Presentation on theme: "Vice President, Clinical Services Stanford Hospital and Clinics"— Presentation transcript:
1Achieving Results through a Multiple Hospital Material Management Model
2Vice President, Clinical Services Stanford Hospital and Clinics Jerrold MakiVice President, Clinical ServicesStanford Hospital and ClinicsStanford, CARyan SiemersManagerPricewaterhouseCoopers LLPChicago, IL
3Agenda The Goal Structure to Support Change The ORC (Offsite Reprocessing Center)Maintaining IT InfrastructureBusiness PartnersKey Performance Indicators
4The GoalEnhance and optimize the Supply Chain across the four Bon Secours hospitals in the Richmond market through:Maximization of Offsite Reprocessing CenterEffective use of MMIS & other technologyPartnering with Distributors and GPOCost ManagementPerformance Measurement
7What 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.
8ORC BenefitsThe consolidation of 4 hospitals and all ambulatory surgery centers’ sterile processing departments (SPD) to an off-site location resulted in:Improved quality for end-usersGreater speed of serviceFreed-up much needed space at the hospital campusesConsolidation 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 hospitalReduced inventory and carrying costs at hospitalsFuture opportunities of utilizing the ORC as a revenue generating entity by selling services to other regional health care providers
39Performance Improvement Methodology The following table depicts the Core Team structure:Team LeadersChief, NetworkOperationsV.P., MaterielManagementBon Secours Richmond Team MembersV.P., Surgical ServicesDirectors of OperationsFinanceHospital EVPsORC SupervisorPurchasing ManagerDirector, Internal AuditHealth Systems Office Team MembersCorporate ITCorporate MM
40Performance 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.
41Performance Improvement Methodology Examples of some of the initiatives in the work plan:EDI 856 receiving interfaceShipping feedback interfaceReceiving interfaceUnit of Measure (UOM) adjustmentsInventory synchronization - Spectrum to LawsonPhysical inventoryOverflow resolutionSpectrum hardware and software maintenanceCardinal item file reviewSpectrum re-order point analysis
42Performance Improvement Methodology Work Plan Initiatives (cont.):Instrument processingLawson kill list reviewPast due PO list reviewProduct substitution processProduct return / credit processReport accessMin / max reorder pointsORC staffing resource analysis and organization structureSupply cabinet interface
45ORC Staffing AnalysisAn ORC staffing analysis was performed to identify the resource requirements needed to manage and run the operationFor 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 ManagerFive Materiel Management TechniciansPrior 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 AnalystThree Shift Lead Mat. Mgmt. Tech’s
46ORC Staffing Analysis (cont.) Therefore, the new budgeted FTE allotment increased to 10 as seen below:Budgeted PositionsFTE’sORC Manager1Inventory AnalystShift Lead MM Tech’s3Materiel Management Tech’s5Totals10
47ORC 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.
48ORC 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 weekThe 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
49ORC 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.
51ORC 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.
52ORC 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.
53ORC 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.
55Tracking MechanismsThe primary tracking tool is a Microsoft Access database which is populated by raw data from Lawson. The main tracking mechanisms are:Fill Rate PercentageThe 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 OrdersPast 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.
56Tracking Mechanisms (cont.) Repeat Killed Items ReportReport 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 killedPrevious weeks killed items with # of days item has killedItems 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 rangeThe total number of lines killed for that specific item corresponding to the given date rangeLawson Discontinued ItemsWhen items are discontinued in Lawson (typically initiated by the HSO), the item description is modified by adding “(D)” at the beginning.instead of 50.
57Offsite Reprocessing Center – Tracking Mechanisms
58Offsite Reprocessing Center – Tracking Mechanisms (cont.)
59Offsite 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.
61Cost Reduction Opportunity Benchmarking High-level Key Performance Indicators ($5M - $12M)Supply Cost per CMI Wt. Adj. Pt. DaySupply Cost as % Net RevenueSupply 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 spend56% of the lines were matched for benchmarking
62Cost Reduction Initiatives Contracting opportunities divided into Phases:Phase IA: Local Vendor NegotiationsContact vendors and request pricing agreementsExecute agreements and upload pricingPhase IB: GPO OpportunitiesEnsure correct tier pricingIdentify standardization opportunitiesPhase II: Further Savings on Phase I ProductsObtain better pricing from remaining vendorsPhase III: Smaller $ OpportunitiesPursue better pricing
63Cost Reduction Initiatives (cont.) Physician Preference InitiativesContinue to discuss opportunities at Clinical Utilization Committee meetings (Cardiology- Radiology, Surgical and Nursing) and control introduction of new productsAdditional Initiatives: Reprocessing, Pharmacy, Dietary, Linen & Laundry, Instrument Purchase & Repairs, outstanding GPO InitiativesSupply Cabinets Lease
66Special 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%)Target10% of PO Lines20% of PO $
67Special 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” ordersMonitor and track departments in relation to the target utilizing the Special Orders DatabaseBenefits of ensuring items are in the item file include:Ensure receiving contract pricing and complianceIdentify products for which a contract needs to be negotiatedEnsure accurate purchase historyReduce manual entry time required for ordering
70Received-Not-Invoiced Issue 41.7% of RNI Dollars are greater than 30 daysThe oldest RNI transaction dates back over a yearCath Lab and OR = 61%190 Vendors have RNI transactions > 45 daysStandard payment terms – 45 days
71RNI Reduction Improvement Clean up RNI > 30 days oldEstablish plan and goals to clean up aged RNI transactionsIdentify resources to research RNI and determine resolutionObtain vendor statements for top vendorsEstablish procedures to clean RNI transactions in Lawson
72RNI Reduction Improvement (cont.) Establish goal to resolve RNI within 30 daysDevelop report to group RNI into <15 days, 15 – 30 days, and >30 daysRun RNI report weekly to help ensure resolution of RNIEstablish roles and responsibilities, processes and expectations to resolve RNIInstitute vendor statement reviewImplement RNI Policy
73RNI Weekly DashboardNote: reported for each facility as well
74Other Cost Management and Performance Improvement Activities Implemented system-wide monitoring and tracking of Key Performance Indicators (KPIs)Developed Vendor Access PolicyEstablished more rigor around introduction of new products and new technologyEnhanced effectiveness and process of Utilization CommitteesIncreased GPO involvement and servicesPerformed system-wide item file clean-upEducated staff to better utilize Lawson reporting capabilities