HFMA WEBINAR. Using Attribution to Drive Product Rationalization and Savings

Transcription

1 HFMA WEBINAR Sponsored By: Using Attribution to Drive Product Rationalization and Savings Date: December 6, 2012 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) Please log in 10 minutes early and test your computer as this is a new platform. To view and listen to this web seminar on your computer click on the following link (or paste it into a browser): 1. Type in your full name where it says "Enter as a Guest 2. Please Enter in Your First & Last Name ONLY! Do not type in GUEST 3. Click Enter Room Your computer will launch the webinar Online live seminars are broadcast over the web via Adobe Connect. You'll need a computer with a browser, Adobe Flash Player 10.1, and Internet connection. Test Your Computer If you have never attended an Adobe Connect meeting before: Test your connection: Meeting login issues Quick things to check first. Check the following simple items to help resolve meeting access issues. 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?

2 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. For Technical Support If connection with the presentation is lost or seems frozen, please exit out of the window and log back in to re-establish connection. If you experience difficulties with the audio during the presentation, please report it through the chat Q&A box. CPE Information To receive CPE Credits for this webinar. You must complete it within 2 working days. After 2 working days the meeting code won t be valid and you will not receive CPE Credit. 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. To complete our on-line evaluation: The URL below will take you to our on-line evaluation form. You will need to enter your I.D. # (confirmation ) You will also need to enter this Meeting Code: 12AT29 URL: Your comments are very important and enable us to bring you the highest quality Programs! If you have questions regarding registration please call HFMA Member Services at ( , ext 2).

3 Sponsored By: Using Attribution to Drive Rationalization & Savings December 6, :00 3:30 pm Central/3:00 4:30 pm Eastern Phil Oaten, President, Meperia Scott Pruyn, Product Manager, McKesson Strategic Supply Sourcing Webinar Series

4 Harnessing Data Normalization to Drive Product Savings Speaker Profiles Phil Oaten, President & CEO, Meperia Visionary entrepreneur with 25+ years of domestic and international business experience Responsible for the launch of NuVia by GHX Founding partner of Inobis, a recognized leader in healthcare supply chain data management 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

5 Using Attribution to Drive Product Rationalization & Savings Agenda Learning Objectives Current Supply Chain Challenges What is Attribution How Attribution is Applied to Healthcare s Products to Drive Product Rationalization Conclusion 3

6 How Attribution can Impact Supply Cost Learning Objective Understanding how product attribution unlocks hidden product cost savings 4

7 Healthcare s Current Content Challenge The Nature of the Problem Non Standard Information from Multiple Sources Dynamic data with 20-30% annual change Supply Spend is not restricted to medical surgical products Hospital information does not match industry norm Contracts based on manufacturer not vendor without crossreference Many descriptive alias terms for both vendor/mfr and product descriptions No standardized representation or word order prevents side by side comparisons Insufficient descriptive product information for key PPI products 5

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 defibrillators 1 60% of med/surg spend due to PPIs with implantable devices used in over 50% orthopedic procedures, and in over 33% of cardiac procedures 2 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 trend 3 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 What is Product Attribution A Process That Creates Understanding Attribution is the process of systematically breaking down the essential elements of a product, such as item numbers, unit of measure, descriptions, etc, so they can be effectively used to drive identification. When applied to a product description, attribution, as part of a normalization process, supports key word recognition that creates the basis of product comparison and understanding. There are three primary benefits associated with product attribution: Product Identification Product Rationalization Product Comparison 7

10 Distribution of Spend The Surprising Truth Distribution of Items Subscriptions 9% Supplies Other 1% Printed Material 0.5% Other 9% Office 2% Distribution of Dollars Technology 12% Linen/Services 1% Unknown 4% Capital Medical 3% Drug Related 12% Facilities 9% Med Surg 31% Example from a regional healthcare system including 18 hospitals, 70 clinics using 6 months of PO and Invoice data. Food 1% Gas 0.5% Lab 4% Maintenance 1% Zone Contract 2 PO Distinct Items Count IM Distinct Med-Surg Items Count ,101 3, ,852 5, ,733 5, ,052 11, ,366 9, ,094 46,497 Total 162,060 78,948 Potential Universe of Available Contracted Products 8

11 Product Identification The Distribution of Purchasing Activity Medical Surgical Items 60% of transactions in IM 40% requires manual intervention Non-File Item Master Of All Items 30% of all item transactions in IM 70% requires manual intervention Non-File Item Master Example from a regional healthcare system including 18 hospitals, 70 clinics using 6 months of PO and Invoice data. 9

12 Why Are So Many Items Non-File? This is Not Just a Healthcare Problem! If you can t find it in 3 minutes or less, it doesn t exist! 10

13 Product Identification What Happens When a User Can t Find What They Need? User tries to find a product User creates a non-file requisition Purchasing attempts to understand requisition Purchasing contacts user for clarification Purchasing looks up product or calls vendor Purchasing creates purchase order If non-automated, purchasing faxes order Process often repeated for the same item! What you may not know! 7% of a nurses time is spent on searching for supplies i 70-80% of all transaction errors are directly related to inaccurate product information ii 24% of supply chain iii management personnel time is spent correcting non-conformance errors 40% of the time a different price is paid for same product across hospital network ii Hospitals overpay 7% on PPI products ii i. Source ROI/Sisters of Mercy Health Systems 2009; - ii. Source Value of ecommerc in Healthcare 2001; iii. Source Concepts in Healthcare

14 Improving Product Identification A Three Step Process Virtual Product Catalogs - Helps expand the scope of products under management - Helps eliminate the need for internal Item Master maintenance Adding Pictures to Assist in Identification Helps reduce the need for descriptive accuracy Helps significantly improve improves identification and understanding Enhanced Technology - Mobile applications bring information to point of need - Market place type presentation layer helps improve understanding, comparison and ease of ordering 12

15 Expanding Access and Control Virtual Catalogs Virtual Item Master Primary Search Virtual Contract Master Distribution of Activity Secondary Search Virtual Industry Catalog Tertiary Search Purchase History ~ 63,000 items 500,000 GPO items A typical GPO 1.7 Million items 13

16 Virtual Catalogs Benefits that organizations typically achieve: Increased spend visibility >90% spend included within the virtual catalog Significantly reduced or eliminated hospital IM maintenance Improved contract optimization as user has visibility into contracted alternatives More accurate cross-walk to the charge master, of the 40% of medical surgical supplies purchased outside of the hospital IM 60% are typically physician preference and have significant cost and or revenue implication 14

17 Adding Pictures to Assist in Identification Benefits that organizations typically achieve: Significantly reduced descriptive confusion Improved understanding Reduced searching time Helps resolve downstream resolution Item Master Description = Scr sdrive10x5 lck str Vs. Screw titanium stardrive10x5mm locking sterile 15

18 Enhanced Technology Process Improvement Gained Through Ease of Interaction 16

19 Enhanced Technology Benefits that organizations typically achieve: Significant productivity improvements More spend under management Information available at point of transaction Tailored user experience, products presented based on user need and not one size fits all Lower cost functionally equivalent products can be presented during requisition process 17

20 Product Rationalization Attribution Used to Align Similar Products 18

21 Product Rationalization Attribution Used to Align Similar Products 19

22 Align Products Based on Specific Attributes Drives Analysis and Functional Comparison 20

23 Product Rationalization Benefits that organizations typically achieve: Makes comparing similar product easier Creates the foundation for value analysis Drives functionally equivalent product comparison: Used to convert to lower cost contracted alternatives User to dive processes improvements such as backorder replacement, bidding Used to detect potential savings leakage 21

24 How Data Attribution Drives Cost Savings 22

25 Using Attribution to Detect Price Variance Descriptive Variance Masks Product Usage Typical Non-File Hospital Description Normalized Description 23

26 Identification of Functional Equivalency Attribute Alignment Based on Specific User Need 24

27 Functional Alternatives Presented to the User An Enhanced But Controlled Experience 25

28 Directed Product Choice Auto-Promote Desired Employee Behavior 26

29 Normalized and Attributed Data Direct and Indirect Cost Savings that organizations achieve: Supply Cost Purchase price comparison informed users GPO contract maximization better tier level performance Product standardization greater purchasing power Revenue/Cost Capture All products spend identified Better mapping to the charge master More accurate budgeting Operational Efficiency Empowered users Reduced non-controlled spend Lower cost per PO line processed 27

30 Questions You Want to Ask Your Managers To Identify The Size of The Opportunity How much time do your clinicians spend searching for supplies? How much time does purchasing spend researching and clarifying what actually needs to be ordered? Where are challenges in achieving goals -- resources, time or technology? How do you always ensure that you pay the contract price you or your GPO negotiated? How do you drive users to contracted items? Where does supply chain automation rank strategically? Do you have visibility and control over OR purchases? 28

31 Questions You May Want to Ask Yourself What Would it Mean to My Organization!!! What would be the financial impact if you knew at the time of requisition users were purchasing contracted products at the contracted price? If you had the resources, time and technology, what would it enable you to have/do? AND If not? How satisfied with current visibility to spend? What would good quality attributed data bring you? How is poor control impacting you, dept, organization? What s at stake for your organization? 29

32 Next Webinar Register at HFMA.org Detecting Product Equivalency to Drive Lower Physician Preference Items February 14, :00-4:30 pm ET (2:00-3:30 pm CT) 30

33 Questions Phil Oaten President Meperia Office: Scott Pruyn Product Manager McKesson Office: