Disrupting the Supply Chain

Disrupting the Supply Chain Jeff Ashkenase, Executive Vice President, Acurity and Nexera Jay Fligstein, Senior Vice President, Acurity Lori Pilla CPSM,RN,MBA, Sr. Vice President, Kaufman Hall

The Impact of Expanding Provider Networks on the Supply Chain PRESENTERS: Jeff Ashkenase, Executive Vice President, Acurity and Nexera Jay Fligstein, Senior Vice President, Acurity

Jeff Ashkenase, MPA Executive Vice President Jay Fligstein Senior Vice President

Agenda Market Trends Types & Stages of Affiliations What Each Stage Means for Supply Chain and Its Partners The Impact of Scale

A Family of Industry Experts

Market Trends: Kaufman, Hall & Associates Report Last year, the number of hospital mergers reached its highest level in more than a decade Total 115 transactions 11 deals involved sellers with net revenues of $1 billion or more 13% increase from 2016 As industry evolves, growing imperative for hospitals to build scale and grow organizational reach

First Things First Which entities are merging and why?

Things to Consider What is the reason for the affiliation; what is the endgame? What is the type of affiliation? Merger Joint venture Joint operating agreement Clinical affiliation Acquisition What is the level of operational integration and when will it occur? Leadership and staffing Technology Back office or shared services Clinical

Major Variables Impacting Supply Chain The legal relationship between the entities Affiliates: owned, leased, or managed Full-asset merger Types of organizations Acute, LTC, physician practices, urgent care, etc. Class of trade GPOs and affiliations Infrastructure, operations, and system integration Clinical and operational integration

Involving Supply Chain at the Outset M&A decisions are often made at the board level, with or without supply chain input The largest challenges faced by the supply chain when providers merge include Change management Technology integration Managing disparate data Supply chain is viewed as a quick, easy hit

Involving Supply Chain at the Outset M&A decisions are often made at the board level, with or without supply chain input The largest challenges faced by the supply chain when providers merge include Change management Technology integration Managing disparate data Supply chain is viewed as a quick, easy hit But, is it?

The Answer: Yes & No Factors include Labor considerations/talent management Price parity Scale for volume aggregation Standardization Conversions Systems integration (MMIS) Distribution models

Critical Success Factors Executive Sponsorship Project Mgmt. Structure Use of Analytics Tracking & Monitoring Support and oversight from anchor hospital IDN Steering Committee Communication with supply chain execs Alignment with the reasons behind the merger/acquisition Empowers team with dedicated project manager; meets monthly Directs, guides, and helps to identify, track, and implement goals Experienced and knowledgeable team that provides analytical support Aggregation of clean data stored in centralized database Submitted monthly Uses industry standards for reporting and business intelligence Developing dashboards to track and monitor progress

More Things to Consider Identifying financial and cultural barriers Assessing how the partners fit together Creating a governance structure Preparing financial projections Developing a shared vision

What is needed to successfully achieve the benefits of scale? From the supply chain perspective Leadership and knowledgeable staff to lead and manage change Technology to aggregate disparate information Clinical integration The ability to standardize

Considering Size, Volume, Scale & Core Competencies Hospital IDN GPO

How Does Your New Scale Impact the Following: Supply chain investments Data and technology Innovation Sourcing expertise Infrastructure Emerging technologies Most Favored Nations (MFN) clause Rational market pricing Contractual protections Your customers

GOAL: Operating at the Intersection of Cost, Quality, and Outcomes Does your scale allow you to innovate?

Financial Operations Track: Disrupting the Supply Chain Presenters: Lori Pilla CPSM,RN,MBA Sr. Vice President, Kaufman Hall

AGENDA: Changing the Game New Rules/Policies Key Shifts in Supply Chain How prepared are you?

New Players: Shaking up Healthcare Supply Chain Provider partnerships shaping the course Reinventing the supply chain model

New Players: Shaking up Healthcare Supply Chain Value-Based Services, focus of long-term growth Expanding capabilities

New rules/policies coming into play Major payers/players focusing on the Consumer model Merging strategies to reduce cost Landscape changes with new providers

Shifts you can expect in Supply Chain Focus of Strategy and Operations Delivery of care

Shifts you can expect in Supply Chain Changing patient population Balancing the goals of value-based care

How prepared are you? Good data drives good decisions Transparency and accountability Be prepared to flex Know your business

Lori Pilla, CPSM, RN, MBA Senior Vice President Kaufman Hall About the Presenter Lori Pilla is a registered nurse and Senior Vice President with Kaufman Hall s Strategic and Financial Planning practice. Her responsibilities focus on assisting a broad range of healthcare organizations with strategic, financial, and clinical performance improvement initiatives. Ms. Pilla has 30 years of experience in healthcare, spanning executive leadership, clinical, operations, business development, and consulting roles. Her areas of expertise include strategic and financial planning, clinical best practices, operations, supply chain management, and data-driven performance improvement. Prior to joining Kaufman Hall, Ms. Pilla was Vice President for Supply Chain Performance Solutions and New Business Development with Intalere GPO, Inc. In that role, she worked with acute and non-acute healthcare organizations in designing and implementing supply chain management, cost reduction, strategic sourcing, and clinical and operational performance improvement solutions. Ms. Pilla previously served as Director of Clinical Contract Design for Ascension Health System, where she partnered with executive and clinical leadership to oversee the health system s full product portfolio, assisted in the delivery of strategic cost reduction solutions, and led contract negotiations. Her experience also includes serving as Director of Business Development Operations and Surgical Services for St. Anthony s Medical Center, Director of Clinical Supply Chain Sourcing with MedAssets, LLC, and Clinical Development Director for SurgCenter Development. Ms. Pilla received an M.B.A. from Lindenwood University in St. Louis, a B.S. in Business Management from Maryville University, and an A.A.S. in Nursing from St. Louis Community College. She has authored numerous articles in industry journals, and is Lean Six Sigma Green Belt certified. Ms. Pilla is also an active member of the American Association of Ambulatory Surgery Centers and the Institute for Supply Management, from which she attained her Certified Professional in Supply Management Certification (CPSM). Contact Ms. Pilla at lpilla@kaufmanhall.com or 224.724.3215.