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Vice President, Clinical Services Stanford Hospital and Clinics

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Presentation on theme: "Vice President, Clinical Services Stanford Hospital and Clinics"— Presentation transcript:

1 Achieving Results through a Multiple Hospital Material Management Model

2 Vice President, Clinical Services Stanford Hospital and Clinics
Jerrold Maki Vice President, Clinical Services Stanford Hospital and Clinics Stanford, CA Ryan Siemers Manager PricewaterhouseCoopers LLP Chicago, IL

3 Agenda The Goal Structure to Support Change
The ORC (Offsite Reprocessing Center) Maintaining IT Infrastructure Business Partners Key Performance Indicators

4 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


6 ORC Overview

7 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.

8 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

9 Case Cart Process Flow

10 Dirty Case Carts arriving at ORC

11 Dirty Case Carts get scanned into Decontam

12 Carts are emptied and trays prepped for wash

13 Dirty Case Carts get washed

14 Trays exit the washer and techs pickup for Assembly

15 Trays get assembled

16 … and count sheets printed

17 Trays are Sterilized

18 Trays are Cooled

19 Trays are scanned to location

20 Trays are scanned to location

21 Trays are pulled for Case Cart assembly

22 Case Carts are Assembled

23 Case Carts are pre-staged for deployment

24 ORC driver logs in and scans Case Carts to truck

25 Case Carts are loaded onto truck for deployment

26 Case Carts are transported to different hospitals

27 Case Carts are scanned to hospital clean dock

28 Case Carts are pre-staged for OR

29 OR Nurse scans Case Cart to room

30 OR Nurse scans any additional instruments needed for procedure

31 OR Nurse sprays with Pre-Klenz and places instruments back in container.

32 Case Carts are scanned into Decontam

33 Case Carts are inspected in Decontam

34 Scanning trays into Decontam

35 Scanning trays that go to ORC

36 Pulling trays that stay at hospital

37 Dirty Case Carts are pre-staged in Decontam for pickup

38 Performance Improvement

39 Performance Improvement Methodology
The following table depicts the Core Team structure: Team Leaders Chief, 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 IT Corporate MM

40 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.

41 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

42 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

43 ORC Staffing

44 ORC Staffing & Organizational Structure

45 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

46 ORC Staffing Analysis (cont.)
Therefore, the new budgeted FTE allotment increased to 10 as seen below: Budgeted Positions FTE’s ORC Manager 1 Inventory Analyst Shift Lead MM Tech’s 3 Materiel Management Tech’s 5 Totals 10

47 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.

48 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

49 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.

50 ORC Staffing Analysis (cont.)
Final approved FTE’s: Position Description FTE’s Manager 1 Inventory Analyst Buyer Shift Leads 3 Zone Operators 13 Total FTE’s 19

51 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.

52 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.

53 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.

54 Results Tracking

55 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.

56 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.

57 Offsite Reprocessing Center – Tracking Mechanisms

58 Offsite Reprocessing Center – Tracking Mechanisms (cont.)

59 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.

60 Supply Cost Management

61 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

62 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 Phase III: Smaller $ Opportunities Pursue better pricing

63 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

64 Savings Matrix SAMPLE

65 Sample Orders

66 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 $

67 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

68 Special Orders Dashboard

69 Received-Not-Invoiced

70 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

71 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

72 RNI Reduction Improvement (cont.)
Establish goal to resolve RNI within 30 days Develop report to group RNI into <15 days, 15 – 30 days, and >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

73 RNI Weekly Dashboard Note: reported for each facility as well

74 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

75 Note: reported for each facility as well

76 Results/Conclusion KPIs (high-level and departmental) Tracking Down
Special Orders Declining RNI Decreasing ORC Growing and Expanding

77 Speakers Jerrold Maki, Vice President-Clinical Services Stanford Hospital and Clinics Stanford, CA Ryan Siemers, Manager PricewaterhouseCoopers LLP Chicago, IL

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