csc’s – a platform for supply chain innovation?health system insights –2018 csc survey 62...
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CSC’s – a platform for Supply Chain Innovation?
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Health System Insights – 2018 CSC Survey
▪ 62 health systems in the U.S. and 6 international invited
– estimated over 70 currently in operation
– 23 Health systems (35%) submitted responses
▪ Online survey - 49 questions
▪ Completed April to June 2018.
▪ Questions grouped under :
– Health system profile
– CSC operations scope
– Financial benefits
– Technology
– Disruptive factors in healthcare supply chains
– Metrics
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Why are they doing this?
▪ Mergers & Acquisitions - present opportunity; pressure to demonstrate benefit
▪ Eliminate duplication of assets, expense
▪ Economies of scale; maximize productivity of all assets
▪ Can be less costly than historical model – in right situations
▪ No longer untested model; limits riskiness, SAVES $$$$
▪ Supply Chain - a source of innovation funding
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Proactive approach to take control of supply chain
▪ Infrastructure and innovation investments▪ Technology investments▪ People investments▪ Clinical engagement ▪ Change management
Standardization Commitment
Contracting
Centralization Last Mile Manage POU
Administration Insights
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CSC Supply Chain Journey
FEASIBILITY?
STRATEGY
STANDARDIZATION
IMPLEMENTATION
ADD SERVICESEXPAND SCOPE
IMPROVE EFFICIENCY
REFINEPARTNER ROLESEXPAND
GEOGRAPHY & SCOPE
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Perception of Single, Best CSC Model is a Myth
Functional Scope
Product Scope
Partner Model
Geo
Scope
CSCMotivation
Drugs and PharmaMedical and Surgical DevicesMedical ConsumablesNon Medical Supplies
DistributorsProcurement OrganizationsThird Party Logistics PartnersInsource
Cost SavingsService ImprovementVisibility and ControlClinical Space
Number of facilitiesLocationsType of Facilities
Warehouse and fulfilmentPurchasing and Accounts Payable
But there are common themes that drive value
within the model
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Technology Deployed
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Service Scope within CSC
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CSC Product Scope
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Sources of Savings available to CSCs
Reported Payback Period
(Significant range within savings %’s)
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Supply Chain Metrics to Drive Improvement
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Inputs on supply chain innovation and disruptors Amazon Augment current supply chain
- Home care customers- Non acute deliveries - Tail spendCould challenge reliance on GPO’s
Will not replace robust and complex models necessary in large IDNs.
Pharmacy and acute care may be the least impacted for a while.
Blockchain Positive applications for pedigree management and asset managementPotential messaging and integration of supply chain participants.Long term is it critical to supply network security.
An interesting solution still looking for a problem to solve.
Still too difficult for most to comprehend let alone put into practice.
Robotics Becomes more attractive with labor costs and constraints.Drones being looked at for lab and drug deliveries across large campuses
Important that CSC’s not get caught up in expensive automation solutions – especially at POU.
Artificial Intelligence
Good applications on sourcing and demand that will allow us to better manage both inventory and labor
Electronic Medical Record
Key to real world evidence for effectiveness -base for negotiation on product value.More seamless integration between ERP’s / EMR’s will come over the next 24 months.
Changes to equipment and ERP that are driven to support the EMR usually not considered when scoping the cost and impact of implementation.
Provider Consolidation
Scale is important; aggregation of spend / commitment to suppliers more important. So are execution and discipline.As we acquire we must have solid intake and on-boarding processes to be efficient.
At some point this will hit a negative economy of scale for the supply chain.
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Plans to support home delivery
▪ Convert from internal focus to an external (patient) service and shipping logistics capability. ▪ Integrate the current supply chain to include physician orders for patient home use. ▪ Regulatory requirements for DME and Homecare licensure ▪ Disruption (Walmart, Cigna, Humana) dis-intermediating hospitals from patients ▪ HIPAA requirements ▪ Manage formulary as care moves away from acute and managing clinician expectation is key.
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Potential to extend/”commercialize” CSC operations
Conditions to succeed
▪ Need clear rules of engagement and alignment on objectives.
▪ Need partners that are willing and must be a good fit both ways.
▪ Sizing has to be correct (number of facilities) and leveraging partners to find right core services at price you can afford.
▪ Agreement between systems to cooperate in cost containment even if they compete on the care side of the business.
▪ Standardization of SKUs and products.
▪ Geographic overlap and executive support.
Those that did not see the potential raised the following issues:
▪ Need to become a ‘distributor’ and not a supply chain. Different set of skills, focus and problems with limited margins.
▪ The investment is not something I think a hospital network wants to make outside of supporting their own members.
▪ Our system must be considered the priority. Revenue is not worth the risk.
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Would you consider outsourcing to a 3PL?
▪ What benefits would you expect a third-party logistics provider to bring to your operations? – More efficiency, more effectiveness and cost
savings– Access to talent, tools and leveraged resources.– Expertise that we do not have internally. – Capital investment supported by the third party– Technology to smooth out and better predict
demand.
▪ What are the likely disadvantages of outsourcing?– Loss of control and in ability to manage cost – Expect it would be higher cost – Lack of integrated culture – Inability to be as nimble. Competing priorities. – Potential labor / union issues
▪ Key attributes you would expect to see from a 3PL– Technology and the ability to understand
different health care providers. – Performance based agreement – Communication and service evolution to
meet changing needs. – Flexibility to change as health system
needs change. – Fixed or capped cost model. – Specific quality metrics and KPI’s – 5-year plan showing improvement in KPI’s. – Cost and operational efficiency – Guarantees around product availability.
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Benefits From CSC Implementation
COST REDUCTIONS; savings can help fund other innovation
IMPROVED SERVICE LEVELS
INVENTORY REDUCTION, OPTIMIZATION
VISIBILITY AND CONTROL
PRODUCT, SUPPLIER, PRICE, CONTRACT STANDARDIZATION
FREE UP REAL ESTATE
FOUNDATION FOR SHARED SERVICES
ECONOMIES OF SCALE, LEVERAGE
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CSC AS A PLATFORM FOR INNOVATION
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