Final Round. Team 15. Will Conrad. Nick Howerton Deepak Ponnavolu

Transcription

1 Healthcare in Gombala Final Round Will Conrad David DeSandre Nick Howerton Deepak Ponnavolu

2 2 Agenda I. Impact of Presidential i Edict II. Risk Factors & Mitigation Techniques III. Improving Gombala s Healthcare Supply Chain

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4 4 Demand Shock Pregnant Women Estimate: 350 k/yr births/1000 people 1 /year Children 0-5 Estimation: 1.3 M+ (350 k/year) * (5 years) * (75% survival rate) Number will increase with improved survival rate Difficulty identification at upper cutoff Total Population Eligible for Free Healthcare: ~2 M /year 1 Sierra Leone data from 2005 CIA Factbook

5 5 Capacity Constraints Doctor Theoretical Capacity: 3.6 M consults/year Assumes 200 doctors, 10 min. consults, 60 hrs/wk If free healthcare patients each required >1 consult with a doctor, system would face constrained capacity This ignores the 75% of Gombalans that do not qualify for free healthcare

6 6 How Do We Supplement Capacity? Leverage the Nurse/Health Staff for triage, minor health issue consults and post-doctor consults Nurse Theoretical Capacity: 10.5 M patients/yr Estimation of 1400 nurses off Sierra Leone ratios 4min. triage + 20 min. consult/patient, 60 hrs/wk Refine triage system to focus on identifying patients requiring doctor consult vs. nurse consult only

7 7 Triage Process Patient Nurse Triage 2 Doctor Consult 1 Nurse Consult 2 1 Annual Doctor Resource Capacity = 3.6 M consults/ year 2 Annual Nurse Resource Capacity = 10.5 M patients/ year (or includes both triage and consult)

8 8 Compensation = Motivation! Surge in demand d will tax an already understaffed d system 100% of Volunteers should be salaried 60% of all healthcare workers considered volunteers Reduces chance of opportunistic fees Paying salaries to all Volunteers would cost an estimated ~$650 k/yr 1 Doubling all salaries would cost another $1.08 M/yr Additional volume may necessitate higher compensation 1 Assuming monthly salaries for $100 for doctors and $50 for nurses.

9 9 Funding Source? Divert funds historically i used dfor drug spending and now covered by Europa 56% of women receive pre-/post-natal care 1 60% of kids receive at least one vaccination 1 These current drug expenditures can be reallocated to boost systemwide capacity by: Increasing the salaries of current health staff, OR Adding additional staff (if available) 1 WHO Sierra Leone Health Profile

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11 11 Risk Creation of Grey Market Users may resell prescribed drugs in grey market Potential profit opportunity Mitigation Create a special packaging for the program Utilize special packaging to identify drugs distributed from hospitals Enforce law preventing resale of drugs in this packaging

12 12 Risk Gaming the system Users may try to game system to procure duplicate prescriptions Increase in program cost Incents creation of grey market Mitigation Issue medical ID passport Issued to eligible citizens Includes pages for medical history documentation

13 13 Other Potential Mitigation Techniques Utilize drug vouchers in stock-out t situations ti We estimate Pharmasecure program would cost $2m annually Drug companies may be incented to cover program cost to reduce prevalence of counterfeit drugs BUT Incents initiation iti of grey market for vouchers We recommend not implementing a voucher program Instead, focus should be minimizing stock-outs through supply chain efficiency improvements If stock-outs prove to be a recurring issue for epidemics, program review in 1-2 years may be justified

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15 15 Measuring Impact of Donations Tracking donation effectiveness can be linked to one primary metric: RODC 1 RODC 1 ΔDALY Doses Delivered Function of Drug availability, fund availability, drug quality Purchase Cost Impact on RODC with factor increase Cost / Dose Delivered Transportation Costs - ΔDonations * = ΔDALY 2 Donated Capital Working Capital Overhead 1 Return on Donated Capital 2 Based on a local approximation Sierra Leone s current DALY rate (Source: WHO data, team analysis) Drug Inventory Temporary Funding (Line of Credit) + SMS Pull System / QA System Investment

16 16 Europa s Proposed Supply Chain Copenhagen 100 Hospitals s Direct shipment from Copenhagen to hospitals 4 month lead time Allows maintenance of current system service levels Increases overall holding and shipping costs

17 17 Global Health Proposed Supply Chain Copenhagen Distribution Center Hospitals Copenhagen services central Gombalan DC 4 month lead time DC services hospitals 1 day Lead time Revised supply chain would improve ev sed supp y c a wou d p ove current service level by 53%!

18 18 SMS Pull-System Inventory Analysis Net savings maximized with daily SMS inventory updates Higher frequency not optimal due to 1-day shipment lead time Lower frequency requires higher local safety stock

19 19 Centralization Analysis $3,500,000, $3,000,000 $2,500,000 Supply Chain Costs 100.0% 90.0% 80.0% 70.0% 0% 60.0% 50.0% 40.0% 30.0% Drug Availability 93% $2,000, % 10.0% $1,500,000 $1,000, % Current State Future State $500,000 $0 Cycle Stock Current State Safety Stock Annual Inventory Holding Cost Future State Annual Transportation Costs Centralization allows: Lower cycle stock Lower network transportation costs Improved drug availability 1 1 Analysis assumes supply chain spending is constant; efficiencies from centralization are used to increase service level

20 20 Additional Recommendations Focus on prevention Improve drinking-water sources 21% of child deaths under-5 caused by diarrhea 1 Major cause of diarrhea is dysentery caused by poor availability of drinking water (<50%) 1 Improve sanitation facilities 13% of child deaths under-5 caused by malaria 1 Poor sanitation facilities (<10%) 1 result in breeding grounds for mosquitoes that spread malaria Installation cost = $40/family for clean drinking water 2 1 Source: WHO health profile: Sierra Leone 2 Source: Rotary Peru project: Lima Sunrise W05738

21 21 Additional Recommendations Increase funding Every additional dollar coming in to Gombala can reduce DALY by Increase # of doctors: There are currently 0.25 doctors per people in Gombala. Significantly fewer than the regional average of and the WHO standard of 20 Optimize pull system data: Pull system data offers potential to better understand demand and optimized inventory policies collecting sufficient data 1 - See regression in appendix 2 - WHO health profile: Sierra Leone

22 22 Other Implementation Considerations Focus on communicable diseases Early treatment of communicable diseases will slow spread of disease Communicable diseases account for 83% of YLL 1 Current state: Tuberculosis rate is 7 times the global average HIV rate is 2 times the global average 1 YLL = Years of Life Lost

23 Q&A 23

24 24 Appendix

25 25 Exhibit Analysis of DC Impact Copenhagen Direct Copenhagen to DC Europa Input $100,000,000 $100,000,000 Monthly Demand Variation $2,500,000 $2,500,000 Annual Cost of Capital 10% 10% # of Hospitals Lead Time to DC, Months 4 Shipping Cost (to DC) $3,500 EOQ DC $2,645,751 DC Orders PerYear 37.8 DC Safety Stock $6,910, Annual Demand per Hospital $1,000,000 $1,000,000 Monthly Demand Variation per hospital $250, $250, Shipping i Cost (to Hospital) $250 $75 EOQ Hospital $70,711 $38,730 Hospital Orders Per Year Lead Time (Months) Hospital Safety Stock $126,674 $63,088 Average System Inventory $16,202, $16,479, Inventory Cost $1,620, $1,647, Annual Shipping Cost $353, $325, Operating Cost % 197% 1.97% 197% 1.97% Service Level 60% 92% Improvement in Service Level 53%

26 Global Health in Gombala Round 1 Will Conrad David DeSandre Nick Howerton Deepak Ponnavolu

27 27 Agenda I. Current State Overview i. Gombala s Healthcare System ii. Global Health (GH) II. Recommendations i. Supply Chain ii. Other III. Suggested Implementation Timeline

28 28 i. Gombala s Healthcare System

29 29 Gombala s Healthcare Issues Healthcare lh system is 90% donor funded d Child mortality rate at 25% DALY of 6.62M 6 years for the country Highest (worst) DALY rate in the world 1 Life expectancy of 49 years 2 Decentralized ordering and inventory management 1 DALY Rate for Sierra Leone = 82,444 (Source: WHO) 2 Source: WHO (Sierra Leone data, 2007)

30 30 ii. Global Health (GH)

31 31 Global Health (GH) Issues 5 primary donors to Gombala Each contributes ~20% of total funds Overall fund availability has high variability Donation timing is not coordinated across donors Restricted fund deployment Donors require funds to be used only for specific diseases, areas of the country, supply channels

32 32 i. Supply Chain

33 33 Recommendations Work with donors to accomplish smooth funding levels throughout the year Implement SMS inventory data collection and pull system for inventory allocation Centralize regional warehouses into one consolidated warehouse located in or near the urban center of Gombala Impact Fund Availability Service Level: 90% 99% Drug Availability Service Level: 60% 93% Cycle Inventory decreases by 40%

34 34 Healthcare Impact of Donations Tracking donation effectiveness can be linked to one primary metric: RODC 1 RODC 1 ΔDALY Doses Delivered Function of Drug availability, fund availability, drug quality Purchase Cost Impact on RODC with factor increase Cost / Dose Delivered Transportation Costs - ΔDonations * = ΔDALY 2 Donated Capital Working Capital Overhead 1 Return on Donated Capital 2 Based on a local approximation Sierra Leone s current DALY rate (Source: WHO data, team analysis) Drug Inventory Temporary Funding (Line of Credit) + SMS Pull System / QA System Investment

35 35 GH Funding Trends 1,2 $15,000,000 $10,000,000 Funding End of Month Fund Balance $5,000,000 $ Based on case data 2 Assumes level demand throughout year

36 36 Donor Funding Implications Based on our analysis Highly variable monthly fund availability allowed only a 90% funding service level That is, 10% of drug unavailability is due to lack of funds Implies that supply chain availability ~60% Smoothed donations would allow for 99.9% 9 1 funding service level Possible solutions: Coordinating donor contributions Requesting equal contributions throughout the year Smoothed donations at 90% of current annual level would provide the same funding service level

37 37 SMS-Based Pull System Inventory information i sharing via SMS Hospitals feed daily inventory updates to central DC Enables optimal shipping quantity/frequency/content Annual Cost: $25,550 Hospital-level inventory drops to $3.3M Annual Net Savings of $270k 1 Enables Service Level increase from 60% to 93% 2 1 Based on assumption of 1 month average inventory carried at hospitals before implementation 2 In combination with warehousing centralization

38 38 Pull-System Inventory Analysis Net savings maximized with daily SMS inventory updates Higher frequency not optimal due to 1-day shipment lead time Lower frequency requires higher local safety stock

39 39 Inventory Centralization Reversing decentralized d inventory management policy will improve efficiency of supply chain Cycle inventory will decrease by ~40% Funds previously tied up in cycle inventory can instead be used for safety stock at the central warehouse In combination with SMS inventory management & pull system, total supply chain transportation costs will decrease by ~50% Drug availability will increase from 60% 1 to 93% Availability is optimized while keeping supply chain costs constant Alternatively, at the current service level (60%), supply chain savings from centralization = $2.4M 1 Includes the effect of smoothing donor funding

40 40 Centralization Analysis $3,500,000, $3,000,000 $2,500,000 Supply Chain Costs 100.0% 90.0% 80.0% 70.0% 0% 60.0% 50.0% 40.0% 30.0% Drug Availability 93% $2,000, % 10.0% $1,500,000 $1,000, % Current State Future State $500,000 $0 Cycle Stock Current State Safety Stock Annual Inventory Holding Cost Future State Annual Transportation Costs Centralization allows: Lower cycle stock Lower network transportation costs Improved drug availability 1 1 Analysis assumes supply chain spending is constant; efficiencies from centralization are used to increase service level

41 41 ii. Other

42 42 Additional Recommendations Pharmasecure QA Program Recommended for remedy of epidemic diseases At 93% service level, demand for drugs in outside market will drop significantly Excluding epidemics Annual system-wide cost = $2 million Drug companies may be willing to absorb costs to counter heavy annual losses due to counterfeiting 1 1 >50% drugs in parts of Africa & Asia are counterfeit. - R. Jones, FDA spokesperson, statement, 18 November 2004

43 43 Additional Recommendations Focus on prevention Improve drinking-water sources 21% of child deaths under-5 caused by diarrhea 1 Major cause of diarrhea is dysentery caused by poor availability of drinking water (<50%) 1 Improve sanitation facilities 13% of child deaths under-5 caused by malaria 1 Poor sanitation facilities (<10%) 1 result in breeding grounds for mosquitoes that spread malaria Installation cost = $40/family for clean drinking water 2 1 Source: WHO health profile: Sierra Leone 2 Source: Rotary Peru project: Lima Sunrise W05738

44 44 Additional Recommendations Increase funding Every additional dollar coming in to Gombala can reduce DALY by Increase # of doctors: There are currently 0.25 doctors per people in Gombala. Significantly fewer than the regional average of and the WHO standard of 20 Optimize pull system data: Pull system data offers potential to better understand demand and optimized inventory policies collecting sufficient data 1 - See regression in appendix 2 - WHO health profile: Sierra Leone

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46 46 Implementation Timeline Implement cash flow smoothing Implement SMS inventory management Centralize inventory & purchasing using pull system Focus spend on communicable diseases Lobby drug companies to implement Pharmasecure Partner with NGO for drinking water & sanitation facilities Collect data & optimize pull system Increase funding & medical personnel 2011 Q Q Q Q Q Q Q Q4 Prioritize supply chain recommendations

47 47 Other Implementation Considerations Focus on communicable diseases Early treatment of communicable diseases will slow spread of disease Communicable diseases account for 83% of YLL 1 Current state: Tuberculosis rate is 7 times the global average HIV rate is 2 times the global average Malaria is responsible for 13% of child deaths 1 YLL = Years of Life Lost

48 Q&A 48

49 49 Round 1 Appendix

50 50 Historic Donor Funding Estimated total funding = $75 M Average periodic funding = $6.25 M Variability of funding (σ) = $5.3 M

51 51 Pull-System Inventory Analysis 1 Inputs Urban Rural Cost of Capital 10% Overall Demand Variation $1,500,000 $600,000 Total Annual Demand $75,000,000 Shipping Cost $75 $175 # of Hospitals 100 Per Hospital ldemand dvariation $212, $84, Annual Demand per Hospital $750,000 $33,541 $51,235 EOQ Hospital SMS Rate $0.70 Orders/year Service Level 93% System Wide Orders/Day Urban Hospitals Frequency of Inventory Check Lead Time Safety Stock Avg Cycle Stock Total Average Inventory 4X Daily 1 $16, $ 16, $33, X Daily 1 $16, $ 16, $33, Daily 1 $16, $ 16, $33, Every Other Day 2 $23, $ 16, $39, Weekly 7 $43, $ 16, $60, Bi Weekly 14 $61, $ 16, $78, Monthly 30 $89, $ 16, $106, Rural lhospitals Frequency of Inventory Check Lead Time Safety Stock Avg Cycle Stock Total Average Inventory 4X Daily 1 $6, $ 25, $32, X Daily 1 $6, $ 25, $32, Daily 1 $6, $ 25, $32, Every Other Day 2 $9, $ 25, $34, Weekly 7 $17, $ 25, $42, Bi Weekly 14 $24, $ 25, $50, Monthly 30 $35, $ 25, $61, Frequency of Inventory Check 4X Daily 2X Daily Daily Every Other Day Weekly Bi Weekly Monthly Overall Impact Total Hospital Inventory Implementation Cost Net Savings* $3,266, $102, $196, $3,266, $51, $247, $3,266, $25, $272, $3,741, $12, $238, $5,154, $3, $105, $6,411, $1, ($17,951.62) $8,402, $ ($216,056.81) 1 Based on assumption of 1 month average inventory carried at hospitals before implementation

52 52 Current Gombala Supply Chain 1,2 Urban center has 50 hospitals =1 hospital 1 Estimated Gombalan hospitals = 100; this figure was derived using Sierra Leone s Dr./hospital data (WHO) and extrapolated based on Gombala s population 2 Assumes hospitals are distributed proportionally to population Regional Warehouses

53 53 Future Gombala Supply Chain 1,2 Consolidated Warehouse Urban center has 50 hospitals =1 hospital 1 Estimated Gombalan hospitals = 100; this figure was derived using Sierra Leone s Dr./hospital data (WHO) and extrapolated based on Gombala s population 2 Assumes hospitals are distributed proportionally to population

54 54 Centralization Analysis 1 Gombalan Demand (Healthcare Spend) $69,197,500 Annual Holding Cost 10% Shipping Cost from Manufacturer $10,000 Lead Time from Manufacturer (Months) 0.50 SMS Pull System Initial Cost $25,000 z (60%) Current State 0.25 CURRENT STATE FUTURE STATE Urban Center Rural Region 1 Rural Region 2 Gombala Total Centralized Warehouse σ Demand $1,500,000 $600,000 $600,000 $2,500,000 Inventory Analysis Cycle Stock $1,315,271 $930,037 $930,037 $3,175,345 $1,860,074 Safety Stock $268,715 $107,486 $107,486 $483,687 $2,415,119 > Service Level: 91.4% (Service Level = 60% in Current State) Annual Inventory Holding Cost $158,399 $103,752 $103,752 $365,903 $427,519 Annual Transportation Costs MFR > DC(s) $131,527 $93,004 $93,004 $317,534 $186,007 DC(s) > Hospitals $273,750 $228,125 $228,125 $730,000 $456,250 Shipments / Day Cost / Shipment Hospital > Hospital $365,000 $182,500 $182,500 $730,000 $182,500 X Ships / Day Cost / X Ship Total Supply Chain Cost $2,512,662 $1,644,904 $1,644,904 $5,802,470 $5,527,470 1 Analysis assumes supply chain spending is constant; efficiencies from centralization are used to increase service level

55 55 DALY Impact Regression Sierra Leone

56 56 Calculating DALY Daily Adjusted Life-Year = Years Lost of Life + Years Lost due to Disease Years Lost due to Disease = # of Disease Instances Disability Weight * * Average Duration of Case Years Lost of Life = # of Deaths * Standard Life Expectancy at Age of Death (in Years)

57 57 Metric Reporting While not implicitly i l reporting on the proportion of rural patients served using our RODC tree, this metric could be determined by leveraging SMS inventory system data to determine the proportion of rural patients by tying the SMS s to the hospital to which they were assigned

58 58 Weather Disruption Contingencies To counter the periods of inclement weather in Gombala, we would recommend the following strategies: For forecasted weather patterns, temporarily increase safety stock at local hospitals Once the quality assurance system is in place, utilize the public market as an additional source of local l safety stock on a temporary basis