physician Preference Items (PPI)

Transcription

1 Sponsored By: HFMA WEBINAR In conjunction with: How to Control Costly Physician Preference Items (PPI) Date: October 16, 2014 Time: 2:00 3:30 p.m. Central (12:00 1:30 pm Pacific/1:00 2:30 pm Mountain/3:00 4:30 pm Eastern) Follow this link (or paste it into a browser) to connect: Please log in 10 minutes early and test your computer as this is a new platform: Enter platform where it says guest type in your full name first and last name only it is very important especially if you need CPE credit so that your attendance is accounted for You will Not be using your telephone, but will hear the audio via your computer speaker Online live seminars are broadcast over the web via Adobe Connect. You'll need a computer with a browser, Adobe Flash Player 11.2, and Internet connection. Test your connection to Adobe Connect: Login issues to check first: Are you connected to the Internet? Disable popup blocker software. Clear the browser's cache. Try connecting from another computer. Are you accessing the correct URL? Audio Issues: Close all Microsoft Applications, especially Outlook and Messenger. Having Outlook open absorbs almost 50% of the bandwidth which may cause intermittent audio interruptions. If you have questions regarding registration or connection please call HFMA Member Services at ( , ext 2). CPE Information: To receive CPE Credits for this webinar you must participate in online polling during the webinar and complete the online program evaluation within 2 working days. After 2 working days online programs will be inactive and you will not receive CPE Credit. The URL below will take you to our on-line evaluation form. You will need to enter your HFMA I.D. # (found in your confirmation ) You will also need to enter this Meeting Code: 14AT24 for HFMA MEMBER or 14AT24C for NON-MEMBER URL: You may also connect directly from the last slide of the live webinar Your comments are very important and enable us to bring you the highest quality Programs! To review your CPE information, please visit the HFMA web site at log into your profile, and retrieve all CPE information (by date) within your "CPE Center.

2 Sponsored By: In conjunction with: How to Control Costly Physician Preference Items (PPI) October 16, 2014 (12:00 1:30 pm Pacific/1:00 2:30 pm Mountain/2:00 3:30 p.m. Central/3:00 4:30 pm Eastern) Scott Pruyn, Director Channel Management, McKesson Supply Chain Solutions Webinar Series

3 How to Control Costly PPI Speaker Profiles Scott Pruyn, Product Manager, Strategic Supply Sourcing, McKesson 20+ years healthcare supply chain experience Formerly with Medibuy, Medline, and Enterprise Systems, Inc. HFMA & AHRMM Member 2

4 How to Control Costly PPI Agenda Learning Objectives Healthcare s Current Challenge: Content, PPI Traditional Methods for Supply Cost Reduction Reinventing Supply Chain Management Five Key Initiatives Conclusion 3

5 How to Control Costly PPI Learning Objective Review how to capture all supplies outside the official MMIS to gain visibility and control of costly PPIs 4

6 Healthcare Supply Chain Challenge Solve Value Analysis Math Problem Fact* On average non file = 28% supply purchases, 55% of items Challenge Access to information Average hospital ~ 14,000 active items; Average large IDN ~ 70,000 active items Industry data churn 20% annually Time & labor to access information Time & labor to analyze information Item Churn Problem 14,000 x 20% = 2,800 item churn 70,000 x 20% = 14,000 item churn Typically 1,000 items can be analyzed within one year How many years will it take to catch up? Q: A: Indefinite - current methods can not support 5

7 Healthcare Supply Chain Challenge The Nature of the Problem Non Standard Information from Multiple Sources Dynamic data with 20-30% annual change GPO contracts based on manufacturer not vendor without cross-reference Hospital vendor/manufacturer master does not match industry norm Many descriptive alias terms for both vendor/manufacturer and product descriptions What you may not know! 70-80% of all transaction errors are directly related to inaccurate product information 24% of supply chain management personnel time is spent correcting nonconformance errors 3% of spend is leaked through the hospital organization 8.7% of a nurses time is spent on searching for supplies Lack of standardized naming conventions limit product comparisons Hospitals overpay 12% on PPI products Insufficient descriptive product information for key Physician Preference Items (PPI) products Source: Meperia Database 6 10/13/2014

8 Healthcare s Current PPI Challenge The Nature of the Problem Increased demand supports PPI proliferation Cost of supplies may overtake labor driven by new technologies, i.e. implantables, cardio defibrillators1 60% of med/surg spend due to PPIs with implantable devices used in over 50% orthopedic procedures, and in over 33% of cardiac procedures2 Demand for cardiac implants will rise by 8.8% annually to a cost of $16.4 billion to serve 73 million people with heart conditions. Increases in orthopedic and spinal procedures mirror that trend3 1. Supply Chain Management in Healthcare: New Research Focus; W.P. Carey School of Business/Arizona State University, March 1, (Interviewing Eugene Schneller) 2. Controlling Supply Costs; The Advisory Company (from website); March 16, Tyson, Patricia, R.N.; Extract big savings from physician preference items medical device buying ; Materials Management in Healthcare, May

9 Traditional Methods of Supply Cost Control PPI Items Impact All Three Categories 1. Lower purchase price Beat up on the vendor Look to a GPO 2. Reduce operational costs Use an ecommerce exchange to transact orders Reduce the number of FTE s 3. User fewer products Create value analysis teams Try to restrict the introduction of new products Despite significant investments the status quo remains 8

10 Traditional Methods of Supply Cost Control Current Practices Have Failed to Curb Price Escalation 1. PPI continues to outpace inflation Vendors very effective at retaining margins* Vendors reluctant to contract for PPI 2. Reduce operational costs Most PPI does not go through an exchange As manpower decreases less attention paid to product standardization 3. 30%+ growth in PPI products Single stream initiatives make little if any impact Vendor /Physician relationships can be a barrier *Manufacturer-demanded secrecy affects nearly 60% of the $112 billion cost of all medical devices, may be augmenting manufacturers profitability; industry shareholder returns doubled that of the pharmaceutical industry. Office of Sen. Arlen Specter, Arlen Specter Speaks on the Senate Floor regarding the Transparency in Medical Devices Act (Washington: Office of Sen. Arlen Specter, 23 October 2007); and R. King and G.F. Donahoe, Estimates of Medical Device Spending in the United States, 9

11 Reinventing How the Supply Chain is Managed If Things Remain the Same How Can There Be Change? 10

12 Reinventing How the Supply Chain is Managed Five Steps You Can Take To Make a Difference Expand the Role of Value Analysis Introduce Formulary Management Techniques Move to Demand Based Forecasting Normalize & Enrich Product Data Create Virtual Storerooms 11

13 Step 1: Expand the Role of Value Analysis How Many Products Go Through Your VA Process Each Year? Most organizations review <1,000 products annually Large IDNs manage 160,000 active items not including contracted alternatives Annual PPI product turn-over rate at 20-30% Typically days pass before data available to make informed decisions Decisions made not just on obtaining best price! Price Quality/patient outcome Supplier delivery performance Revenue implications Source: Meperia database 12

14 A Typical Hospital Item Master Does Not Support Value Based Processes Fundamentally designed to manage inventory Lacks descriptive detail Used to process orders, not compare items Difficult to validate price Relies solely on manufacturer number match to GPO contract 13

15 Using Normalized Data to Detect Price Variance Descriptive Variance Masks Product Usage Detecting price variation 14

16 Structure Change From Serial to Parallel Projects Single Linear Teams Challenged with Resources Poor resource utilization Resource Resource limited to supporting one project at a time-next project cannot start until prior project completion Poorly aligned skill sets, typically materials management limitations, often lacks the necessary resources Serial Processing By the third project s completion first project s results are invalid 15

17 Structure Change From Serial to Parallel Projects Multiple Concurrent Teams Empowered with Data Resource Distributed resources Aligned skill sets by specialty Multiple projects conducted simultaneously One broken link does not derail a project Parallel Processing Faster more relevant results 16

18 Manpower Redeployment Support Objectives Skill Set Alignment Data Acquisition Finance Supplier Clinical Specialty Materials/Purchasing Specialty 17

19 Step 2: Introduce Formulary Management Most Activity Happens Outside of Your Item Master Distribution of Items for Average IDN Zone Distinct Items Count Distinct Med-Surg Items Count ,852 5, ,733 5, ,052 11, ,366 9, ,094 46,497 Total 162,060 78,948 Potential Universe of Available Contracted Products 18

20 Establishing a Formulary Aligning Organizational Objectives 19

21 Formulary Level Drives Approval Process Increase Purchasing Efficiency Without Loss of Control Align purchase approval path with formulary level for procurement of organizationally approved items without supervision with increased scrutiny as levels increase Automatic identification of non-preferred, higher cost products during requisition/procurement (after product formulary established) Capture and record potential cost savings in real time 20

22 Presenting a Formulary to the Requisitioner User Acceptance Gained Through Ease of Interaction 21

23 Non-aligned Activity Captured Up Front Impact of Non-sanctioned Procurement Identified 22

24 Step 3: Create Virtual Storerooms Low Turn Over High Cost Products Stored in Multiple Locations Total Knee Component PAR = 3 Cost = $5,000 EA Inventory value = $15,000 IDN Inventory value = $105,000 (7 acute care hospitals) 23

25 Create Virtual Storerooms Low Turn Over High Cost Products Stored in One Location Total Knee Component PAR = 3 Cost = $5,000 EA Inventory value = $15,000 IDN Inventory value = $15,000 (7 acute care hospitals) 24

26 How to Create a Virtual Storeroom Logistics, Product Demand Determine Storage Location Identify low turning, high value products Identify use over network for prior months* Identify primary user or preferred geographical location Determined on product shipment cost Can be multiple locations Create an asset 2 account & assign locations Convert expense item to asset and add to asset 2 account Point all demand to asset 2 account and stocked location *assumes normalized data 25

27 Step 4: Demand-Based Forecasting Predicting Product Need During Admitting Process Accurately predicting product demand can help improve bottom line performance across the supply chain Reduces inventory carrying cost for both hospital and vendor Ensures the right product to meet patient need Provides adequate lead time to procure Balances revenue against product carrying costs Requires minimal intervention 26

28 What s Needed for Demand Forecasting? Alignment of Data and Technology Patient scheduling feeds Identifying Physician Specific procedure DRG/ICD-10 or CPT4 codes Associated product list Procedure date/time Continual supply list validation to current market conditions and physician preference updates Automated communications to primary vendor for PPI 27

29 Emergence of Demand Forecasting Right Procedure, Right Patient, Right Supplies Intelligent POU systems, cabinetry tracks individual supply usage to patient, physician, supplier Information shared across supply point continuum Demand forecasting closes supply chain loop Patient Schedule Preference List Vendor Managed Delivery Clinical Documentation 28

30 Step 5: Normalize, Enrich Product Data Descriptive Attribution to Drive Functional Comparison Consistent data structure Information rich Data structured to support product comparison Easy to compare products and relative pricing Sufficient descriptive data to compare to externally sourced data such as GPO contracts Drives functional similarity / equivalence definition 29

31 Data Normalization and Enhancement Disparate Data Integration Multi-Source Data Integration Data extracted and normalized from industry sources including: Manufacturer catalog GPO Hospital Data intelligently attributed and conditioned to help meet the specific needs of each user without detriment to other users 30

32 Normalize, Enrich Product Data Lack of Alignment Undermines Product Comparison Manufacturer Contract Providers (GPO s) Suppliers 31

33 Mapping Data Across the Supply Chain Aligning context to determine a match 3M Manufacturer Vendor/Distributor Henry Schein Inc Henry Schein Inc avagard chg waterless scrub avagard chg surgical scrub Cardinal Health M9200 scrub avagard brushless-5331 McKesson Medical Supply cleanser, hand avagard Hospital Purchasing Medline Industries MMM9200 scrub surg hnd avagard chg 1% Mms A Medical Supply Co TM9200 cleanser hand avagard 3M Surgical and Healthcare Personnel Hand Antiseptic with Moisturizers 9200 Owens & Minor scrub, avagard, surgical 9200 Professional Hospital Supply scrub hand sanitizer avagard (8 per case) Group Purchasing Organization Seneca Medical scrub avagard soap 16.9 oz 32

34 Normalized, Enhanced Item Master Supports Greater Understanding of the Products in Use 33

35 Evaluating Around Attribution Physicians Select Attributes Not Brands 34

36 Opportunity for Standardization By Product Family or Supplier 35 35

37 What Can We Conclude? Current Processes Will Not Improve the Outcome!!! Data is volatile, disparate, often inaccurate All spend needs control - not only medical surgical Current Item Master structure ineffective, does not support the majority of purchases Most one-time only purchases are PPI Contracting process ineffective for PPI type items 36

38 Supply Chain White Paper Series Download supply chain white papers Predictive value analysis: Closing the loop and beyond to make informed decisions Using preemptive formulary management to control user supply access at the point of requisition Artificial intelligence: The future of the healthcare supply chain Why your item master doesn t support cost reduction efforts How physician preference items affect your organization 37

39 Upcoming Webinars Save the Date A Better Way to Identify and Attribute Products for Sustainable Savings January 15, :30 pm ET (2-3:30 pm CT) Pre-eligibility Screening of Your Supply Chain Data March 19, :30 pm ET (2-3:30 pm CT) 38

40 Questions Scott Pruyn Director Channel Management McKesson Office:

41 To Complete the Program Evaluation The URL below will take you to HFMA on-line evaluation form. You will need to enter your member I.D. # (can be found in your confirmation when you registered) Enter this Meeting Code: 14AT24 HFMA MEMBERS 14AT24C non- HFMA MEMBERS URL: Your comments are very important and enables us to bring you the highest quality programs! 40