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MHS Presentation of Capabilities
Citation preview
Mobile Supply Chain Execution
Business Discussion
MEETIN
G O
BJECTIV
ES
Introduction
How did we get here?
Recognition of similar market missions
MEETIN
G O
BJECTIV
ES
How MHS core competencies compliment MedAsset’s initiatives
Potential synergy of working together
How to proceed?
MHS O
VERVIE
W •Founded in 1999 by Ken Kelliher and Mike Ferris
•Significant organic growth plus two strategic acquisitions: @Par Mobile Supply Chain Software and HISI
•Largest provider of inventory valuation services for hospitals in US
•Serve 1,000 hospitals
•Client satisfaction rating of 95%•Client satisfaction rating of 95%
•Client retention of 97%
•Currently more than 500,000 SKU scans daily
•Product database of 1.5M unique items•Functional Equivalents•Hazard Track / Expired Products
Abou
t MHS
Management Health Solutions, Inc. MHS is a healthcare supply chain servicescompany, and the leading provider of an integrated clinical inventorymanagement solution called OPTIC.
� Creates superior control over supply chain operations � Improves financial performance and enhances patient safety� Creates Profitable Departments & Maximizes Clinician Time On Patient Care
Abou
t MHS
Organizational ImpactIncrease Revenue
� Recover lost charges
� Increase Cash Flow
� One time reduction on inventory
Reduce Expense
� Optimize and Control Inventory Levels
� Reduce and Control Supply Spend
Better Information
5
Better Information
� Realize Supply Chain Visibility
� Access to data
Maximize Productivity
� Drive Efficiencies Across Enterprise
� Optimize the Workforce
Total Quality
� Improve Internal Customer Satisfaction
� Enhance Patient Care and Safety
Partial Listing of MHS Client Base
A key to providing effective solutions to clients is collecting accurate data in the most efficient and least invasive method.
The core competencies of MHS involve the The core competencies of MHS involve the capture of data in hospitals using the @Par software package and complete physical inventories of supplies. From these competencies MHS utilizes clean, workable data to provide a menu of solutions resulting in benefit to the organization. The ability to obtain this data should be of great value to the MedAssets solution process.
TOTAL SUPPLY CHAIN
SOLUTIO
NDiscover� Conduct physical inventory count� Analyze historical and transactional data� Quantify reduction opportunity
Diagnose� Integrate automated solutions for clinical,
warehouse and distribution inventory management
� Master data item management– aggregate, clean, enrich and maintain data
TOTAL SUPPLY CHAIN
SOLUTIO
N
clean, enrich and maintain data� Monitor supplier contracts, product alerts &
recalls, usage trends
Deliver� Define & implement supply chain process
innovation strategies� Create visibility into inventory management
through online portal� Leverage analytical reports to identify further
opportunities
Item master cleansing and provision
OPTIC Prog
ram
@Par™ Software
Inventory Valuation
Data
MHS Core C
ompeten
cies and Serv
ice Offerin
g
Software applications that allow supplies to be tracked and billed from receiving dock to clinical usage. Designed interoperability to leverage performance of existing systems.
Inventory valuations for supplies, pharmacy , and capital assets. Thorough counting and identification of organization assets with data reporting available via web portal.
of data reports to identify irregularities of the procurement process. On-going maintenance of the item master process (adds/updates)
Individual projects designed to alleviate supply chain issues including process mapping and modeling. Deep dive into client data to recommend and implement systemic solutions.
OPTIC Prog
ramData Management
ProfessionalServices
MHS Core C
ompeten
cies and Serv
ice Offerin
g
Data Driven Management
On-Demand Reporting
Real-time/Batch upload/download with Hand Held Wireless or Cradle synchronization
Par Optimization Reports
Preference Card - Case Utilization
Variance Report
Utilization information &
Product management reportsProduct management reports
Self-service webpage receipt confirms product Pick/Delivery/Return; who, when and where.
Physical Inventory Review process for recounts prior to booking
Discrepancy reports note variances for immediate correction
Workforce Management & Productivity reports
“improving processes”
“optimize supply chain operations”
“customized solutions”
“reduce costs and increase revenue”
Common goals for clients with focus on the supply chain
operation. Can these goals be met more effectively with a synergistic approach from
MedAssets and MHS?
revenue”
@Par™ Software
Inventory Valuation
Data
.
Clinical Value Analysis
Physician Preference Items
Bill Only Supplies/OR Log
Data Management
ProfessionalServices
Inventory Right-Sizing
Supply Expense Per Case
Utilization Data
MHS Core Competencies Compliments MedAssets Client Initiatives
A package of consulting services and tools must be driven by their needs – this is solution selling
CVA
SIM/ BARUtilization Data
Lead With Clinical! It is the core of all our offerings and central to change management
Borrowed from the Aspen presentation
Operations &
NavigatorPPI
SLA/SIStrategic Sourcing
Customer Contract
@Par can provide technology platform to
capture data and formulate workable database to assist in
solution sales
Benefits and Savings
� Realize Total Supply Chain Visibility
� Accurate Information
� Optimize and Control Inventory Levels
� Reduce and Control Supply Spend
� Optimize the Workforce
� Drive Efficiencies with Clinical Staff� Drive Efficiencies with Clinical Staff
� Improve Internal Customer Satisfaction
� Right Product Right Place Right Time Right Quantity!
� Enhance Patient Care and Safety
� ROI 4 - 8 to 1
Opportunity Assessment Agenda
� Tour all related supply chain areas
� Review Current Inventory Management processes
� Evaluate inventory storage configuration
� Review vendor management and consignment controls
� Review Procedure Card and Case Cart process� Review Procedure Card and Case Cart process
� Present Findings
� Assessments are conducted by senior healthcare supply chain consultants
Solution Benefits
� Rapid Inventory Reduction
� Reduce Inventory 20-40%
� Increase turns with fewer shortages
� Improve cash flow immediately
� Improve Patient Safety efforts by identifying expired and obsolete product
� Clinical Supply Chain Process Mapping� Clinical Supply Chain Process Mapping
� “As Is”
� “Should Be”
� Gap Analysis
� Information Technology functional capability Assessments (what IT applications exist and what should be used)
� Implementation Strategy and Planning
Location Target Value Actual Value
OR-1 $15,108
OR-2 $50,329
OR-3 $14,327
OR-4 $43,204 $85,107 $41,903 97%
OR-5 $94,715
OR-6 $80,613
OR-7 $24,955
OR-8 $18,871
OR-9 $35,908
OR-10 $94,130 $180,157 $86,027 91%
OR-11 $34,033
OR-12 $14,589
OR-14 $13,820
Variance
OR PAR Level Review
Inventory Reduction Example
The actual inventory value in the sample clinical areas was 56% greater than target inventory values. Assuming the same variance across all clinical areas, with a total value of $1M, the client had $592k in excess spending.
OR-14 $13,820
OR-15 $25,124
OR-16 $41,759
OR-17 $48,621
OR-18 $16,151
OR-19 $28,684
OR-20 $47,880
OR-21 $15,697
OR-22 $72,929 $63,083 ($9,846) -14%
C-1 $61,005
C-2 $45,171
Sub-Total $210,263 $328,347 $118,084 56%
Total $1,055,707 $592,887 56%
A 56% Reduction Using MHS Methodology Yields
$592K in Savings!
$1,195,000, 88%
$100,000, 7%$50,000, 4%
$20,000, 1%
Hospital Owned Inventory
OR Group
Cath / EP Labs
Special Procedure Rooms
Emergency Department
$1,221,000, 77%
$309,120, 20%
$50,000, 3%$0, 0%
Supplier Consigned Inventory
OR Group
Cath / EP Labs
Special Procedure Rooms
Emergency Department
Inventory Baseline Charts
Hospital
Inventory
Consigned
Inventory
Total BOH
InventoryAnnual Spend
Avg Monthly
SpendMos BOH
Inventory
Turns Rate
$1,195,000 $1,221,000 $2,416,000 $17,905,000 $1,492,083 1.6 7.4
$100,000 $309,120 $409,120 $5,262,000 $438,500 0.9 12.9
$50,000 $50,000 $100,000 $1,270,000 $105,833 0.9 12.7
$20,000 $0 $20,000 $678,000 $56,500 0.4 33.9
$1,365,000 $1,580,120 $2,945,120 $25,115,000 $2,092,917 1.4 8.5
Inventory Turns Analysis
OR Group
Cath / EP Labs
Special Procedure Rooms
Emergency Department
Total
$17,905,000,
71%
$5,262,000, 21%
$1,270,000, 5% $678,000,
3%
Annual Clinical Spend
OR Group
Cath / EP Labs
Special Procedure Rooms
Emergency Department
Baseline: Clinical Inventory Turns
� The MHS methodology establishes baseline statistics
� Clinical areas falling below the optimal turns rate are identified for the � Clinical areas falling below the optimal turns rate are identified for the Inventory Optimization focus beginning with the ABC analysis
� Energy is directed toward increasing turns and reducing spend
Clinical Inventory Targets Turns and Inventory Reduction Opportunities
� CIM-established baselines are published and progress toward turns rate benchmarks measured periodically to ensure reductions are achieved using inventory optimization best practicesinventory optimization best practices
� Inventory reductions are a new source of funds as dollars once tied up in inventory are freed up for alternative investment opportunities
In this example, the Cath/EP Labs, Special Procedures and ER areas all exceed the recommended BOH and inventory turns rate. However, the OR actual BOH exceeds the $1.49M threshold necessary to achieve the benchmark 12.0 turns annually and will require a $926K reduction in the inventory value to reach the
target.
A-B-C Inventory Classification
The standard ABC analysis breakdown with benchmarks and safety stock targets
� The ABC analysis provides the information needed to manage 80% of � The ABC analysis provides the information needed to manage 80% of your clinical spend effectively
� Developing item reorder parameters that lead to increased turns requires a thorough ABC analysis
� MHS focuses on where the dollars are spent to reduce quantities and dollars in the clinical inventory
No Purchase Activity 24
months Targets of Opportunity by Manufacturer – Top 5 Stocking
Locations
Obsolete Inventory Analysis
MFG. Inventory BOH $ SKU's
1 MEDTRONIC $111,495 532 ST JUDE MED $108,469 133 EDWARDS LIFESCIENCES $92,170 174 ABBOTT LABS $62,092 185 ENDOCARE $45,675 66 JOHNSON&JOHNSON $44,946 307 FOXHOLLOW $39,730 88 MAXXIM MED INC CIRCON $36,720 49 INTEGRA LIFESCIENCES CORP $35,839 12
10 WL GORE & ASSC INC $30,210 1811 US SURGICAL CORP $28,310 3112 BIOMET INC $27,416 1813 STRYKER $25,301 51Locations 13 STRYKER $25,301 5114 SMITH & NEPHEW INC $25,013 3515 CR BARD INC $18,722 1616 MUSCULOSKELETAL TRNSPLNT $18,008 817 SYNTHES $12,221 2018 CONMED LINVATEC $10,393 4219 COOK $6,640 1220 VALLEYLAB INC $6,402 421 PFIZER $3,287 922 ARTHREX INC $3,215 323 BOSTON SCIENTIFIC CORP $1,909 424 ARTHROCARE CORP $1,605 3
MISC. $179,528 254$975,315 689
Savings Opportunities
Enter Inventory Balance On-Hand Typical Savings
Excess Clinical Inventory Reduction 7.7%
OR Suite Par Management 3.7%
OR Storage Area Par Level Management 1.6%
Reduction of Bulk Storage 6.9%
Reduction of Carts Storage 0.9%
Process Flows and IT Utilization 2.0%
Suture and Endomechanical Storage Consolidation 1.6%
Consignment Expansion Program 3.1%Consignment Expansion Program 3.1%
Consignment and Vendor Management 2.4%
Enter Annual Spend
Reduction of In-bound Freight 0.25%
Product Standardization/Vendor Consolidation 1.00%
Enter Annual Staffing Costs (Fully Loaded)
Rework and Feedback Loops 7.5%
IT/SIS Enhancements 3.0%
Case Cart System Improvements 5.0%
Inventory Findings
� MHS conducted full physical inventories at all Loma Linda facilities to provide a total on hand value of all clinical supplies. The total value of clinical inventory for all Loma Linda facilities was $11,018,734 with the bulk of the inventory in the main hospital.
� As with all MHS inventories we assess the expiration dates for all items with expiration dates and if there were expired items they are tracked and removed from the supply area. The total value of expired supplies and removed from the supply area. The total value of expired supplies throughout the Loma Linda facilities was $73,170. While this is a relatively low percentage of the entire inventory, the patient safety issue should be considered.
� Items that are found within the facility that cannot be matched to the either file may be considered “unapproved” items. During the inventory MHS identified 916 unique items that we were unable to match to either the item master or your 24 month purchase history.
Inventory Findings
$7,501,372
Inventory Value By Facility
Inventory Value
LLUMC Surgery
Center
East Campus Heart &
Imaging
Heart &
Surgical Hosp
Highland
Springs
Pro Plaza CT FMO
$446,605
$1,925,516
$4,653
$979,578
$28,774 $63,695 $68,541
Inventory Findings
� Upon evaluating those items physically on hand during the inventory count within the Loma Linda facilities against the purchase history, MHS has determined that certain items may be potentially obsolete, overstocked, or low volume use items. These items should be reviewed jointly by the clinical staff and supply chain staff for disposition.
� The results of this analysis found that there is up to $2,414,939 or 22% in potential surplus and or obsolete inventory for these facilities. The chart below shows the value of on hand inventory that showed no chart below shows the value of on hand inventory that showed no purchase activity in 13 to 24 months and over 24 months.
Facility 13 to 24 24 mo. Total
LLUMC $512,253 $815,035 $1,327,288
East Campus $331,179 $615,358 $946,537
Surgery Center $55,110 $86,004 $141,114
Total $2,414,939
Clinical Supply Chain Findings
� Loma Linda's Materials Management department has limited jurisdiction over the clinical supply chain.
� The OR should be a customer of Material Management where the supplies and equipment are available at the point of use whenever needed. Clinical resources need to be patient focused and sterilization resources are needed to decontaminate and reprocess instruments and equipment.to decontaminate and reprocess instruments and equipment.
� There are a number of processes that are hand offs between disciplines. The major issue we discovered with this is that there is no follow through on the next steps or completion of the entire process. In most cases there is no individual with knowledge of the process from beginning to end. This lack of continuity leads to a break down in the completion of a process and creates an atmosphere of distrust.
Supply Replenishment
� Central Sterile has responsibility for instrument sterilization throughout the facility as well as partial replenishment responsibility for the OR storage areas. CS also has partial responsibility for picking the OR case carts.
� The inventory in both SPD and the OR core is perpetual however this is not effective and it is being managed as an adjustment inventory.not effective and it is being managed as an adjustment inventory.
� SLS’s have PTs Perioperative Technicians who also have limited responsibility for supply availability within the OR; they are assigned to a specialty and are directed by the respective SLS as to what to order. PTs have other responsibilities beyond the supply chain and are involved in room turnovers, patient transportation, and other non-technical responsibilities within the OR.
Supply Replenishment
� Supply replenishment in theory is based off of automated reorder points within PMM however electronic reorders are not being placed.
� The current replenishment process is a manual process performed by the CS Tech and PTs (there is an “invisible” segregation between who does what tasks).
� Supplies within Central Sterile are replenished in a similar fashion however this is done by another Central Sterile technician. The Central Sterile technician monitors what's on the shelf and then determines based off best guess what is needed to fill cases on the following days.guess what is needed to fill cases on the following days.
� There is an abundance of returned items returned from the OR. During our visit we observed roughly 10 to 12 carts full of supplies that were returned to the storage room, this is typical as noted by the CS staff. This indicates that there is some inaccuracy with the preference cards.
� There is an abundance of sterile sets and instrument in the OR core as well as in Central Sterile. Sterile sets should all be maintained together in the same location. It is our recommendation that consideration be given to reorganizing the storage areas for supplies and sterile trays.
Information Technology
� Loma Linda is currently using the McKesson suite of products. PMM is used for procurement and inventory management activities; HMS for surgical management; PSM for surgical scheduling; and PFM for financials.
� The technology exists for efficient and effective processes within the surgical supply chain however this technology is not being effectively leveraged and managed to optimize the surgical supply chain.
� It was mentioned numerous times that staff frequently allows others to use their log in to access the system. use their log in to access the system.
� There are a tremendous amount of manual processes that take place as workarounds partially due to the ineffective management of the materials management information system and the surgical information systems.
� There is far too much access to these systems further deteriorating the integrity of the data and the effectiveness of the systems.
� There is inconsistent utilization of these systems throughout the Loma Linda facilities.
Process Analysis
� LLUMC presently has the systems in place to facilitate the “should be” processes however there will need to be policies and procedures developed and enforced.
� There is also a need for more formal and detailed education on the entire process.
� There is also an opportunity to implement a point of use system in the clinical areas to act as a data repository but primarily as a collection point for all transactions associated with the clinical areas.
� Implementing a point of use system that utilizes handheld technology � Implementing a point of use system that utilizes handheld technology would reduce the amount of paper generated and wasted within the process as well as add more accountability and stream line processes that will reduce both time and labor while improving product availability at the point of use.
� Capturing data at the point of use and using that data to optimize par levels will reduce inventory and increase trust in the system therefore improving customer satisfaction.
� The current span of control within Loma Linda is currently a barrier to optimization.
Opportunities/Recommendations
� Evaluate the implementation of a Master Data Maintenance program that puts limited access to the item master and related files within PMM. An initial cleansing project should be implemented to eliminate the duplicate items, manufacturers and vendors and to clean up Unit of Measure and conversion factor issues.
� Review all excess / obsolete inventories with appropriate clinical staff to � Review all excess / obsolete inventories with appropriate clinical staff to determine if these items can be removed and made inactive. If so arrange for these items to be returned to the vendor for credit or resold.
� Eliminate current perpetual inventory process in Central Sterile and the Operating Room and reengineer the process and storage allocation for supplies and trays.
Opportunities/Recommendations
� Implement enhanced supply chain process that will:
� Utilize hand-held technology for all supply chain activities throughout the clinical areas including traditional “non-stock” SKU’s;
� Eliminate the distinction between “stock” and “non-stock” SKU’s within the replenishment process to support consistent process flows;
� Eliminate all existing manual systems and coping mechanisms � Eliminate all existing manual systems and coping mechanisms (workarounds) within the clinical supply chain;
� Implement formal feed-back loops in order to drive data-driven sku velocity analysis for all PAR locations supporting on-going PAR optimization activity which will reduce inventory and reduce expedited inbound freight costs;
� Develop a consignment management program that includes monthly reconciliation process with the Manufacturer rep.
Opportunities/Recommendations
� Segment typical supply chain duties and responsibilities from typical clinical duties and responsibilities, concentrating expertise for each function.
� Implement a single stage case cart pick process that allows for ownership of the entire process within one discipline.
� Realign PT’s to segregate inventory management role within the OR
� Develop a retraining program for PMM and HSM that includes not only functional use of the system but a complete review of the processes and responsibilities.
� Leverage existing knowledge base and supply chain policies and procedures for all clinical supply chain activities across the health system assuring that all facilities are applying best practices. Develop internal benchmarks and publish performance metrics across the system to further engage staff and raise expectations.
Opportunities/Recommendations
� Review and revise preference cards to effectively identify “open” and “hold” items and develop active feedback loops that continuously maintain preference card accuracy.� Use procedure charges to monitor cost per procedure by facility and physician
� Review in room supply charting process and responsibility to possibly shift this role to supply chain staff.
� Inventory all sterile instruments and sets and catalogue by description and compare to current equipment lists in HSM and description and compare to current equipment lists in HSM and disassemble sets that are no longer in use.� Removing sets from the OR core and consolidate in CSR� Assess current active sets to current demand assuring there enough sets meet that demand.
� Implement an instrument set tracking system that provides complete tracking of individual instruments and has the capability of managing loaner and consignment sets.
Opportunities/Recommendations
� Implement inventory control enhancements to increase product availability and improve efficiency across all product lines. There will be investment associated with implementing point of use technology however the saving derived from operation efficiencies combined with reduced inventory, and efficient ordering will be significant. Charge capture will be significantly increased enhancing revenue and allowing for performance significantly increased enhancing revenue and allowing for performance tracking statistic i.e. Cost per procedure / adjusted discharge etc.
Savings Opportunities
One Time Cash infusion Annual On Going Savings
1
A Master Data Maintenance program should be implemented to control
access to all pertinent files in both PMM and HSM. The results will allow
LLUMC to reallocate staffing currently involved in file management to focus
on strategic sourcing and consolidation opportunities. The resulting savings
could be in the area of 2% of the spend. (Calculation based on OR only) See
data savings below.
$660,000
2-4
All excess inventory or inventory that has been determine as obsolete should
be removed from the inventory and if possible return to the vendor for
credit. Implement processes related to inventory reduction and par
optimization. (15% reduction)
$1,650,000 $800,000
5-7
Processes around the supply chain activities in the OR should be revised. This
should include a consolidated case cart picking process, staff realignment,
retraining program, application of best practices, development of ?5-7 retraining program, application of best practices, development of
benchmarks and dashboard reports, and implementation of technology to
improve processes. (Productivity gains are difficult to track savings
?
8-9
Review and revise supply lists on preference cards and develop process to
track utilization and use results to monitor costs and actual supply usage per
procedure. In addition identify instrument sets that have had no usage over
the last 2 years and determine feasibility of eliminating sets to free up extra
instrumentation.
$100,000
10
Implementing these inventory control enhancements will increase product
availability and improve efficiency across all product lines. There will be
investment associated with implementing point of use technology however
the saving derived from operation efficiencies combined with reduced
inventory, and efficient ordering will be significant. Charge capture will be
significantly increased enhancing revenue and allowing for performance
tracking statistic i.e. cost per procedure / adjusted discharge etc.
$150,000
Packaging
Floor Floor
UnitUnit
Critical Care Critical Care
Clinical LabsClinical Labs
Support Support
LUM STORES
Warehouse Automation
Support Support
LocationsLocations
EmergencyEmergency
SurgerySurgery
Special Special
ProceduresProcedures
WAREHOUSE REMOTE
STOREROOMDEPARTMENTS
Floor Floor
UnitUnit
Critical Care Critical Care
Clinical LabsClinical Labs
Support Support
LUM STORES
Distribution Automation
PackagingPackagingPackaging
Support Support
LocationsLocations
EmergencyEmergency
SurgerySurgery
Special Special
ProceduresProcedures
WAREHOUSE REMOTE
STOREROOMDEPARTMENTS
Floor Floor
UnitUnit
Critical Care Critical Care
Clinical LabsClinical Labs
Support Support
LUM STORES
Total Supply Chain Automation
PackagingPackagingPackaging
Support Support
LocationsLocations
EmergencyEmergency
SurgerySurgery
Special Special
ProceduresProcedures
WAREHOUSE REMOTE
STOREROOMDEPARTMENTS
Mobile Supply Chain Platform
@PAR
InterfaceHL-7
@Par Interoperability
Legacy Systems
ADT BILLING
ORISMMIS
Fully Integrate End to End Solution for Total VisibilityFully Integrate End to End Solution for Total Visibility
EMR
InterfaceHL-7