1. 1. NYC Health and Hospitals CorporationSupply Chain Management TransformationJoseph QuinonesFranco Sagliocca, MBA, FACHERichard Olah, CMRP
2. 2. 2About HHC $6.7 billion integrated healthcare delivery system Largest municipal healthcare organization in the country MetroPlus is HHCs own 400,000 member health plan Serves 1.3 million New Yorkers / year (475,000+ are uninsured) Provides medical, mental health and substance abuse services through: 11 acute care hospitals 4 four skilled nursing facilities 6 large diagnostic and treatment centers 70+ community based clinics HHC Health and Home Care also provides in-home services for New Yorkers 2008 recipient of the National Quality Forum 2008 recipient of The Joint Commissions John M. Eisenberg Award for Innovation inPatient Safety and Quality
3. 3. 3NYC HHC Networks
4. 4. 4Grappling with the Magnitude of the Problem $1,000,000 At a Million dollarsthe questions and trade-offs are important but focused $1,000,000,000At a Billion dollarsthe questions and trade-offs involve thousands of NYC residents and entire communities The imperative for change was very clear for everyone
5. 5. 5Supply Chain Management is Accountablefor Sustaining Financial Stability Hospitals are the central focus of our modern healthcaresystem, where the most advanced scientific knowledge andtechnology meet the vulnerability of patients in need of care. Theyrival the busiest hotel or the most bustling airport in the logistics ofadmitting and caring for patients 24/7, and often serve as researchlabs and teaching institutions as well. These complex enterprises areas challenging to manage as a global business, but most hospitalsstruggle because they arent run enough like businesses, says JohnHammergren in his book, Skin in the Game. (Part 2 of 5)
6. 6. 6Total Cost of Ownershipis a philosophy for really understanding all supply chain related costs of doing businesswith a particular supplier for a particular good or service -World Class Supply Management, 2003 Price Paid for a Product or ServiceAcquisition CostsLogistics Cost Quality Equation Inventory Costs Inventory Risk Cost to Serve6
7. 7. 7The Environment (Opportunities)* OpportunityMaintenance, 21% Other, 26%NonSupply CostRx, 18% Supply Cost, 30%70%Lab, 5% Food, 3%Med/Surg, 27%
8. 8. 8NYC HHC
9. 9. 9 Business CaseSource: Oracle Healthcare Insight Study as reported in HFM magazine, June 2010
10. 10. 10FocusOrder Price FocusedTakers/Placers Box Movers EvolvingTraditional Better Data to Drive Operationaland Clinical Excellence
11. 11. 11Pillars
12. 12. 12At the end of the day its all aboutEXCELLENT Patient Care The history of our healthcare system is an incredible story ofscientific and technological innovation, but its evolution isincomplete. The gaps and disconnections can be addressed bytechnologies already in existence, but they need to be widely andconsistently adopted. When advances in the following areas are putinto practice transparency, connectivity, productivity andefficiency, best practices, diagnostics, robotics, retail healthcare andpersonalized medicine well be able to fulfill the promise ofputting the patient back into the center of care, says JohnHammergren in his book, Skin in the Game. (Part 4 of 5)
13. 13. 13SavingsFY 2012 Savings SavingsSupply Savings (as of June 2011)Employee Redirection$ 2,240,000 VendorAmountCardinal New Opportunities$ 2,000,000NY blood & Service $ 3,422,631.00Total $ 4,240,000Braun IV Solutions and Sets$969,523.00GE Savings on Preventive $715,963.00Maintenance Contract Physician Preference ItemsSavingsCardinal Products$921,000.00 Orthopedics $ 2,000,000Cardinal Growth Rebate $264,981.00 Surgical Solutions Scopes*$ 5,000,000Citi Storage $650,000.00 US Surgical - Sutures Endomechanicals Conversion**$ 2,000,000HWS Waste Amendment$215,000.00Total$ 9,000,000Braun Pump Savings Woodhull$115,750.00Braun Pump Savings Coney $111,130.00 *Currently some use at Bellevue **Currently some use at Bellevue and 100% use at Coney IslandConey Second Year Warranty $75,000.00Braun Second Year Warrnty$78,000.00Met pumps savings$73,450.00Projected Savings =Met second Year Warrnty$48,750.00$21.46MCentral Poly Savings Plastic $281,782.003 M SAVINGS$21,000.00ARJO HUNTLEIGH $65,000.00Contracts Media$192,384.89 Total:$ $8,221,344.89
14. 14. 14Metrics / Scorecard
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16. 16. 16Overview: Project Description The Road Ahead is a restructuring initiative that HHC is undergoing tobecome a more cost-effective, more efficient, and stronger organization. Tomeet new economic demands, to rise to the challenges of deliveringhealthcare today, and to plan for the future, HHC must act now. What are the goals of The Road Ahead? To streamline care delivery for greater efficiency To restructure and combine some services to lower costs while maintaining needed capacity To ensure that changes are as fair as possible to our patients, communities and staff To preserve our essential mission of affording broad access to the uninsured If HHC is to continue to fulfill our mission to all New Yorkers, we must reduce ourcosts of providing care and we must become the healthcare provider that NewYorkers will choose. There will be difficult choices ahead. While every step is not yetclear, The Road Ahead begins now.
17. 17. 17Overview: Challenges HHC is facing extraordinary financial deficits. Specifically, we will have a budget shortfallof more than $1 billion in fiscal year 2011 (which begins July 1, 2010) and in the following years thereafter. What does thismean to us as an organization? It will mean that there isnot enough money in the budget to continue to work the way we do. This will require us tore-think the way that we operate our facilities and provide much of our care.We are facing this dire financial future for several reasons, among them: Reduced funding from state Medicaid reimbursement Reduced funding from the Federal Government Growingnumbers of patients without health insurance Increased healthcare equipment costs Higher costs for pensions and other benefits In addition, it is clear that HHC has important operational challenges as well as financial ones. We need to do better toleverage the size of our system through collaboration and greater standardization of best practices. And we need to designour delivery of care process so that it is consistently as efficient and patient-centered as possible. Beyond our own budgetchallenges, the intense competition in our healthcare world means that we must earn patient loyalty every day. To do that,we must: Make sure that the services offered meet the needs of todays HHC patient More effectively deliver a continuum of care across HHC services to serve patients responsively at all stages of their lives and Work together better across work areas, teams, and facilities to improve patient safety and satisfaction Given our significant budget constraints, we expect that there will be reductions and consolidations in programs and staff. Making these changes will be difficult but necessary if HHC is to be able to sustain our mission. We must keep our morale up and remember that HHC has successfully navigated tough times before. We will do it again.
18. 18. 18Overview: Purpose As part of The Road Ahead, one of the goals is for every HHC facility tobecome more productive and more effective. We are already doing goodwork toward these goals, using other HHC resources that rely on theingenuity and support of employees to succeed. Our efforts in support ofBreakthrough are an important demonstration of how HHC employees canwork together to identify and implement process improvements. Theseefforts are already yielding positive results, new revenue, and cost savings. The continuing commitment to Patient Safety is another good example ofhow HHC employees have taken personal responsibility for doing the rightthing. By supporting our staff and serving our patients better, well also meetanother important goal: We will see satisfaction increase and our hospitals,clinics, and long-term care facilities become the healthcare choice that allNew Yorkers will make.
19. 19. 19Overview: Moving Forward In 2009, the Restructuring Steering Committee leaders from across HHC began analyzing, planning, and working toidentify options to be considered as part of The Road Ahead HHCs restructuring strategy. The Restructuring SteeringCommittee met often, consulted with outside experts, and established a broad agenda for change. In the spring of 2010, theRestructuring Steering Committee deliberated, reviewed, and evaluated a range of very specific options, some of which havebeen selected, some of which were rejected. The decision-making process balanced the need for deep cost-containmentactions with concern and consideration for HHC employees, targeted opportunities for growth, and the importance ofpreserving HHCs historic mission to care for all. Most of the options that are finally chosen will become part of The Road Ahead and will be implemented over the next fourfiscal years, beginning with fiscal year 2011 (which starts on July 1). They will all be discussed in detail in the weeks to come,as the Citys budget gets worked out, but they reflect the hard realities of NYC in 2010. Some changes will happen quickly;others will take longer to develop and implement. We have already brought staffing down by 1,000 full-time jobs through attrition not filling every job when employees haveretired or voluntarily left HHC but we will not be able to solely rely on attrition in the future and, as programs areconsolidated, staffing levels will need to be reduced. Planned workforce reductions will occur after discussions with laborrepresentatives and their implementation will be consistent with our collective bargaining agreements and our PersonnelRules and Regulations.These painful steps have been carefully considered by our Restructuring Steering Committee which includesrepresentation from all of our networks. The Restructuring Steering Committee thoroughly weighed proposed actions andrecommendations from Deloitte and made decisions that are as fair as possible to all of our facilities, communities, patientsand staff. All employees should know that HHC is still advocating strongly for fair and supportive treatment from allgovernment funding sources. On a positive note, our collective work through Breakthrough and other major operationalimprovement efforts are projected to close more than $200 million of our budget gap in the next fiscal year.