Tag Archives: supply chain

Intalere Member Best Practice Spotlight – The University of Vermont Medical Center – Cybersecurity, Who’s Protecting Your Patients’ Digital Information? Technical Standards Review and the Role Supply Chain Can Play in Enforcement and Compliance

Issue

Many hospitals rely on their suppliers to protect their patients’ Protected Health Information (PHI), leaving both the hospital and their patients vulnerable to hackers, HIPAA violations and unplanned outages due to incompatible and outdated technologies.

Solution

To take the responsibility for protecting patient data out of the hands of their suppliers, The University of Vermont (UVM) Medical Center developed a multi-disciplinary group whose mission was to evaluate all newly-acquired technologies, technology changes and their potential impact on the organization to ensure that they are supportable, secure and highly reliable. The Technical Standards Review Board (TSRB) reviews more than 250 applications per year, an average of 10% of which are rejected due to cybersecurity issues, reliance on unsupported third-party applications/databases or incompatibility with The UVM Medical Center’s technical standards for which no remediation is possible. Another 20% of the applications are rejected and subsequently appealed. The supply chain department will then engage with the supplier to discuss what can be done to address the technical issues. In the vast majority of the instances where an appeal was sought, working with the supplier or revising contractual language has enabled the end user clinicians and their support personnel to be able to safely deploy the best technological solution to fit their needs.

Outcome

Since the adoption of this process, approximately 50 software applications and medical devices per year, that would not otherwise be available to the organization due to technical deficiencies, were able to be deployed to the direct benefit of The University of Vermont (UVM) Medical Center patients.

About The University of Vermont Medical Center

The University of Vermont Medical Center (UVM Medical Center), along with the Larner College of Medicine at UVM and UVM College of Nursing and Health Sciences, is one of 138 academic medical centers in the country. Through The University of Vermont Health Network and collaborative relationships throughout Vermont and northern New York, UVM Medical Center is able to provide the highest quality care, informed by academic research, to patients throughout our region.

Check out the project video and view the UVM Medical Center page in the 2018 Intalere Best Practices Compendium.

Intalere Member Best Practice Spotlight-Summit Pacific Medical Center-Supply Chain Transformation

Issue

The Summit Pacific Medical Center (SPMC) materials management department needed to shift from a manual procurement-focused ticket system to an inventory-based, data-driven, end-to-end supply chain model to provide enhanced support and value to SPMC clinical areas.

Solution

By the end of 2017, the SPMC materials management team had succeeded in expanding and improving inventory throughout the hospital and was pushing the boundaries of integrating new areas into the materials management system. Through 5S, Standard Work and Continuous Improvement methods, the materials management team created a highly efficient, data-driven replenishment system that enabled Par Optimization Analysis and slotting logic to proactively size and adjust locations based on consumption to deliver a high reliability of inventory at a low cost of effort. Through point-of-use integration, clinical staff was spending less time managing supplies and had more of what was needed to treat patients. By reducing and sizing inventory locations to demand, supply chain staff was able to reduce their workload and convert former areas that were needed for inventory to patient care areas. To add visibility and transparency to the process, they developed a robust set of dashboards that accurately reported their progress toward goals and areas for improvement and provided important information and feedback to end users on their supply expenses.

Outcome

The improved process resulted in an increase in materials management controls and supply maintenance tracking from 2,727 physical inventory tracked locations to more than 4,364 locations. There was also a net 30% reduction in inventory levels and total hospital inventory turn rate of 4.6. Data visibility was added to department purchases, as well as enhanced controls. Clinical staff time spent on materials management was significantly reduced.

About Summit Pacific Medical Center

Summit Pacific Medical Center (SPMC) is a critical access hospital with a Level IV Trauma designation. SPMC offers 24-hour emergency services including a full-service laboratory and diagnostic imaging department. The Emergency Department is staffed 24 hours, 7 days a week by an ED physician. SPMC also operates three rural healthcare clinics and an urgent care clinic that is open seven days a week. The hospital is unique due to its size and accessibility. SPMC is proud of its low emergency department wait times and its ability to give patients access to a doctor quickly.

Check out the project video and view the Summit Pacific Medical Center page in the 2018 Intalere Best Practices Compendium.

Intalere Member Best Practice Spotlight – Mankato Surgery Center – Managing the Supply Chain and Inventory Efficiencies

ISSUE

Mankato Surgery Center was noticing variables in the year-end physical inventory counting, inconsistencies in product nomenclature, inaccuracies in identifying consignment inventory, and inaccuracies of the physical counts that lead to significant over-valuation of inventory and difficulty in determining profitability.

SOLUTION

A newly created multi-disciplinary Inventory Efficiency Workgroup identified the general assumptions and developed a project scope. The objectives for the project were to eliminate the duplication of labor that occurred during the annual physical inventory of correcting entry counts and to eliminate the erroneous inventory valuation during the annual financial audit. After thorough auditing, benchmarks were created. The multi-disciplinary workgroup team approached and solved the issues from different focal points.

OUTCOME

It was determined that the Item Master List was the pinnacle of the overall issues. Seven percent of products on the Item Master List were identified as inconsistent nomenclature and product misidentification. Staff spent more than 60 hours correcting the Item Master List. Further, the annual financial audit showed inventory was overstated by 94.4% and by removing vendor-owed inventory from the Consignment List, the correct inventory value was calculated. It was also found that the Implant Inventory was set at an artificially high quantity to save computer key strokes, so this was eliminated, thereby, eliminating the artificial high-value of inventory.

ABOUT MANKATO SURGERY CENTER

Mankato Surgery Center, accredited by AAAHC, is a multi-specialty, physician- owned ambulatory surgery center located in south-central Minnesota. Mankato Surgery Center focuses on providing the highest quality ambulatory surgical care with state-of-the-art surgical equipment and technology, and highly skilled and trained staff.

Check out the project video and view the Mankato Surgery Center page in the 2018 Intalere Best Practices Compendium.

Intalere Member Best Practice Spotlight-Parkview Health-Supply Chain Takes on Construction RFP and Bid Management

ISSUE

A major lesson learned from Parkview Health System’s rapid growth expansion over the past several years was that there were gaps in transparency of construction bids, contractual requirements and invoice review with which Supply Chain could have assisted.

SOLUTION

Teams were assembled to conduct a gap analysis and develop process improvements for construction acquisition and contracting. Internal auditing uncovered critical gaps in processes when it came to choosing contractors and evaluating invoices. This audit led to the development of a Construction Concept to Implementation Flow Chart that helped the team understand the current process in detail. Supply Chain inserted steps and processes into the flow chart based on current policy and the gaps identified by the teams involved in the review.

OUTCOME

The process changes implemented will result in cost savings (as identified in the audit) as well as a perception of transparency in the bid processes. Contractual improvements will result in more clarity in billing of when and how much should be paid. Success is measured by adherence to the newly prescribed processes including a formal vendor certification process, identifying standard contract templates and addendums, recording events that identify errors in invoicing, and savings that occur due to the reductions.

ABOUT PARKVIEW HEALTH

Parkview Health is a not-for-profit, community-based health system serving a northeast Indiana and northwest Ohio population of more than 820,000. With more than 10,000 employees, it’s the region’s largest employer. Its mission is to improve patient health and inspire patients to take steps to improve their own well-being. Parkview Health has been serving these communities since its early beginnings as Fort Wayne City Hospital in 1878.

Check out the Parkview Health page in the 2017 Intalere Best Practices Compendium.

Intalere Member Best Practice Spotlight – Virginia Mason Medical Center – Virginia Mason Memorial Supply Chain Integration

ISSUE

With Supply Chain expenses for medical supplies, devices and implants hovering around 10% of an organization’s total net revenue, this is an area where economies of scale, negotiating power and collaboration come together to make healthcare more sustainable and cost effective. The Virginia Mason Health System is committed to taking advantage of these opportunities through a team-centered approach which results in better financial results and improved, focused patient care.

SOLUTION

A team consisting of Virginia Mason Supply Chain leadership, Intalere and Health Resource Services (HRS) representatives instituted weekly meetings that focused on sharing best practices, analyzing standardization opportunities, identifying technology solutions and developing joint project plans. Intalere Savings Roadmaps identified savings opportunities available by simply taking advantage of existing Intalere and HRS regional agreements without any conversion, known as Quick Wins, or by aggregating volume and tier optimization. These Quick Wins accounted for approximately $532,723 in aggregated savings in 2016 and was accomplished without having to convert any suppliers.

OUTCOME

Virginia Mason Health System was able to prioritize and implement more than 60 contracts and tier adjustments. Total savings for phase one of the project topped $1.2 million for the health system. In later phases, the health system will work with Intalere and HRS in the areas of physician preference items, purchased services and other non-labor spend.

ABOUT VIRGINIA MASON MEMORIAL

Established in 1920, Virginia Mason Health System is a non-profit organization offering a system of integrated health services. A multispecialty group practice of more than 460 employed physicians, it offers both primary and specialty care as well as an acute care hospital, licensed for 336 beds.

Check out the project video and view the Virginia Mason page in the 2017 Intalere Best Practices Compendium. Read the full success story.

The Importance of Price Transparency

Jim WebbShon Wettstein

By Jim Webb, Executive Vice President, Business Development at BroadJump, and Shon Wettstein, Vice President, Product Management, Intalere

Among the most critical struggles hospital supply chain executives face today is not truly knowing fair market prices for the goods they are purchasing on an everyday basis. This is due to a pervasive lack of information – or a lack of cost transparency – about the fair market value of medical and surgical supplies. What can they do to ensure consistent logical pricing structures and the implementation of best practices that will help achieve savings goals?

  • Empower supply chain leadership to negotiate based on current market share and spend with incumbent suppliers.
  • Have the CFO and CEO, if necessary, actively participate in key supplier negotiations and provide additional pressure when suppliers aren’t cooperative.
  • Ensure pricing is addressed in contracts.
  • Avoid signing supplier pricing confidentiality clauses.

These best practices are most successfully accomplished when supported by strong analytics and technology resources, including technology that is incorporated into everyday practice.

Luckily, disruptive solutions are entering the market to assist in a more strategic contracting process. The best solutions are proving to be efficient, transparent, tactical and easy to use.

Read our full article on the importance of price transparency and check out this success story on how Intalere OptiPrice Advantage, powered by BroadJump, helped a member save nearly $300,000 in three months.

What’s Your Level of Supply Chain Maturity?

Pilla, Lori business shot

by Lori Pilla, Vice President, Custom Contracting and Supply Chain Consulting Solutions, Intalere

The maturity of your supply chain depends on many factors, including size of the organization, class of trade and available resources. The capabilities your organization possesses in terms of tactics, operations and strategy can offer a glimpse into where you are in terms of the maturity of your supply chain. Let’s take a look at the four stages of supply chain maturity to see where you might fall.

Stage 1: Ad-Hoc

At this stage, the focus is on today and fighting whatever fires may come up on a daily basis. There are limited controls and few metrics, with maybe something like comparison to prior year being the major benchmark. This stage is also typified by few formal policies and processes that have evolved to their current state without formal design. There is also limited data availability and limited functional coordination.

Stage 2: Controlled Enterprise

The focus in Stage 2 is on control and budgeting – basically the proverbial mantra of “making the numbers.” There is usually a formalized organizational structure and position descriptions as well. In terms of metrics, this stage utilizes more robust measures with comparison to budgets, industry and competitive analysis, and stronger product knowledge. Stage 2 also has productivity measures and substantial functional coordination, but is also marked by organizational silos.

Stage 3: Integrated Supply Chain

Stage 3 focuses on internal integration and a commitment to customer service that drives the organization. There is an emphasis on cross-functional coordination. Incentives are widely used and continuous improvement process is firmly entrenched in the culture. In terms of data, this stage features integrated databases and processes, benchmarking and targeting, and an overall goal to aspire to “world class” supply chain effectiveness. There is extensive functional coordination, i.e. “integrated logistics.”

Stage 4: Advanced Supply Chain

Finally, in the Stage 4, the functional organization gives way to process organization, which seeks out innovative approaches (best practices) for developing sourcing strategies and uses them to shape processes. The vision is on integration with the supplier and customers, and the use of advanced integration technologies. The advanced supply chain organization influences strategies and objectives of suppliers and customers to be more aligned with their own.

Whatever your size and aspirational level of supply chain maturity, there are things, that with a strategy and supportive organization and culture, you can do to improve your supply chain organization. Based on a foundation of performance management and technology, working to improve your processes in terms of inventory management, contract utilization, customer service and transactional procurement, are goals worth working towards.

Learn more about Intalere’s transformational supply chain solutions.

Healthcare Economics – Healthcare Can’t Survive or Thrive Without Supply Chain

A Guest Blog Post by Joe Walsh, VP of Supply Chain and Chief Purchasing Officer, Intermountain Healthcare

A consistent theme throughout Intalere’s blog posts and really in every communication they have with employees, members and suppliers, is the absolute vital role that supply chain plays in building a sustainable financial model for healthcare going forward. This week, I thought it would be beneficial to walk through a simple table to illustrate the point.

Let’s take a look at a healthcare provider with theoretical revenue of $500 million and a cost structure of approximately 95%, providing a $25 million profit, or 5% margin. This represents a somewhat typical structure for healthcare providers today.

The organization’s board decides that they would like to increase profitability by $25 million.  We will review two possible initiatives by which they could possibly accomplish this goal.  The second initiative would focus on cost management, shown in the middle column.  Focusing on reducing costs and/or improving quality within the organization by 5%, and moving towards a 90-10 cost to margin structure, they could realize the additional $25 million in profit gain.  Alternatively, the company could focus on growing its revenues as illustrated in the scenario highlighted in the third column. Based on the current cost structure (95% cost to 5% margin), the organization would have to double revenue, to $1 billion, in order to realize the $50 million profit. That’s an increase in revenue of 100%, an almost herculean task that would likely involve significant investment, addition of service lines, possible acquisitions, etc.

While reducing costs is no easy task, it is far easier than doubling existing revenues. As mentioned in Intalere’s previous post on transforming the perception on the importance of the supply chain, the low hanging fruit, or value, of supply chain is still easier to obtain than laying nurses off at bedsides or cutting clinical care or adding service lines. We have a great opportunity to help the industry navigate the future with success.

Contact Intalere to learn more about how we can help your organization thrive with its supply chain.

Member Best Practice Spotlight: Towner County Medical Center – Saving a Rural Hospital

TCMC photo

We continue our monthly series focused on how our members are tackling their daily challenges through innovative solutions with Towner County Medical Center, illustrating how they worked with Intalere and other partners to implement a financial turnaround.

Issue

Towner County Medical Center (TCMC) was on the path to becoming one of the casualties we hear about in rural healthcare today. The fiscal year ended in June 2013 with a -13.1 percent margin. The facility had a maxed out credit line and an extended accounts payable balance of more than $1.3 million. It was apparent that vendors were taking advantage of the facility, and the supply chain needed expertise to help improve financial outcomes.

Solution

An independent supply chain consultant was hired to help with training and expertise in the supply chain and TCMC partnered closely with their Intalere representatives to review cost savings opportunities. The consultant and Intalere representatives reviewed all aspects of operations. Methods used included:

  • An independent analysis from the consultant.
  • An Intalere Savings Roadmap.
  • Intalere assistance with software ensuring proper purchasing. 

Outcome

The turnaround at TCMC in just one year was substantial. A -13.1 percent margin from FY 2013 was turned into a positive 1.8 percent margin for FY 2014. Net revenue increased 11.1 percent and with the help of Intalere, TCMC was able to add all of the revenue and decrease expenses by 1 percent over the prior year. The credit line has been cut almost in half and TCMC’s accounts payable balance has decreased to below $500,000.

About Towner County Medical Center

Towner County Medical Center consists of a 20-bed critical access hospital, a 37-bed long-term care facility, a rural health clinic, a provider-based clinic, assisted and independent senior living facilities. 

Read more Intalere member success stories, including best practices now!

Best Practices in Benchmarking Medical Equipment

by Bryan Ramey, Mitchell Planning Associates, and Mike Gerhardt, Senior Director, Facility Management Specialists, Intalere

Across every industry, benchmarking is an essential tool to help organizations understand key metrics in determining their position in the marketplace. In today’s healthcare hospital industry, Supply Chain departments are using monthly, quarterly and annual metrics such as the hospital’s total patient days versus their total spend for disposable and consumable supplies, medical devices, implants and instruments to gauge not only how they compare to similar hospitals, but also how similar departments within the hospital compare to each other, i.e. Medical, Cardiac, Surgical and Neuro ICUs. But the capital equipment process within hospitals still lacks efficiency and an effective way to drive down the cost to acquire medical equipment.

Hospitals are now being challenged more than ever to find ways of cutting cost and reducing their overall bottom line. Benchmarking medical equipment by utilizing good, reliable data, along with competitive pricing is a way to contribute to the organizational cost reduction goal. After all, over the course of a hospital fiscal year, the total spend for medical equipment ends up being one of the largest cash outflows. Furthermore, medical equipment procured for new hospital construction projects remains to be the second largest line item cost next to the overall cost of actual construction. So a process which incorporates unreliable data and non-competitive pricing, along with bad habits like benchmarking only to “check the box” doesn’t provide much value for the hospital.

So as you begin to procure your equipment during the annual capital process, it’s important that you can trust the information. The data should be transparent and easy to understand, the provider of the data should be knowledgeable about the benchmarks they are presenting, and the benchmarks should be representative of best-in-class pricing. What good is it to compare your potential equipment purchase to quotes that haven’t been negotiated down to the final price when there are resources to help determine what you should actually be paying? Having transparent data and best-in-class pricing strengthens the ability to determine the “end” price so you can “begin” negotiations with the end in mind. Possessing knowledge of final landed costs can produce an additional cost savings of 7-10%.

For example, to be the fastest runner in the world, one must know that the fastest time is 9.58 seconds to run 100 meters. If the runner is unaware of the world’s best time, then he only beats himself for not dedicating the resources to knowing and understanding the facts. The same goes for benchmarking medical equipment. Understanding the data and knowing the actual prices paid will help your Supply Chain team deliver deeper discounts and better deals, hence, making the capital process much more efficient and effective.

Where will you end up? What is your target? What is the outcome? These are questions that should be answered prior to negotiating. How do you determine the appropriate end? Compare to previous purchases, compare to similar purchases, compare to other organizations with like or similar purchases, and compare to best-in-class purchases. For an aspiring Supply Chain team that truly wants to be the best, one must know what constitutes as being the best, how high the bar is set to reach the best, and in the world of procurement, how low the actual price is to be the best in class.

To learn more about Intalere and Mitchell Planning’s Equipment Planning solutions, click here.