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New England Society for Healthcare Materials Management Ken Peterson, Vice President System Logistics Management Aurora Health Care April 16, 2004.

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Presentation on theme: "New England Society for Healthcare Materials Management Ken Peterson, Vice President System Logistics Management Aurora Health Care April 16, 2004."— Presentation transcript:

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2 New England Society for Healthcare Materials Management Ken Peterson, Vice President System Logistics Management Aurora Health Care April 16, 2004

3 A ** 2

4 Committed to Finding a Better Way Making Health Care a Competitive Advantage for Wisconsin Companies and Citizens 3

5 Using Web Based Technology & the Internet as a Driver Agenda Aurora at a Glance Focus on Operating Margin Materials Goals to Support Aurora Strategy Aurora’s Use of the Web & Internet Improvements & Successes Lessons Learned 4

6 Aurora Health Care Largest community owned, not for profit, integrated network in Wisconsin Largest private employer in State of Wisconsin: Employees: 27,162 Hospitals: 13 Acute Care and 1 Psych hospital Clinics: 113 Retail Pharmacies: 143 Revenue: $2.4 billion Supply Expense: $571MM Total Certified Beds: 2,598 Adult Inpatient Days: 430,973 at a glance 5

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8 The Three Part Commitment To the People of Eastern Wisconsin Whatever the national benchmarks are for price increases for 2003 through 2005, Aurora Health Care will be below Aurora Health Care will initiate actions to moderate total community health costs while demonstrating improved community health Aurora Health Care will be accountable to the community and transparent in its success in meeting its commitments 7

9 Moderate Total Community Health Costs Maintain Growth to meet needs of Community Replace Aging Capital Support New Technology (Speed/Cost of Change from an IS as well as from a Clinical stand point) Focus on Improving Operating Margin 8

10 Increase/Enhance Customer Service(s) 1. Web Based Requisitioning Tool Improve Productivity 1. Transmitting Transactions via Internet 2. Automating the Capital Process Effectively make use of Web-enabled technology and the Internet Reduce Costs/Improve Productivity 1. Contract Management Program (Premier’s e-Sourcing Program) See and Identify Opportunities to Reduce Costs 9

11 Increase/Enhance Customer Service(s) 4 Automated Single User Interface for procurement Vs use of multiple (proprietary) platforms (Aurora’s tool is IREQ -Intranet Requisitioning) (Global Healthcare Exchange (GHX)’s tool is “Catalyst” ) 4 Centralized all transactions through MMIS Means to support Outlying Users From 200 Users to 2700 Users ( Began Implementation 2001) 4 Lock Down/Approval features to assist departments’ control costs Web Based Technology & the Internet 1. Web Based Requisitioning Tool 10

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13 Web Based Technology & the Internet 1. Processing Transactions via the Internet: Aurora: Using XML (Extensible Markup Language) to process the 3 major ordering sets over the Internet via GHX to suppliers or direct to Cardinal Health --- ( PO (850), Confirmation (855), Invoice (810) (Began Implementation Oct 2001) Improve Productivity 4 Consolidates transactions through single intermediary vs. using numerous EDI systems 4 Facilitates accurate transmission of electronic purchase transactions by comparing data (catalog format: description, units of measure) that provider transmits with supplier data and flags discrepancies) (GHX “Content Intelligence) GHX… more than an Internet Intermediary! 12

14 4 Web Based Capital Approval Tool (completed and fully deployed) Increase the processing speed for submission/approval Improve accuracy of data & capturing full project costs Track processing times and data for bundling 4 Web Based Capital Request Tool (under development -- estimated completion Fall 2004) 4 Quote/RFP Tool (GHX) (working development with GHX) 4 Web Based Transactions via Internet (GHX) (working development with GHX & shopping for supplier to pilot program) Web Based Technology & the Internet 2. Automating the Capital Process 13

15 Authorization For Expenditure Request 14

16 Web Based Technology & the Internet Reduce Costs & Improve Productivity 1. Contract Management Program (Premier’s e-Sourcing Program)  Initiate Rapid Contract Implementation and Establish Accurate Pricing Act as central repository for all contracts Ensure accurate and timely contract pricing from day 1 Contract/Pricing Activation on line with Suppliers & Distributors (Active) 4 Facilitates Accurate Data Transmission Transmission of accurate nomenclature and pricing from Premier Contract File to users’ MMIS via GHX (Under Development) Pricing Confirmation via GHX during confirmation and invoicing (Under Development) 4 Reduce Healthcare Costs by Increasing Visibility/Availability of Data Enabling higher levels of contract compliance: Analytics: Contract Utilization- By Supplier, by Contract, by Product, by facility, by department… (Under Development) 4 Verify Purchase/Contract Volumes: Rebate Calculator (Under Development) 15

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18 3. Automation Requires/Be Prepared for Process Change: Change for Customers Change for your Staff & other Departments Change for Suppliers Lessons Learned 1. Establish a Vision: Why/what benefit am I trying to accomplish Involve your IS Dept Early Involve users as part of development process 2. Establish Current State Basis for Benchmark/Metrics Early Capability to prove value of Systems and Processes Credit for increases in productivity 4. Be Prepared to Commit Your Time and Resources Hold your staff, suppliers & intermediary accountable to meet agreed upon expectations Participate in User Groups 17

19 Improvements/Successes Purchasing Transactions via Web Based Technology & Internet 1. Intra/Internet Requisitioning Tool (IREQ): Productivity Gains 4 From Manual to Web Based: (Estimated) From 200 to 2700 users connected to MMIS Buyers: 17 Min per PO processed = 54,085 hr/yr equates to 26 FTE’s Savings Users: 19 Min per Req processed = 66,262 hr/yr equates to 31.8 FTE’s Savings 4 From FY 2000 to FY 2003 Expanded Central Purchasing Function with minimal staff increase FY Hospitals FY Hospitals FY Clinics FY Clinics 2. Productivity gains for Users and Staff increase as Aurora uses more Web Technology & continues to connect with more suppliers via GHX 4 Connected with 25 Suppliers on 850/855’s through GHX or direct with Distributor-Cardinal Health & Live with 3 Suppliers on 810’s and growing: (Volume = 43,750 PO’s/yr = $50MM/yr) 4 Reduction of pricing errors (Reduced 50% of open invoices w/Cardinal Health from $1.7M in Mar 02 to $26K today -- Continuous Pricing Verification) 3. Productivity gains with Automated Capital Request Process 4 Decrease processing (approval/coordination/negotiations/order from 11 weeks to 7 weeks) 18

20 Improve Order Efficiency Purchasing Staffing Levels 19

21 Cost to Implement Aurora’s Web- Based Requisitioning Tool 20 Hardware$ 60,000 Software$147,000 Consulting$400,000 Staff Time$ 30,000 1 FTE Full-Time Trainer Note: The hardware and software were purchased for this project but were then the foundation for all Web- based projects that followed.

22 Questions?? Web Based Technology & the Internet 21


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