Purchaser/supplier Global Relations: Global overview of successful experiences Presenter: Doug Kent, Interim Chief Operating Officer, Health Shared Services BC IHF GPO Conference, Paris, France November 4, 2014

Note: Numbers are for Fiscal Year 2011/12 (ended on March 31, 2012.) Health Shared Services BC A not-for-profit shared services organization created by and for BC's six health authorities to enhance value to the health system through the effective and efficient delivery of support services. BC’s Health Authority Spending: approx. $12B Encompassing: Acute Care Facilities: 88 Community Care Long Term Residential Care Provincial Programs (Cancer, Renal, Transplant, etc) HSSBC’s Value Proposition Opportunity Predictability Capacity Cost Risk A quick slide to tell you who HSSBC is and to provide some context on the delivery of healthcare in BC - which is slightly different from the rest of Canada. The delivery of all health care in BC, except for physician services provided through private practices and retail drugs, is through six health authorities – known for short as HAs. This encompasses everything from acute care through to community care and long term care. The objective is to have an integrated approach to health care delivery across the continuum. Although general practitioners and specialty clinicians provide care through their office-based practices, most physicians work extensively with their regional health authority to ensure integrated health delivery. Of the 6 HAs, five are regionally based with mandates to serve their distinct populations. The sixth health authority (PHSA) administers and delivers provincial programs and specialty services such as Renal, Cardiac, Cancer, Transplant, Mental Health and specialized Women’s and Children’s programs. These programs are delivered with and through the regional health organizations or at purpose built facilities such as Regional Cancer Centres and the BC Children’s Hospital. A benefit of this structure is that administrative costs in BC are some of the lowest in the country. Even though this is true, the 6 HAs identified that sharing the cost for non-clinical support services could further reduce these administrative costs. In addition, they identified that consolidating their collective purchasing power would provide better pricing and that standard clinical products and business processes would free up clinical time, improve patient safety and practitioner safety. To pursue these objectives, the HAs formed Health Shared Services BC (HSSBC) which is a member owned organization.. HSSBC is governed by the 6 HAs, a Ministry of Health representative and 2 independent members of the public while PHSA provides management and administrative oversight. HSSBC manages around $2 Billion in services and spending for the HAs. HSSBC is the sole purchasing agent for the HAs for all purchases except for clinical services and facilities construction. In the last five years, through efficiency improvements and leveraged buying power, it has projected delivery of over $250 million in expense reductions which have been invested back into clinical programs. 2 Note: Numbers are for Fiscal Year 2011/12 (ended on March 31, 2012.) 2

HSSBC Supply Chain has been a success Over $230 Million Procurement Savings Reduced commercial risk Improved quality of service Contained cost of service Suppliers’ success essential to overall success Not all suppliers have been winners Measure of success varies

Measures of success Q/C Health Organization Supplier R/C Cost is cost of acquisition plus overall supply chain cost which includes admin and lost opportunity cost Supplier R/C Supply Chain objective is upper right quadrant Foundations of success Q - Quality of Care R – Revenue C - Cost

Foundations of success Full Supply Chain accountability Increased purchasing power Collaborative approach to manage supply chain Reduction in cost of sales Leverage scale Full Supply Chain accountability Increased purchasing power Collaborative approach to manage supply chain Reduction in cost of sales Leverage scale

Changing expectations of Success Supplier supported innovation adoption Reduction in Supply Chain disruptions Responsive to changing strategic and clinical priorities Opportunity to grow intellectual capital Increased pressure for revenue growth and profitability Improve outcomes and reduce cost of care Higher involvement in the management and ownership of innovation risk Reduction in Supply Chain disruptions Responsive to changing strategic and clinical priorities Opportunity to grow intellectual capital Increased pressure for revenue growth and profitability Continued pressure to improve outcomes and reduce cost of care