an oorhis rs: bacon · t tep in our s is the on of a s t es of al s. ut we t end e. a y r of...
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![Page 1: an oorhis rs: Bacon · t tep in our s is the on of a s t es of al s. ut we t end e. A y r of SPS’s k is our t to, m l-e t ng to hands-on an t to t-e ng and ng. ew s $2.6B+ ced +](https://reader033.vdocument.in/reader033/viewer/2022041618/5e3d0c2534d81015573d93a4/html5/thumbnails/1.jpg)
Clinical Integration Track
Implem
enting and Maintaining Standards on
Physician Preference Items (PPI)
Presenters:M
eg Voorhis, The Advisory Board Com
pany
Elizabeth Goodm
an-Bacon, The Advisory Board C
ompany
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FAC
ULTY D
ISCLO
SUR
E
The faculty reported the following financial relationships or
relationships to products or devices they or their spouse/life partner have w
ith comm
ercial interests related to the content of this C
E activity:
•M
eg Voorhis, The Advisory Board Com
pany-none to report
•Elizabeth G
oodman-Bacon, The Advisory Board
Com
pany-none to report
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Road M
ap•
Who w
e are•
Increasing pressure on cost / changing role ofsupply chain
•Best practices for strategic control of PPI spend
–C
ategory managem
ent
–Stakeholder engagem
ent•
PPI managem
ent •
Value analysis
–Supplier engagem
ent
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Spend Performance Solutions
Targeting the Most Potent D
rivers of Hospital C
ost
Core C
apabilities Across C
linical-Supplies
and Purchased-S
ervicesS
pend
Proprietary Technologies and Data Assets
SPSoffers
oneofthe
nation’sm
ostcomprehensive
pricingdatabases
forclinical
preferenceitem
s,including
actualprices
paidfor
hundredsof
differentsuppliesby
400+hospitals.
Ouroffering
alsoincludes
proprietarytechnology
forautom
atedscenario
biddingby
suppliers,enabling
maxim
umcreativity
indevelopm
entofcontractterms--a
capabilityw
ecall
“mass
customized
negotiation.”
Unrivaled C
ategory Expertise
Our
engagements
areheaded
byconsultants
with
yearsof
focusedexperience
inspecific
clinical-supplyspecialties
(cardiacrhythm
managem
ent,orthopedics,
spine,traum
a,etc.)
andpurchased-services
industrysegm
ents(transcription,print,hotelservices,etc.).
Our
expertsare
trueexperts—
runningdeep
where
otherconsultantsgo
broad.
Execution Focus
Acriticalfirststep
inour
engagements
isthe
identificationofa
hospital’srichest
sourcesof
potentialsavings.
Butw
edon’t
endthere.
Akey
differentiatorof
SPS’sw
orkis
ourcom
mitm
entto
execution,from
full-service
contractw
ritingto
hands-onphysician
engagement
tocontract-
compliance
trackingand
reporting.
Our Purview
Our Results
$2.6B+
annual spend sourced
12%+
average savings achieved
$260M+
annual savings delivered to hospitals and health system
s
Total H
ospital S
pend
LaborN
on-Labor
Clinical
Supplies
Purchased S
ervices
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Increasing Pressure on Cost
CFO
s’ Estimated B
reakdown of
Total Hospital C
ost Containment O
pportunity
N=45
40%
10%5%
25% 20%C
linical standardization
Labor costs
Supply costs
Capital expenses
Administrative
overhead
By S
ource of Savings
Most Still Struggle to C
ost Reduction G
oals
of facilities have a cost reduction target
88%fully realize goals,
another 69%are partially successful, and
14%fail outright
17%
Cost reduction ranked #1
among strategic priorities
evaluated by CEO
s in 2015 H
ealth Care Advisory Board
poll.
Cost C
ontinues to be Top Priority
•D
ownw
ard pressure on reimbursem
ent•
Increased capital demands
•R
ise of Consum
erism and Price
Transparency•
Increasing competition betw
een hospitals requiring m
arket leading cost per procedure
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Supply Chain R
ipe for Transform
ation
1) Hospital-Supplier Alignment Survey, Health Care Industry Com
mittee; The Advisory Board Com
pany, November 2013
2) United States Government Accountability O
ffice, Lack of Price Transparency May Ham
per Hospitals’ Ability to be Prudent Purchasers of Medical Devices, GAO
12-126, January 20123 and 4) Advisory Board research and analysis, incl. Form
10-Ks from m
ajor suppliers retrieved at http://ww
w.sec.gov/edgar.shtm
lin 2013.
4) Premier, Inc., SEC Form
S-1, July 2013; PiperJaffray, “A Series of Unfortunate Events”, Company Note on M
edAssets, Inc., Feb 2011. 5) Results across first $1B sourced by Spend Perform
ance Solutions, The Advisory Board Company.
Supplies and Purchased Services a Large and Grow
ing Portion of Total Hospital Cost
3 Year CAGR
5.7%
9.8%
Wages, S
alariesS
upplies,S
ervices
Typical GPO
profit margin:
30-50%
Typical supplier profit m
argin: 35%
Economics W
idely Out of Balance
Observed price
variation for identical supplies purchased by sim
ilar hospitals: 3x
Typical supplier SG&
A expense: 39%
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Healthcare is D
ue for Change
Savings project group disbands
End-users upsold
Line item
overpayments
Conditional pricing lost
20%+ value
leakage typical
Category m
anagement team
engaged
Assured value im
provement
Real-time end-user
corrections made
Suppliers and purchasers both held
to comm
itments
Supplies/Services Contract Signed
Supplies/Services Contract Signed
Hospital Industry Standard
Out-of-Industry
Standard
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Path Towards Spend M
anagement
Value-Add
Com
petence Over Tim
e
Contracting
Tactical negotiating and contracting process w
ith suppliers
Strategic SourcingBusiness process in place to support cross-functional team
s to select optimal
supply sources and/or solutions to low
est total cost of ow
nership
Category M
anagement
Integrated business processes in place to m
anage the entire value chain for spend
Price Fo
cus
Tota
l Va
lue Fo
cus
Spend Managem
ent Maturity C
urve
11Adopt a custom
er -focused approach –supply chain can add greater value to the
organization by focusing on the business’s overall goals instead of focusing narrowly on
lowest cost of goods and services
22Invest in talented staff and skill developm
ent –supply chain is no longer a purely
transactional role, but instead requires strategic vision and planning
33Advance Supplier Partnerships –
suppliers can and should serve as strategic partners in low
ering total cost
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Opportunity
Identification
Value Execution
Value Realization and M
anagement
Category M
anagement
•C
ategorization and data integrity
•Price and utilization benchm
arking•
Outcom
es/total cost benchm
arking•
Opportunity prioritization and
wave planning
•PM
O and plan m
anagement
•Vendor engagem
ent and negotiation•
Stakeholder engagement and change m
anagement
•Tier and com
mitm
ent optimization
•C
ustom data and analytics support
•Value tracking and intervention
•U
tilization tracking and intervention
•R
isk mitigation
•C
ontract / relationship m
anagement
•Value analysis m
anagement
Category
Managem
ent Lifecycle
Value Realization
and Managem
entO
pportunity Identification
Value E
xecution
What is category m
anagement?
Category m
anagement aligns an organization around segm
ents of spend to effectively manage total value
of goods, services and outcomes. Value is m
easured beyond initial transactions and instead throughout the entire spend lifecycle of goods and services.
![Page 10: an oorhis rs: Bacon · t tep in our s is the on of a s t es of al s. ut we t end e. A y r of SPS’s k is our t to, m l-e t ng to hands-on an t to t-e ng and ng. ew s $2.6B+ ced +](https://reader033.vdocument.in/reader033/viewer/2022041618/5e3d0c2534d81015573d93a4/html5/thumbnails/10.jpg)
Spend Segmentation
Degree of Local Preference
Spend
Determ
inin
g Sp
end
Strateg
y
Category Plot
12
34
1Low
Preference / High Spend •
Examples: DM
E, office supplies
•Sourcing Cycle: 2-5 yrs
•Contracting Strategy: GPO
, aggregated pricing•
Level of Supplier Engagement: Low
•Level of Stakeholder Engagem
ent: Low
23
High Preference / High Spend•
Examples: PPI
•Sourcing Cycle: 1 -3 yrs
•Contracting Strategy: Local agreem
ents•
Level of Supplier Engagement: High
•Level of Stakeholder Engagem
ent: High
4High Preference / Low
Spend •
Examples: Ablation
•Sourcing Cycle: 2-5 yrs
•Contracting Strategy: GPO
, aggregated pricing•
Level of Supplier Engagement: M
edium
•Level of Stakeholder Engagem
ent: Low
Moving aw
ay from traditional negotiation
workflow
based solely on benchmarking or
contract timing…
Low Preference / Low
Spend •
Examples: Law
n care, security
•Sourcing Cycle: 2-5 yrs
•Contracting Strategy: GPO
, aggregated pricing•
Level of Supplier Engagement: Low
•Level of Stakeholder Engagem
ent: Low
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Evolution of Supply Chain Team
s
Transactional Supply Chain
Value Based Supply C
hain
Tactical Buyers of G
oods & Services
•Reactive: R
esponding to individual requests for purchases of goods/acquisition of services
•Limited adherence to PO
process
•Lack of tools/methods to analyze
enterprise-wide spend data
•Limited scope of spend affected directly by
supply chain department
•Lack of involvement in com
plex requirements
Managers of Spend &
Dem
and
•Develop m
ulti-year spend managem
ent forecast
•Assist in setting financial direction of the health system
•Coordinate cross-functional sourcing
activities
•Work w
ith physicians on key clinical and utilization initiatives
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Focus Not Just on Price, B
ut on Total C
ost Variables
Lead Variation R
eduction Cam
paign
•Analyze cost and quality data
•Identify care variation opportunities
•Parallel source w
ith suppliers based on standardization
Com
prehensive approach increases quality perform
ance and decrease costs
Win, W
in, Win
Hospitals
Reduced C
osts,Im
proved Margins
Physicians
Empow
ered by data transparency
Suppliers
Confident in reliable
proposals and deals
Build Physician Trust,
Optim
ize Supply Costs
•U
nderstand clinical preferences •
Drive first physician-led sourcing
bid•
Build infrastructure and capacity for change
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Migrating from
Preference-Driven
to Value-Driven D
ecision
•Educating physicians on costs and alternatives
•Partnering w
ith physicians to understand clinical requirem
ents
•Leveraging relationships to be a transparent and dependable partner for suppliers
Aligning on Preference N
egotiating with
Physicians
•‘Selling’ decisions to physicians
•U
nreliable partner for suppliers
•H
eroic but un-scalable episodic sourcing
•Leveraging enhanced docs and supplier relationships
•Physicians aren’t just at the table –
they lead the conversations
•C
onversations focused on total value
Leading on Value
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In Case You N
eeded Convincing…
Clear Evidence of Physicians’ Pivotal R
ole in Cost Savings
Source: Berkley T, “Aligning Financial Incentives: Future State,” Premier C
onsulting Solutions 22, 2008; BozicK, “C
osts and Cost
Managem
ent Strategies for Hips and Knee R
eplacement Im
plants,” presented at: AAOS Annual M
eeting, Feb 16, 2011, San Diego, C
A;
Morgan Stanley, “H
osp. Supplies and Medical Technology: O
ur Physician Survey: Insight Into the Changing O
rthopedic Implant M
arket”; Lerner C
, et al, The Consequences of Secret Prices: The Politics of Physician Preference Item
s,” Health A
ffairs, 2008, 27:1560-1565; H
ealth Care Advisory Board interview
s and analysis.
% of M
SSP ACO
s that Earned Shared Savings
2012 Cohort
29%
20%
Physician-LedHospital-Led
(0.03)
(0.37)
(0.05)
(0.44)
Volum
e vs. Price
Level of Physician
Engagem
ent vs. Price
Hip Im
plantsKnee Im
plants
Impact of Physician Engagem
ent on C
linical Supply PriceC
orrelation Coefficient
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Addressing Physician O
utliers
Capture M
issed Opportunities
•Accurate and com
prehensive clinical docum
entation across the care continuum
Ensure Adherence to Evidence-B
ased Practice•
Com
pliance with predictable care
paths and clinical guidelines•
Efficient and effective care processes consistent w
ith clinical evidence
Make R
esource Utilization
Predictable•
Use of pharm
aceuticals, PPIs, clinical supplies aligned w
ith EBP•
Rationalized use of labs, PT,
rehab, and ancillary services
16%Proportion of physicians w
ho typically drive 80%
of cost savings opportunity from
care variation
Physicians and care team
hold the keys to successfully reducing care variation.
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But Engaging Physicians on C
ost and U
tilization is Hard
Driving to C
hange While
Respecting Patient O
utcomes
21%79%
% of O
rthopedic Surgeons Able to Estimate
Implant C
ost Accurately
Unable
Able
!Physicians often shocked to learn the price of supplies they use
2.31
1.641.64
1.39
Ortho D
r. AO
rtho Dr. B
LOS w
ith Aquamantys
LOS w
ithout Aquamantys
Total Joint Replacem
entLength of S
tay
Leading with Education
Understanding the Source of Physician Preference
•U
nder what circum
stances are particular products clinically justified?•
What inform
ation/trials will you need to consider changes in utilization?
•O
utside of product requirements, w
hat services or value adds are required from
the suppliers?
LOS D
ata Supports Reduction of
Aquamantys
Use for H
ip/Knee R
eplacements
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Shift from C
ost to Value Analysis
Q:
When w
e use a supply, does it improve outcom
es? Is the im
provement significant enough to justify the
cost?
Which of m
y surgeons have superior outcomes and
low supply costs? C
an they serve as an example to
my other surgeons?
Q:
Answering Tw
o Key Q
uestions
Easy to Dism
iss… Engaging Surgeons in a Com
plete Conversation
Harm
onic ScalpelH
DH
05 HO
OK
5mm
DISSEC
TING
299
154$579
$1,030
42 MIN
UTES
48 MIN
UTES
1.12
1.150.33%
0.35%
1.3 DAYS
1.2 DAYS
6.02%
5.85%
CASE VO
LUM
E
TRU
E SUPPLY C
OST
CASE D
UR
ATION
PATIENT SEVER
ITY
30 DAY R
EADM
ISSION
S
LENG
TH O
F STAY
CO
MPLIC
ATION
RATE
Impossible to Ignore…
NO
HAR
MO
NIC
SCALPEL
HAR
MO
NIC
SCALPEL
+$2,359
SUPPLY PR
ICE
$1,926PR
ICE PAID
BY SIMILAR
IN
STITUTIO
NS
$2,093PR
ICE PAID
FOR
EQ
UIVALEN
T SUPPLIES
$20,433PR
OC
EDU
RE
REIM
BUR
SEMEN
T
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Foundation for a Larger PartnershipToday’s Effort Furthering Tom
orrow’s R
eality
•Shared decision-m
aking expertise•
Measurem
ent/reporting infrastructure•
Clinical “product developm
ent”•
Joint negotiation skills•
Leadership development
•Joint cost-m
anagement expertise
Capabilities developed for
collaborative sourcing
Today
Tomorrow
Collaborative Sourcing
•Population H
ealth•
Risk C
ontracting•
Retail Innovation
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Com
mitm
ent, First and Foremost
Suppliers Looking for Reliable H
ospital Partners
We’re reserving best value for the local custom
ization w
here compliance actually occurs. W
e face a choice betw
een delivering value to those who are big and those
who do w
hat they say they’ll do. We have gone to the
latter, and we feel great clarity around this.
VP of N
ational Accounts
Medical D
evice Supplier
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Tactics for Working w
ith Supplier Partners
123
456
Walk a M
ile in Each Other’s Shoes
Push for Product Launch Information
Ask for Evidence in Best-in-Class
Data Packets
Support Optim
al Product Utilization
Track Product Performance D
ata Together
Implem
ent Channel for Tw
o-Way
Feedback
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Streamlining D
elivery and Shipping Post-Procurem
entN
orthwestern M
emorial H
ospital with Lindon D
evices1
Coordinated P
roduct Delivery
Coordinated Approach
•Late orders and shipm
ents have decreased
•Shipping costs have decreased ~10%
•C
entral point of contact im
proved comm
unication w
ith supply chain
Misaligned Approach
•R
outine overages due to last m
inute physician orders
•D
ifficult to manage
inventory for hospital•
Out of stock products
created opportunities for other vendors to fill the gap
AFTERBEFO
RE
Northw
estern’s purchasing units now
submit orders at roughly the sam
e time
1
Lindon funnels all of their orders to one representative, w
ho coordinates shipping
2
Northw
estern and Lindon designees meet
regularly to review order trends and
identify new opportunities for
improvem
ent
3
1)Pseudonym
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Support Optim
al Product Utilization
1)Pseudonym
1)Indiana U
niversity Health, Saxony H
ospital2)
Pseudonym3)
Pseudonym4)
Pseudonym
IU H
ealth Saxony1w
ith ThengelOrthopedics
2, Westernesse
Device
3, and ErkenbrandInc. 4
Case in B
rief: Indiana University
Health’s “Friday M
orning Meetings”
•IU
Health is an 18-hospital system
based in Bloomington,
IN; Thengel, W
esternesse, and Erkenbrandare
orthopedic companies w
hich produce joint replacement
devices
•The entire orthopedics team
at IU H
ealth Saxony, led by D
r. R. M
ichael Meneghini, and the representative for
each of its suppliers, meet w
eekly to discuss next week’s
cases and select products•
Working w
ith Thengel, Westernesse, and Erkenbrand, IU
is im
proving appropriate product utilization, throughput, and shipping
Friday Morning M
eeting
Product S
election
Improved U
tilization
•Surgeons, suppliers, nurses, chaplain’s services, and supply chain m
eet weekly to review
the docket of surgeries for the upcom
ing week
•Based on the technical requirem
ents of the case, surgeons select the appropriate brand and product from
a list of options pre-approved by supply chain
•Supplier representatives in attendance then coordinate shipping and w
ork with nurses to
have the appropriate tools and support available for procedure
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Track Product Performance D
ata Together
1)Biosense
Webster, Inc.
Advantage Risk Program
for Catheter Ablation
Case in B
rief: BW
I Sharing Risk for C
linical Outcom
es•
Biosense Webster, Inc. (BW
I) is a Johnson & Johnson subsidiary, specializing in cardiac catheter ablation technology and based in D
iamond Bar, C
A
•The new
ly launched Advantage program is an outcom
es-based, risk-sharing program for BW
I’s TH
ERM
OC
OO
L SMAR
TTOU
CH
®C
atheter•
At the core of the program is a BW
I-created case and outcomes tracking system
for hospitals
Product S
election
Provider enters sourcing contract for new
BWI
product
Data Tracking
Financial Risk
BWI receives price
increase if improved
outcomes achieved
BWI and hospital w
ork together to track product
outcomes for ablation
Source: Advisory Board interviews and analysis.
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Implem
ent Channel for Tw
o-Way
Feedback
1)Pseudonym
University of C
hicago Vendor Scorecard
Key Perform
ance Categories
1Q
uality–
How
have product recallsand defects affected our ability to conduct business?
2C
ost –H
as the vendor offered com
petitivepricing and ideas
that support cost containment?
3D
elivery–
How
well do w
e get our orders filled the first tim
e, on time,
and in the right quantities?
4Technology
–H
as the vendor kept us updated on the latest technology or research trials?
5Service
–H
owis custom
er service on both corporate and sales rep level?
Source: UC
Medicine; Advisory Board interview
s and analysis.
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Implem
ent Channel for Tw
o-Way Feedback, continued
Source: UC
Medicine; Advisory Board interview
s and analysis.
Case in B
rief: University of C
hicago Medicine and C
ook Medical
•560-bed system academ
ic medical center headquartered in C
hicago, IL•C
reated a vendor scorecard that evaluates supplier performance across five key
dimensions—
quality, cost, delivery, technology, and service•In response to scorecard, C
ook Medical positioned itself as a strategic partner by
engaging sourcing team to identify w
ays to improve overall supply chain at U
C
University of C
hicago Medicine and C
ook Medical
UC
Medicine
Cook M
edical
•Implem
ented scorecard approach to evaluate vendor perform
ance •Scorecard used to drive
discussion, identify areas for supplier im
provement
•Engaged with sourcing
team im
mediately to find
“win-w
in” opportunities •W
orked to lower U
C
Medicine’s shipping and
product usage costs
UC
Medicine’s Vendor Scorecard H
as Been a Catalyst for Innovation
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KeyTakeaw
aysThe rate of change w
ithin healthcare requires a supply chain organization to keep pace w
ith business demands
12Procurem
ent professionals that take more focused actions to engage
physicians and suppliers, and manage PPI tow
ards total value, can see better outcom
es across the continuum of care
3Deriving value in PPI is not just during contracting…
striving for trust, transparency, and sustainable partnerships that align to institutional priorities is key throughout any contract cycle
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•Please direct your brow
ser to ww
w.cmeuniversity.com
to complete your evaluation
and print your own statem
ents of completion!
•O
n the main page, under the M
ember Login section located on the left-hand side of
the screen, click on the link “Create N
ew Account.” You w
ill be directed to a new
page. Under the section labeled “N
ew U
sers,” please type in your email and a
desired password and click on the button “C
reate Account.” You will be asked to
set up your profile.
•O
nce your profile is complete and you have clicked the “Save” button at the bottom
of the screen, on the left-hand side is a section labeled C
ourse Links. Click on
“Find Post-test/Evaluation by Course” and search “11265”.
•Please select the type of credit you are seeking and then please click on the session(s) that you w
ant to claim for credit. You m
ust complete an evaluation for
each session for which you are claim
ing credit. Upon successfully com
pleting the evaluation activity, your certificate w
ill be made available im
mediately.
•Tip: If you do not receive the em
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Ecertificate@pim
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Instructions for Claim
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redit