Presentation on theme: "Achieving Results through a Multiple Hospital Material Management Model."— Presentation transcript:
Achieving Results through a Multiple Hospital Material Management Model
Jerrold Maki Vice President, Clinical Services Stanford Hospital and Clinics Stanford, CA Ryan Siemers Manager PricewaterhouseCoopers LLP Chicago, IL
Agenda The Goal Structure to Support Change The ORC (Offsite Reprocessing Center) Maintaining IT Infrastructure Business Partners Key Performance Indicators
The Goal Enhance and optimize the Supply Chain across the four Bon Secours hospitals in the Richmond market through: Maximization of Offsite Reprocessing Center Effective use of MMIS & other technology Partnering with Distributors and GPO Cost Management Performance Measurement
What is the Offsite Reprocessing Center (ORC)? The ORC was created in order for Bon Secours Richmond Health System (BSR) to be proactive toward a projected increase in surgical procedures and supply utilization across the local market. To offset the financial and operational demands of this increase, the BSR Executive Management Team, along with CVHN, approved the creation of the ORC.
ORC Benefits The consolidation of 4 hospitals and all ambulatory surgery centers’ sterile processing departments (SPD) to an off-site location resulted in: Improved quality for end-users Greater speed of service Freed-up much needed space at the hospital campuses Consolidation of hospital storerooms and full movement to a just-in-time (JIT) hospital environment utilizing a bulk inventory facility at the off-site location resulted in: Avoidance of vendor JIT service fees (ValueLink), which were increasing due to increased surgical services volumes and the opening of a new hospital Reduced inventory and carrying costs at hospitals Future opportunities of utilizing the ORC as a revenue generating entity by selling services to other regional health care providers
Case Cart Process Flow
Dirty Case Carts arriving at ORC
Dirty Case Carts get scanned into Decontam
Carts are emptied and trays prepped for wash
Dirty Case Carts get washed
Trays exit the washer and techs pickup for Assembly
Trays get assembled
… and count sheets printed
Trays are Sterilized
Trays are Cooled
Trays are scanned to location
Trays are pulled for Case Cart assembly
Case Carts are Assembled
Case Carts are pre-staged for deployment
ORC driver logs in and scans Case Carts to truck
Case Carts are loaded onto truck for deployment
Case Carts are transported to different hospitals
Case Carts are scanned to hospital clean dock
Case Carts are pre-staged for OR
OR Nurse scans Case Cart to room
OR Nurse scans any additional instruments needed for procedure
OR Nurse sprays with Pre-Klenz and places instruments back in container.
Case Carts are scanned into Decontam
GOES TO ORC St. Mary’s MRMC St. Francis O R C STAYS AT HOSPITAL Case Carts are inspected in Decontam
Scanning trays into Decontam
Scanning trays that go to ORC
Pulling trays that stay at hospital
Dirty Case Carts are pre-staged in Decontam for pickup
Performance Improvement Methodology Team LeadersChief, Network Operations V.P., Materiel Management Bon Secours Richmond Team Members V.P., Surgical Services Directors of Operations Finance Hospital EVPs ORC Supervisor Purchasing Manager Director, Internal Audit Health Systems Office Team Members Corporate ITCorporate MM The following table depicts the Core Team structure:
Performance Improvement Methodology Develop a work plan that incorporated all improvement initiatives including implementation steps, dates for completion, and responsible parties. The work plan was discussed and updated at each Core Team meeting. Develop metrics that could be used to track progress. The fill rate of hospital supply requisitions was the high level indicator that was used to track progress. Other indicators were used to track progress of individual initiatives, e.g., killed line items, past due purchase orders, discontinued items ordered, number of temporary ORC employees, etc.
Performance Improvement Methodology Examples of some of the initiatives in the work plan: EDI 856 receiving interface Shipping feedback interface Receiving interface Unit of Measure (UOM) adjustments Inventory synchronization - Spectrum to Lawson Physical inventory Overflow resolution Spectrum hardware and software maintenance Cardinal item file review Spectrum re-order point analysis
Performance Improvement Methodology Work Plan Initiatives (cont.): Instrument processing Lawson kill list review Past due PO list review Product substitution process Product return / credit process Report access Min / max reorder points ORC staffing resource analysis and organization structure Supply cabinet interface
ORC Staffing & Organizational Structure
ORC Staffing Analysis An ORC staffing analysis was performed to identify the resource requirements needed to manage and run the operation For the ORC Central Stores processes, the original Project Plan called for a Monday through Friday work week and two 8 hour shifts per day. Cardinal was required to deliver products Monday, Wednesday, and Thursday evenings, while Baxter would deliver on Tuesday and Thursday. The FTE resources allocated for this project were 6 FTE’s as seen below: One ORC Manager Five Materiel Management Technicians Prior to the ORC going live, it was decided that, for the interim, Cardinal would deliver products Monday through Friday. Also, a third shift was added to breakdown and put away the products so that the first and second shifts could concentrate on picking. To facilitate these changes, 4 additional FTE’s were requested and approved. They are: One Inventory Analyst Three Shift Lead Mat. Mgmt. Tech’s
ORC Staffing Analysis (cont.) Therefore, the new budgeted FTE allotment increased to 10 as seen below: Budgeted PositionsFTE’s ORC Manager1 Inventory Analyst1 Shift Lead MM Tech’s3 Materiel Management Tech’s5 Totals10
ORC Staffing Analysis (cont.) In December of 2005, it was decided that further additional resources would be required to complete the staffing of the three shifts. PWC was asked to perform this analysis. The following table shows the results of this analysis: The Shift Leads will support the picking process during periods of high volume.
ORC Staffing Analysis (cont.) Below are the calculations on processed lines used to determine the required FTE’s: The average number of lines processed per day for the time period of Nov. 1, 2005 through Dec. 9, 2005, excluding the week of Thanksgiving, equals 4,418, or 22,090 lines per week The ORC has two carousels that are used over two shifts, equating to 32 hours of productivity per day (2 carousels x 2 shifts x 8 hours per shift) Each Carousel is rated at 150 lines per hour
ORC Staffing Analysis (cont.) Carousel 1 is named zone 1, carousel two is named zone 2, and zone 3 is used for bulk items considered too large to be picked efficiently by the carousel. Data is not available on the breakdown of where the lines are filled. However, observations and interviews showed that the breakdown is roughly 40% from each of the carousels and the remaining 20% from zone 3.
ORC Staffing Analysis (cont.) Final approved FTE’s: Position DescriptionFTE’s Manager1 Inventory Analyst1 Buyer1 Shift Leads3 Zone Operators13 Total FTE’s19
ORC Organizational Structure Shift One: 8:00 a.m. – 4:00 p.m. Positions shown are approved and budgeted. Shifts one and two primarily perform picking duties. Shift three performs breakdown and put away.
ORC Organizational Structure Shift Two: 3:00 p.m. – 11:00 p.m. Positions shown are approved and budgeted. Shifts one and two primarily perform picking duties. Shift three performs breakdown and put away.
ORC Organizational Structure Shift Three: 11:00 p.m. – 7:00 a.m. Positions shown are approved and budgeted. Shifts one and two primarily perform picking duties. Shift three performs breakdown and put away. Final plan is to move to Monday, Wednesday, and Friday Cardinal deliveries, thus reducing the breakdown and storage coverage required. Scheduled implementation for first week of April, 2006.
Tracking Mechanisms The primary tracking tool is a Microsoft Access database which is populated by raw data from Lawson. The main tracking mechanisms are: Fill Rate Percentage The fill rate percentage at the ORC is calculated by taking the total lines killed during the ordering process and dividing by the total number of lines ordered and then subtracting this answer from 1. For example, 100 lines are ordered and 10 lines kill. Fill Rate Percentage = 1 – (10 / 100) = 0.9 or 90% Past Due Purchase Orders Past Due Purchase Orders are tracked due to their impact on receiving. A PO is considered past due if it has not been received after three consecutive business days from its order date. To elaborate on the impact of this report, if an item has a re-order quantity of 50 and 20 of those 50 are on a past due PO, the procurement system (Lawson in this case) will continually only order up to an additional 30 items (50 minus 20) because it knows that 20 are already on order. This has effectively reduced the on hand quantity (par level) to 30 instead of 50.
Tracking Mechanisms (cont.) Repeat Killed Items Report Report shows various levels of detail on items that are killing during the filling process, either in Lawson or the Carousel. Specific information available is: Current weeks killed items with # of days item has killed Previous weeks killed items with # of days item has killed Items specific volume rank calculated from total lines ordered (i.e., the #1 ordered product in the ORC) The total number of lines ordered for that specific item corresponding to the given date range The total number of lines killed for that specific item corresponding to the given date range Lawson Discontinued Items When items are discontinued in Lawson (typically initiated by the HSO), the item description is modified by adding “(D)” at the beginning. instead of 50.
Offsite Reprocessing Center – Tracking Mechanisms
Offsite Reprocessing Center – Tracking Mechanisms (cont.)
Repeat Killed Items Report: Note that this is a condensed version of a full report. It has been condensed to better fit on to this page.
Supply Cost Management
Cost Reduction Opportunity Benchmarking High-level Key Performance Indicators ($5M - $12M) Supply Cost per CMI Wt. Adj. Pt. Day Supply Cost as % Net Revenue Supply Cost as % Operating Exp. Supply Cost per CMI Wt. Adj. Disch. Detailed, item-level Benchmarking ($2.2M - $6.3M) 7 Months PO History Data (09/2005 – 03/2006) 121,608 lines of data represented (PO and drop ship purchases) ~$60M in total spend 56% of the lines were matched for benchmarking
Cost Reduction Initiatives Contracting opportunities divided into Phases: Phase IA: Local Vendor Negotiations Contact vendors and request pricing agreements Execute agreements and upload pricing Phase IB: GPO Opportunities Ensure correct tier pricing Identify standardization opportunities Phase II: Further Savings on Phase I Products Obtain better pricing from remaining vendors Identify standardization opportunities Phase III: Smaller $ Opportunities Pursue better pricing
Cost Reduction Initiatives (cont.) Physician Preference Initiatives Continue to discuss opportunities at Clinical Utilization Committee meetings (Cardiology- Radiology, Surgical and Nursing) and control introduction of new products Additional Initiatives: Reprocessing, Pharmacy, Dietary, Linen & Laundry, Instrument Purchase & Repairs, outstanding GPO Initiatives Supply Cabinets Lease
Savings Matrix SAMPLE
Special Orders Issue April 2006 Actual 3,352 Special Order Lines out of 14,242 PO Lines (23.5%) $2,154,018 Special Order $ out of $6,047,147 PO $ (35.6%) Target 10% of PO Lines 20% of PO $
Special Orders Issue (cont.) Goal was to reduce the # of Special Purchases to 10% / 20% by: Identifying and adding items to the Item File and updating department templates accordingly (established criteria and policy) Educating requisitioners on importance of using Item File and not “free-texting” orders Monitor and track departments in relation to the target utilizing the Special Orders Database Benefits of ensuring items are in the item file include: Ensure receiving contract pricing and compliance Identify products for which a contract needs to be negotiated Ensure accurate purchase history Reduce manual entry time required for ordering
Special Orders Dashboard
Received-Not-Invoiced Issue 41.7% of RNI Dollars are greater than 30 days The oldest RNI transaction dates back over a year Cath Lab and OR = 61% 190 Vendors have RNI transactions > 45 days Standard payment terms – 45 days
RNI Reduction Improvement Clean up RNI > 30 days old Establish plan and goals to clean up aged RNI transactions Identify resources to research RNI and determine resolution Obtain vendor statements for top vendors Establish procedures to clean RNI transactions in Lawson
RNI Reduction Improvement (cont.) Establish goal to resolve RNI within 30 days Develop report to group RNI into 30 days Run RNI report weekly to help ensure resolution of RNI Establish roles and responsibilities, processes and expectations to resolve RNI Institute vendor statement review Implement RNI Policy
RNI Weekly Dashboard Note: reported for each facility as well
Other Cost Management and Performance Improvement Activities Implemented system-wide monitoring and tracking of Key Performance Indicators (KPIs) Developed Vendor Access Policy Established more rigor around introduction of new products and new technology Enhanced effectiveness and process of Utilization Committees Increased GPO involvement and services Performed system-wide item file clean-up Educated staff to better utilize Lawson reporting capabilities
Note: reported for each facility as well
Results/Conclusion KPIs (high-level and departmental) Tracking Down Special Orders Declining RNI Decreasing ORC Growing and Expanding
Speakers Jerrold Maki, Vice President-Clinical Services Stanford Hospital and Clinics Stanford, CA Ryan Siemers, Manager PricewaterhouseCoopers LLP Chicago, IL