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Providing Insight, Understanding and Community

April 2018 | Vol.14 No.2

The Third Degree A degree in business or healthcare administration is still a good bet for those seeking a future in healthcare supply chain management. How about a supply chain degree?


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CONTENTS »» APRIL 2018 The Journal of Healthcare Contracting is published bi-monthly by Share Moving Media 1735 N. Brown Rd. Ste. 140 Lawrenceville, GA 30043-8153 Phone: 770/263-5262 FAX: 770/236-8023 e-mail: info@jhconline.com www.jhconline.com

The Third Degree

Editorial Staff

Editor Mark Thill mthill@sharemovingmedia.com Managing Editor Graham Garrison ggarrison@sharemovingmedia.com Art Director Brent Cashman bcashman@sharemovingmedia.com Publisher John Pritchard jpritchard@sharemovingmedia.com

A degree in business or healthcare administration is still a good bet for those seeking a future in healthcare supply chain management. How about a supply chain degree?

Vice President of Sales Jessica McKeever jmckeever@sharemovingmedia.com Director of Business Development Alicia O’Donnell aodonnell@sharemovingmedia.com Sales Executive Tyler Moss tmoss@sharemovingmedia.com

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Sales Executive Lizette Anthonijs Lizette@sharemovingmedia.com Circulation Wai Bun Cheung wcheung@sharemovingmedia.com The Journal of Healthcare Contracting (ISSN 1548-4165) is published monthly by Share Moving Media, 1735 N. Brown Rd. Ste. 140, Lawrenceville, GA 30043-8153. Copyright 2018 by Share Moving Media. All rights reserved. Subscriptions: $48 per year. If you would like to subscribe or notify us of address changes, please contact us at the above numbers or address. POSTMASTER: Send address changes to Share Moving Media, 1735 N. Brown Rd. Ste. 140, Lawrenceville, GA 30043-8153. Please note: The acceptance of advertising or products mentioned by contributing authors does not constitute endorsement by the publisher. Publisher cannot accept responsibility for the correctness of an opinion expressed by contributing authors.

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Publisher’s Letter

6 Making a Merger Work

Dameka Miller and Trinity Health plan the work, work the plan

40 Intalere to meet in Orlando in May 44 HealthTrust in Nashville in July 45 Calendar of Events

12 Capstone Ready to Cover New Ground

46 HSCA

16 The Third Degree

48 New Pricing Accuracy Solutions Make Four-Way Matching More Attainable

A degree in business or healthcare administration is still a good bet for those seeking a future in healthcare supply chain management. How about a supply chain degree?

34 Service your customers can trust

The Journal of Healthcare Contracting | April 2018

Protecting Data in the Era of Cyberattacks

49 Industry News 50  Observation Deck: Supply chain’s role in the big picture

Sentara Healthcare believes patients, the clinical staff and suppliers deserve nothing less than ISO-9001 certification

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PUBLISHER’S LETTER

John Pritchard

Do You Know Any All Stars? We’ve had many industry giants grace our pages over the years. Getting to know the best-in-class Supply Chain Leaders from IDNs across our country is one of the greatest parts of my job. These past couple years, we continued to interview more Leaders in features such as; • 10 People to Watch in Healthcare Contracting • Women Leaders in Supply Chain • 9 Leaders that will shape the future of the Supply Chain In fact, these three features were all cover stories in 2017. People are important to The Journal of Healthcare Contracting. I would be so bold to say this is our competitive advantage – knowing the movers and shakers in our industry. Even though this our 15th year of publishing The Journal of Healthcare Contracting, we are not resting on our laurels. So, I am requesting that you, our loyal readers, introduce us to great Supply Chain Leaders. Maybe we already know them, but maybe we don’t. Do you know: • Someone on your staff with a bright future? • A new addition to healthcare from another industry? • Someone impressive from your local AHRMM chapter? • A clinician new to Supply Chain that “gets it”? These are the type of people we’d like to meet. Simply drop me an email at jpritchard@ ShareMovingMedia.com and copy your colleague. I will make sure they receive their monthly copy of The Journal of Healthcare Contracting. Who knows, maybe they will be the next Contracting Professional of the Year? Thanks for reading this issue of The Journal of Healthcare Contracting.

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April 2018 | The Journal of Healthcare Contracting


EXECUTIVE INTERVIEW Dameka Miller

Making a Merger Work Dameka Miller and Trinity Health plan the work, work the plan

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Mergers just aren’t what they used to be. Twenty years ago, the combination of one hospital with another, perhaps in the same or neighboring town or city, was news. Today, news is when one IDN merges with another to form a national entity spanning half the country and comprising a couple of hundred inpatient facilities and hundreds more outpatient locations. But regardless of how many facilities are involved, the keys to successful integration remain the same: Communication and transparency.

April 2018 | The Journal of Healthcare Contracting


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EXECUTIVE INTERVIEW

Trinity Health headquartered in Livonia, Michigan, is itself the result of the coming together in 2013 of two national Catholic health systems – Trinity Health and Catholic Health East. Since then, the organization has continued to grow, and today comprises 93 hospitals and 109 continuing care programs in 22 states.

Up for the task

“I spend a lot of time thinking about who needs to know what at the right time.”

Director of Supply Chain Management Dameka Miller is well-suited to help orchestrate those mergers and acquisitions from a supply chain perspective. Brought up in the Trinity Health system as an intern and purchasing agent at one of its smaller hospitals, Miller’s career has spanned supply chain, change management, consulting (for Trinity Health and Deloitte Consulting) as well as a regional director role with Premier. She assumed her current position with Trinity Health in 2015. Just as Miller’s professional career has matured, so too has the integration strategy of Trinity Health. “Trinity Health’s Integration Management Office is centralized and coordinates all integration activities across the organization now, because it is far more effective than working in silos, function by function. Ten years ago, separate teams worked independently to integrate their respective functions at the new organization.” With a permanent staff, the Integration Management Office has worked to establish a standardized methodology for mergers and acquisitions, Miller explains. For each integration, a comprehensive plan is posted on a central site, which both sides (Trinity Health and the new facility or facilities) can consult throughout the integration process. This helps guide the success of the joining organization’s full transition to standard platforms, processes, policies and procedures used by Trinity Health in serving individuals and whole communities, says Miller. “I have transparency into other functions on which I might be dependent. For example, if IT implementation is delayed, I can see that immediately.”

“We rely on our collective experience and expertise – and on individual agility and flexibility.”

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If she were to suggest a step-by-step integration process for others to follow, it might be the following:

STEP 1: Communication planning

“I spend a lot of time thinking about who needs to know what at the right time,” says Miller. “You really have to think about that – as well as what it is you’re communicating.” Internally, who needs to know what the IDN is about to embark on? What does the new facility or system need to know about Trinity Health’s operating model from a supply chain perspective, and what should both sides expect of each other in this new model?

STEP 2: Integration planning Integration planning involves all the tactical and logistical details that need to be ironed out when incorporating a new entity into the organization. Those include contract changes, group purchasing affiliation, distribution, staffing and governance.

STEP 3: The first 90 days “This goes back to communication planning,” says Miller. “I have built regular, weekly or biweekly, scheduled touch points with the new site into my plan, so we can talk through challenges and barriers. Those first 90 days determine how well we will mesh our operations and where we might have to work on our relationship.”

STEP 4: ‘Are we forming, storming or norming?’ Where does the integration stand after that first 90 days? To be “forming” means both sides understand the relationship and how they will work together, says Miller. “Storming” means

April 2018 | The Journal of Healthcare Contracting


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EXECUTIVE INTERVIEW

resistance is coming from either end – Trinity Health or the acquired facility or IDN. The question then becomes, “How do we work through that?” And by “norming,” Miller means the merger is proceeding smoothly – all systems are normal.

Demonstrating the value Demonstrating the value of the merger or acquisition is an essential part of the integration process. That means demonstrating Trinity Health’s value proposition to the new organization, and making sure all stakeholders know the value of becoming part of Trinity Health’s supply chain. “Regardless of the size of the merger or acquisition, two things need to be known in order to plan for a successful supply chain integration,”

handling large amounts of data, or the supply chain director may wear multiple hats, so managing the details of an integration can be overwhelming. When integrating single hospitals into a large system, it’s important to understand the resource capacity and skill set of the incoming team so you can determine how to fill any gaps early in the integration process.” A governance model with defined levels of accountability is the foundation of an integrated supply chain, says Miller. “You need clearly defined roles and responsibilities, and everyone needs to know where they stand in the supply chain operating model. When we onboard a system, we orient them to that governance and operating model so they understand the services we provide and what they can expect. “Trinity Health has a proven model that sets the tone for how we work together. When we acquire another organization, we always begin by including key stakeholders in our governance structure. This, along with the breadth of our shared services support and data infrastructure, is key to integrating Trinity Health’s supply chain. “Underestimating the time, resources and expertise required to facilitate integrations makes for rocky transitions,” says Miller. “There will always be unexpected barriers, bumps and roadblocks. It helps immensely when people are able to give their thought and time resources to forecasting and planning for these, but that isn’t always possible. That’s when we rely on our collective experience and expertise – and on individual agility and flexibility. “They are enormous benefits at those moments.”

“Underestimating the time, resources and expertise required to facilitate integrations makes for rocky transitions.” says Miller. “First, it is critical to understand the general operating characteristics of the incoming organization’s supply chain operations, such as current ERP system, GPO, distributor arrangements, staffing, etc. You also have to take a really close look at where the potential synergies lie for reducing expenses. Identifying the synergies in mega-mergers involving different GPOs becomes more complex. In nearly all cases, you will need a third party to lead decisions regarding the new organization’s GPO selection process. “Integrating a system of hospitals adds another level of complexity when compared to the integration of a single hospital,” she adds. “Larger mergers require more focus on integrating people and culture, and require considerably more care and planning with regard to the new organization structure, as well. “Supply chain teams at single hospitals can be very lean, so we focus on welcoming them into the organization and making sure they have the appropriate support,” she continues. “For example, a single hospital may not have an dedicated analyst accustomed to

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April 2018 | The Journal of Healthcare Contracting


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TRENDS

Capstone Ready to Cover New Ground

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April 2018 | The Journal of Healthcare Contracting


Five years after the launch of its new name and corporate structure, Premier owner and Certified Sponsor Capstone Health Alliance is running at full power and is eager to bring new services and opportunities to its members. An offshoot of WNC Health Network (an Asheville, North Carolina-based alliance formed in 1994), Capstone officially took off in October 2013 after plans were formalized to separate the WNC Health Network’s group purchasing program from other operating divisions. Today the GPO has more than 250 hospital members in 23 states, and its purchasing volume exceeds $7 billion. “We are proud to have more than 675 contracts in our portfolio, which are either Premier-enhanced contracts or Capstone local agreements,” says President and CEO Tim Bugg. “Our logic is that through aggregation and collaboration, there is opportunity everywhere. “Led by our two executives – Mark Landau, COO, and Robin Lincoln, SVP Contracting Operations – Capstone has more than 90 agreements

negotiated for our membership on Capstone paper, and more than 575 Premier aggregated or enhanced agreements,” says Bugg. Capstone is an active member and holds a board seat in the Healthcare Supply Chain Association (HSCA), and follows all safe harbors and codes of conducts related to GPOs. “To be clear, Premier brings us tremendous opportunities in the sheer number of contracts and programs it allows us to work with, and we are proud to support the Premier ASCEND program, which includes more than 70 percent of our membership,” he says. “The fact that Capstone operates as a regional GPO does not negate or devalue our belief in Premier as a GPO. We believe that together, we bring sustained value to our shared memberships.”

“Our logic is that through aggregation and collaboration, there is opportunity everywhere.”

The Journal of Healthcare Contracting | April 2018

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TRENDS

Capstone contracting decisions are member-driven, through a committee process, he says. A team of region managers – all of whom have healthcare supply chain experience – call on Capstone members “not to sell contracts, but to identify savings and help the members improve the supply chain in their respective organizations.”

Purchased services Like other GPOs and alliances, Capstone sees tremendous savings opportunities in nontraditional areas, such as purchased services. Capstone has expanded its purchased-services portfolio by close to 700 percent since 2015. Its portfolio now includes opportunities for IT, human resources, facilities, clinical and professional services, as well as finance. “We have a member-led Purchased Services oversight committee that reviews all opportunities, both at the regional level and for all Capstone members,” says Bugg. “We have seen many savings opportunities and successes in purchased services from a variety of

areas outside of supply chain. We have found that partnering a member with a service vendor in a nontraditional area, then sharing the value the member realized, helps our membership better understand the potential value a contract offers. “As with most GPOs and regional aggregation groups, physician preference items are a priority, and Capstone will continue to strive to find solutions for our organizations using our member-driven model,” he says. “We are also looking forward to continued expansion in the non-acute market. We have large member partners, such as CHAMPS Group Purchasing, Vantage Group Purchasing, and IPC Group Purchasing, which have

Tim Bugg

“We are also looking forward to continued expansion in the non-acute market.”

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April 2018 | The Journal of Healthcare Contracting


large non-acute memberships. Our job is to work collectively with them to affect cost in all markets of care.

Variance in care “While contracting and aggregation will always be the core of what we do, our long-term goal is to use aggregation and collaboration to tackle variance in care using best practice/best outcome models. We obviously realize this is a big dot goal, but to really reduce cost in healthcare, the strategy has to be broader than just contracting. We are proud to be an owner and partner of Premier, and we are continually impressed by Premier’s successes in being more than a GPO. Premier leads the way in helping its members not only reduce cost, but improve quality with datadriven results. Our hope is to use our regional model with Premier’s national experience to further enhance our member facilities’ ability to achieve success in this new era of healthcare.”

The Journal of Healthcare Contracting | April 2018

Director of Member Services Kristin Scott helps evaluate and understand members’ needs. “Our members expressed a need for continued learning and training,” recalls Bugg. “In our discussions we found there weren’t many affordable options for them to train incoming staff or keep their own knowledge up to date. As a result, we developed the Capstone Learning Academy, an online portal housing supply chain modules on tactical and strategic topics designed by subject matter experts from our membership.” Topics covered include purchasing, supply chain and inventory control. Upcoming modules were scheduled to be released, with a second-quarter focus on value analysis. “Essentially, at the core of it, we are a GPO married to a GPO, and we use all resources necessary to provide our members with as many cost reduction opportunities as possible,” says Bugg. “Our job is to reduce cost in the healthcare space, and that’s what we strive to do every day.”

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The Third Degree A degree in business or healthcare administration is still a good bet for those seeking a future in healthcare supply chain management. How about a supply chain degree? It’s 10 years hence. 2028. You’ve got an opening in supply chain, and you’ve narrowed it down to two candidates. One has a degree in business, the other in supply chain management. Which one do you choose? Jamie Kowalski, a Whitefish Bay, Wisconsin-based supply chain consultant, has an opinion, based on a career working with hospital clients, observing trends and conducting surveys of hospital/provider senior and supply chain executives.

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April 2018 | The Journal of Healthcare Contracting


Supply chain management has gained traction among the public, and there’s a growing interest level in it, says Kowalski, who served on the advisory board of the Marquette University Center for Supply Chain Management. Universities that are strong in the discipline are counseling students that accounting, finance and IT degrees are still valuable, but “there is a lot of opportunity in supply chain, as companies now recognize it as a key contributor to customer service and profitability. For healthcare providers, that also means sustainability. “The challenges facing supply chain leaders, and the complexity and scope of supply chain, are such that we may get to the point where, if you don’t have a degree in supply chain, you won’t be a candidate,” he adds. A talented, hardworking candidate with a supply chain degree may beat out an equally talented competitor who has a degree in business, but not the supply chain specialization. Christopher O’Connor, president, Acurity and Nexera, notes that traditionally, people have come to healthcare supply chain management with expertise in another discipline, such as accounting, a clinical area, or business in general, “That will change as the number of [supply chain] degree programs grows,” says O’Connor, who has served as an adjunct professor at Cornell University, Iona College and SUNY Binghamton, where he has taught undergraduate and graduate courses in healthcare and supply chain management. And that’s exactly what appears to be happening.

supply chain. “However, the field is gaining traction as a career path for students, and there has since been a significant uptick in supply chain management degree programs across the country. “Institutions such as Michigan State University and Arizona State University offer undergraduate departments exclusive to supply chain management, while many other schools have combined supply chain with departments such as marketing, logistics or information systems. MIT, The University of Texas and the University of Maryland, among others, even have doctoral programs specific to supply chain management.” Mike Schiller, CMRP, senior director of supply chain for the Association for Healthcare Resource & Materials Management (AHRMM), says that “supply chain degrees are absolutely applicable” for those pursuing a career in healthcare supply chain management. And there Christopher O’Connor are plenty to choose from. “There has been incredible growth in the number of supply chain programs available, with 74 colleges offering a business degree in supply chain, transport, or logistics – up from 56 four years ago,” says Schiller.

“You increasingly find hospitals and IDNs looking for vice presidents of supply chain. And those jobs tend to pay fairly well.” – Eugene Schneller

Since 2010, enrollment in Southern New Hampshire University’s online MBA in Operations and Supply Chain has grown from 12,000 to 72,000, he says, sourcing a June 15, 2015, article in Fortune.

Degree programs growing “Before the early 2000s, academic programs for supply chain were rare, so most supply chain professionals were trained in areas such as finance or engineering,” says Abe Eshkenazi, CSCP, CPA, CAE, FACHE, CEO of APICS, a provider of research, education and certification programs in

The Journal of Healthcare Contracting | April 2018

On a mission The W.P. Carey Department of Supply Chain Management at Arizona State University is consistently ranked among the nation’s Top 5 for undergraduate and graduate programs by U.S. News & World Report, according to the school’s website. ASU offers undergraduate and graduate degrees in supply chain and logistics. Eugene Schneller,

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THE THIRD DEGREE PhD., has been on a mission to incorporate a healthcare perspective into the programs. Schneller arrived at ASU in 1985 to develop its healthcare management program. “One day, I was sitting with a friend – Larry Smeltzer – in the supply chain department, and I asked him, ‘Why don’t we do some research together? So little is known.’” They sought and received funding from the National Science Foundation to explore the healthcare supply chain, and they spent the better part of a year talking to executives in hospitals, distributors, manufacturers, GPOs and others, to learn more about it. At the time, Schneller knew of no healthcare management programs with a supply chain track, but he knew the need existed. “Supplies are usually the second largest cost after labor in the hospital, and yet CEOs knew very little about it,” he says.

Supply Chain Initiative

Ten years ago, Stonehill College in Easton, Massachusetts, launched the Healthcare Supply Chain Management Initiative. It did so with the help of a $30,000 grant from Kimberly-Clark Corp., as well as the efforts of alumnus Bob Simpson, DeRoyal and AHRMM. (Simpson retired last year as president and CEO of LeeSar, a Fort Myers, Floridabased healthcare supply chain company.) The Initiative is led by Mitchell Glavin, Ph.D., Stonehill’s Associate Professor of Healthcare Administration and Chair of the Healthcare Administration Department. “Supply chain management wasn’t my background,” says Glavin. “But I had done work in somewhat related areas, such as performance evaluation and benchmarking, so I volunteered to head up the Initiative.” For 16 months he researched the field, familiarizing himself with pertinent literature and organizations, including AHRMM. He devised an undergraduate course in healthcare supply chain management – one he continues to teach today while incorporating active supply –Jamie Kowalski chain management professionals as guest speakers. The Initiative sets up summer internship “Larry and I started to see strategic aspects to supply chain manageprograms for students in medical products ment,” he continues. “Given my background in sociology and healthmanufacturers and distributors, including care management, I found that really interesting.” (Smeltzer died in 2004 LeeSar. Providers ramping up their internal at the age of 57.) One of those aspects – and one Schneller continues supply chain capabilities have also been a to study today – is the role of physicians in healthcare procurement. source of internships. The Initiative over time Another is the role of group purchasing organizations in the healthcare has developed a strong link with the New Engsupply chain. land Society for Healthcare Materials ManageToday ASU’s supply chain management program maintains strong ment. Halyard Health and MedAssets (now ties to industry, including companies such as John Deere, says Schneller. Vizient) have also provided financial support. The university is also a partner in the Center for Advanced Purchas“We have also tried to ‘bake’ supply chain ing Studies (CAPS Research), which Schneller describes as a marriage concerns and challenges into the healthcare of academia and industry working to solve supply-chain-related probadministration curriculum, so those students lems, some of them healthcare-specific.

“The challenges facing supply chain leaders, and the complexity and scope of supply chain, are such that we may get to the point where, if you don’t have a degree in supply chain, you won’t be a candidate.”

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April 2018 | The Journal of Healthcare Contracting


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THE THIRD DEGREE “There has since been a significant uptick in supply chain management degree programs across the country.” – Abe Eshkenazi

are exposed to supply chain as a critical competency and potential career path,” he adds. He estimates that Stonehill already has produced eight to 10 graduates who are working as healthcare supply chain professionals.

A career choice “Over the past 10 to 20 years, APICS has seen the supply chain function greatly evolve and grow in importance across the enterprise,” says Eshkenazi. “It has emerged as a revenue driver and competitive differentiator for corporations.

Follow the Instructions How to navigate value-based waters “The Healthcare Supply Chain: Best Practices for Operating at the Intersection of Cost, Quality and Outcomes,” recently released by GNYHA Ventures Inc., is a guidebook designed to acquaint the newcomer with the demands of healthcare supply chain management, get the veteran up to speed, and demonstrate to both the opportunities that lie ahead for them. Consulting Editor Christopher O’Connor, president of Acurity and Nexera (subsidiaries of GNYHA Ventures), has assembled a group of experts to help today’s supply chain professionals thrive in a valuebased environment. It is a revised, second edition of a volume published in 2015, which sought to clarify the relationship between the healthcare supply chain and the Cost, Quality, and Outcomes (CQO) Movement, championed by the Association for Healthcare Resource & Materials Management. The authors state their case in the Introduction to the new edition. “Today, providers must be able to quantify and weigh the impact of total healthcare

delivery costs against patient and financial outcomes. Hospitals must evaluate the clinical effectiveness of a device compared to its functional equivalent by examining the outcomes of the procedures in which each have been used.” Through case studies, best practices and suggested key performance indicators, the 114-page book guides readers through the fundamentals of CQO, building its foundation, and next steps. Chapters range from creating efficient processes for requisitions, purchasing and inventory control; to applying alternative data sets, establishing a physician-led value analysis process and creating an outcomes-based contracting strategy. Forward-looking as the book is, its authors caution readers to remember the basics. “Improve fundamental operations before exploring outcomes-based methods,” states one best practice. “The supply chain’s contracting process must be buttoned up before it can take on more strategic endeavors.”

Editor’s note: For more information on the book, go to www.acurity.com/CQO or www.nexerainccom/CQO. Those interested in taking the free online Hospital Supply Chain Performance Self-Assessment, which is referenced in the book, can visit www.nexerainc.com/CQOAssessment.

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April 2018 | The Journal of Healthcare Contracting


THE THIRD DEGREE “While supply chain managers used to primarily operate in the back room, driving cost and efficiency, they are now filling executive roles, meeting aggressive performance goals and leading business strategy. Holding on to technical and subject matter expertise is still essential for supply chain managers, but we’re seeing that those who develop more advanced management skills and adopt an enterprise-wide mindset are rising in businesses. “As this evolution has progressed, supply chain professionals have become more consumer-focused, having to consider not only the demands of supply chain partners – suppliers and customers – but also the end consumer.” Healthcare supply chain management is evolving as well. Supply chain students see opportunity in healthcare, says Schneller. “My first job was at Montefiore Hospital. Then, supply chain was in the basement. But in many healthcare systems today, it’s part of the executive suite. So you increasingly find hospitals and IDNs looking for vice presidents of supply chain. And those jobs tend to pay fairly well.”

“We have tried to ‘bake’ supply chain concerns and challenges into the healthcare administration curriculum.” – Mitchell Glavin

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Guess who’s coming to class? Check out the person sitting next to you in your supply chain management class. Is a stethoscope hanging from his or her neck? “Clinicians love supply chain,” says Christopher O’Connor, president, Acurity and Nexera, who also teaches undergraduate and graduate courses in healthcare and supply chain management. “They’ve always touched it, but never worked with it as ‘boots on the ground.’” Healthcare’s current emphasis on the connection between cost, quality and outcomes (or CQO) resonates with them, he adds.

Says Kowalski, “Since some IDNs are now as large – revenue-wise – as Fortune 500 companies, the compensation for supply chain leaders in healthcare and other industries is likely to be comparable. There are good career opportunities because of expected significant turnover in the leadership ranks, as established in the most recent survey.” With more salary, of course, comes more responsibility. “It takes a professional with strong leadership skills as well as technical supply chain skills to achieve the highest performance,” says Kowalski. “There is still a certain portion of the population in healthcare organizations that doesn’t get what supply chain is all about, or what their role is related to supply chain management. They will need somebody to educate them, persuade them – somebody with the people skills to lead them. “The industry is just begging for this.”

April 2018 | The Journal of Healthcare Contracting


THE THIRD DEGREE Credentialed How many healthcare supply chain executives do you know who actually have a degree – undergrad or grad – in supply chain management? Probably not many. But meet Jim Szilagy, chief supply chain officer at UPMC in Pittsburgh, Pennsylvania. He received a bachelor’s degree in procurement/materials management from Arizona State University in 1985. “While in my sophomore year at ASU, I read an article featuring a new program within the W.P. Carey School of Business,” he recalls. “The article described how procurement and materials management was a growing field, and only two other schools in the country offered this program to prepare students

for this emerging profession. I immediately became intrigued by the abundance of opportunities that would be awaiting graduates with this exclusive degree, and changed my field of study from accounting.” He started his supply chain career with a power tool company, then consumer electronics, and then joined Alcoa Inc. before landing in healthcare at UPMC 12 years ago.

“I immediately became intrigued by the abundance of opportunities that would be awaiting graduates with this exclusive degree, and changed my field of study from accounting.” “I have witnessed tremendous advancements in the healthcare supply chain since I joined UPMC,” he says. “This is in part due to the level of talent that has been infused from other industries, but also largely from the professional growth driven by new talent entering the workforce with supply chain degrees. “Several years ago, [UPMC] created a very robust and competitive summer intern program, where we recruit students from schools with strong undergraduate and graduate supply chain programs. We literally have hundreds of applicants and select around a dozen highly qualified students to manage a variety of supply chain projects throughout the summer. “We find this program to be tremendously valuable. It is critical for our sustained success to continue to nourish the organization with fresh talent at the entry level and to mentor and advance these professionals to increasingly higher levels of responsibility.”

Jim Szilagy

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April 2018 | The Journal of Healthcare Contracting


Guidance for the outpatient lab A good distributor representative can guide even the most seasoned outpatient-lab professionals Carolyn Blair has worked in a

Charles Powell, M.D., mean-

Despite all those combined

lab for about 40 years, first as a

while, has been practicing medi-

years of experience, Blair and

phlebotomist, then as a hema-

cine for 19 years, including 16

Powell still draw on the expertise

tology supervisor in the hospital

years in the Army and Navy. To-

and knowledge of their primary

setting, and today as laboratory

day, he is executive vice president

distributor – McKesson Medical-

manager of the Diagnostic Clinic

of clinical operations for Health-

Surgical – to help keep their labs

of Longview (Texas).

care Associates of Texas in Irving.

running efficiently.

The Journal of Healthcare Contracting | March 2018

Sponsored by McKesson Medical-Surgical

25


Diagnostic Clinic of Longview

its current chemistry analyzer –

Founded more than 35 years ago,

we’ve had in my 22 years here” –

DCOL is a multispecialty physi-

after visiting a user in Oklahoma.

cian group practice that includes

Staffing is a challenge for

18 locations, more than 90 phy-

DCOL, as it is for other labs, says

sicians and 30 mid-level provid-

Blair. Finding well-qualified peo-

ers. The majority of its lab work

ple takes time and effort. Add to

is performed in the central lab in

that the stress associated with

Longview, but outlying locations

running a lab today, with all the

have phlebotomy draw stations

required regulations, and provid-

and perform point-of-care test-

ing comprehensive training to

ing as needed. The lab performs

the staff.

which Blair describes as “the best

more than 1 million tests per year.

“That’s why, in the end, it’s im-

“Evan comes by once a week,”

portant find a good rep like Evan,”

says Blair, referring to McKesson

she says. “He’s kind of old school;

Medical-Surgical Account Man-

not many account managers come

ager Evan Stanley. “My chemistry

around once a week like he does.

tech sends orders on Monday;

We really depend on him, and it

Evan comes in on Wednesday,

takes a lot of stress off us, knowing

walks through the lab, and we let

we will receive what we ordered in

him know what is needed. Every-

a timely manner. Any time we have

thing is delivered on Thursday.

issues, I’ll ask him, ‘Have you heard

“Rarely is it not here on Thursday,” she adds.

of this before?’ or ‘Do you have a customer with this problem?’”

Stanley is quick to put Blair in

Stanley guides DCOL in choos-

touch with directors and techs

ing instruments. “That’s very im-

from labs that may be using a

portant to us, because we want

piece of equipment in which she

to keep our instruments for as

has an interest. “He is always tell-

long as possible” says Blair. “We

ing me what’s out there, and he

want to make sure we’re making

lets me be the judge,” she says.

the best decision for our needs.”

“He takes us to other labs and

He also helps the lab identify

gives us time to talk to the techs,

reliable service options when

to ask questions, to see how they

needed. “When you run the vol-

feel about it – and he doesn’t

ume of tests we do in a 12-hour

hover over us.” DCOL acquired

period, fast and efficient service

26


is very important. Evan helps us

will include a 60,000-square-foot

were OK businesspeople, but it

get any assistance we may need

facility housing an ambulatory sur-

was time to bring in some heavi-

regardless of what brand equip-

gery center and medical offices.

er guns,” in the form of private

ment we purchased.”

Healthcare Associates of Texas Healthcare Associates of Texas is on the move. Founded 26 years ago by two doctors and one office, HCAT now has 48 providers, and it intends to double that number by the end of 2018. This summer, HCAT will move into a new “mother ship,” a 95,000-squarefoot facility providing primary care and specialist services, imaging, laboratory, nerve conduction, urodynamic and sleep studies, and more. Phase II of the construction

“We grew to three locations on

equity firm Webster Capital. “Our

our own dime,” says Powell. “Then

concept is to grow by acquisition

we realized that, as doctors, we

and organic growth, and they will help us with both.”

McKesson helps HCAT maintain what Powell describes as “that very fine balance” between too much inventory on the shelves, and shortages, which can jeopardize patient care.

project, set to begin later in 2018,

Powell actually prefers the word “integration” to “acquisition” when speaking about new clinics. “We wouldn’t buy a practice if things weren’t already working,” he says. “We like to step in and adopt those things that are working well, and bring in solutions of our own that can improve operations.” One of those “solutions” is McKesson Medical-Surgical Account Manager Jonathan Poulin, who began servicing HCAT five and a half years ago.

27


“As we have grown, McKesson has made sure that Jonathan is the representative for the new facilities,” says Powell. “He visits the locations, reviews their practices, including what lab tests they do, and works on standardizing supplies and equipment through HCAT, which gives us economy of scale.” He also helps HCAT decide which tests formerly done in the facility or sent out to a reference lab may be performed more efficiently at HCAT’s central lab. “Doctors love it,” says Powell, referring to the central lab. “Turnaround

multiple diseases in an hour. Its GI

“Having accurate and comprehensive test results in one hour enables physicians to immediately prescribe treatment protocols that target the specific infections, rather than administering a wide-spectrum antibiotic, which may not be necessary.” – Charles Powell, M.D.

times are faster, they have more

panel, for example, identifies 22 disease targets for bacterial, viral and parasitic gastroenteritis infections; its respiratory pathogen (RP) panel identifies 20 viral and bacterial respiratory pathogens. “Not every patient needs that test, but using it in a responsible manner will improve patient care,” says Powell. “Having accurate and comprehensive test results in one hour enables physicians to immediately prescribe treatment protocols that target the specific infections, rather than administering a wide-spectrum antibiotic, which

control over their panels, and it’s

patient care. McKesson has also

seamless for the patients.”

played a key role in helping HCAT

For a growing physician prac-

McKesson helps HCAT maintain

upgrade its lab equipment. In July,

tice or health system, continuity in

what Powell describes as “that very

for example, they helped HCAT

the supply chain is critical. Carolyn

fine balance” between too much

implement the FilmArray system

Blair and Charles Powell believe

inventory on the shelves, and

from BioFire, a molecular labora-

they have found it, with help from

shortages, which can jeopardize

tory instrument that can identify

McKesson Medical-Surgical.

28

may not be necessary,” he says.


Help wanted Your outpatient labs need you.

As a supply chain executive, you may not be conversant with hematology, chemistry, immunoassays, analyzers, molecular testing, point-of-care testing or CLIA. You may not be familiar with the supplychain-related demands of the typical outpatient lab. 29


And yet, chances are, your

operational and financial efficien-

Purchasing efficiencies are also

health system has been actively

cies and delayed care to patients

sacrificed, as without a strong

acquiring

practices,

with lower quality outcomes.

formulary, the opportunity to ne-

surgery centers, urgent care cen-

Having a distribution partner

gotiate for best price tier from the

ters, even retail clinics, over the

who understands the complexi-

distributor or manufacturer may

past few years. And with each

ties encountered with acquisition

be missed.”

one comes a lab.

and consolidation and the ben-

Glass adds, “As health systems

efit of an integrated lab strategy

acquire more and more sites,

is essential to healthcare delivery

things can become increasingly

in today’s environment.

disorganized. There may be no

physician

LAB TESTS REPRESENT

2% SPENDING OF HEALTHCARE

AND INFLUENCE

70%

OF MEDICAL DECISIONS

standardization of products or

A key pillar

processes. You might find a hun-

“Laboratory is a key pillar to suc-

dred non-acute locations, each

cess with value-based-care pro-

one ordering from a different

grams from government and

vendor, ordering different tests,

private payers alike,” says Patrick

and employing different supply

Bowman, Director, Strategic Ac-

chain processes.”

counts, Lab, McKesson Medical-

Health system administrators

Surgical. “A significant amount of

– including supply chain execu-

Source: The Impact of Diagnostics on Healthcare Outcomes, Health Industry Distributors Association.

a health system’s revenue is based

tives – might assume (or hope?)

upon

pro-

all those non-acute operations

“Having lab testing close to the

grams, which essentially score an

are taking care of themselves,

point of the patient encounter

organization’s ability to achieve

Glass says. “And they are … but

with immediate results, diagnosis

certain benchmarks, many of

they might not be doing a very

and treatment in the non-acute

which require both a higher level

good job of it.”

space of the health system can be

of patient compliance and com-

an essential component in achiev-

pleted laboratory results.”

value-based-care

Point of care

Lack of control over those labs

Some healthcare systems opt to

satisfaction,”

can have negative operational, fi-

pull all testing out of the non-acute

says Lynn Glass, Vice President of

nancial and clinical consequences.

clinics and into a central lab, says

Strategic Accounts, Lab, McKes-

“Having multiple laboratory

Bowman. “I think the easy answer

son Medical-Surgical. ”Failure to

products that execute the same

for many is, ‘We have this hospital

fully integrate a lab strategy that

function can result in clinical inef-

lab that runs like a well-oiled ma-

addresses standardization, up-

ficiencies, as not all tests replicate

chine, so we can do our tests there

grade in product, and efficien-

the same result and range,” he

at a fraction of the cost.’”

cies impacts both supply chain

says. “This leads to both confu-

But doing so can lead to unac-

and patient care with decreased

sion and potential misdiagnosis.

ceptable delays getting results,

ing higher quality outcomes and increased

patient

30


making a diagnosis, and begin-

experience, and also addresses

ning treatment, he says. What’s

management of the chronic dis-

more, a high percentage of pa-

ease patient population.

tients – particularly those with chronic conditions – fail to comply

Supply chain’s role

with instructions to go to a central

Just as they must in the hospi-

lab for a test. That’s a problem, be-

tal, supply chain executives must

cause patient compliance and en-

work as part of a team to take

gagement are in direct correlation

control of the scattered non-

with better patient outcomes.

acute labs.

“It’s important to see the big

“Decisions on non-acute lab

picture, to have a strategy,” he

strategy should be made by com-

says. “Keep as close to the cli-

mittee, which will often include

nicians as possible those tests

representation from nursing staff,

whose results are needed quick-

medical leadership, supply chain,

ly,” even if the nominal cost of

finance and the laboratory direc-

running them at the central lab

tor or manager,” says Bowman. “A

might be less.

committee of this size and scope

“It’s important to address and

is essential, because non-acute

provide healthcare in conjunction

laboratory testing can greatly

with value-based care,” adds Glass.

impact each of their respective

Utilizing point-of-care lab testing

areas of responsibility.”

provides immediate diagnosis,

A distributor with experience

treatment and a higher quality of

in the non-acute lab setting can

care. This will impact both reim-

help the team make sound deci-

bursement and the overall patient

sions. For example, McKesson can 31


help supply chain executives take control of the non-acute continuum through improved supply chain operations, stronger financial performance and building a clinical infrastructure that leads to better outcomes. “A large hospital lab operates very differently than lab in the non-acute space of a health system,” says Glass. “A distributor with the capability of servicing

afford best contracting and pric-

An acute hospital lab is likely to have semi-trucks backing up to their dock and delivering supplies once a week. But the larger system might have 50 to 100 sites with ongoing needs for point-of-care lab supplies.

the large hospital may not have

ing. McKesson can sequester specific lots of reagents, supplies and controls, then deliver them to the non-acute sites as space allows. “We’re more than a distributor,” says Glass. The company’s strategic account teams, point-of-care specialists, lab equipment specialists, consultants and technology resources can help health systems implement solutions that drive increased revenues, operational and

the same level of expertise in the

knows how to pack and ship in

financial efficiency, and a higher

non-acute sites. Adds Bowman,

small quantities, while maintain-

quality of care to the patient with

“The delivery model is key in this

ing product integrity throughout

better clinical outcomes and higher

space. An acute hospital lab is

the chain.”

patient satisfaction.

likely to have semi-trucks back-

McKesson supply chain opera-

“It’s a matter of changing

ing up to their dock and deliver-

tions has a storage and delivery

the conversation, changing the

ing supplies once a week. But the

model that can efficiently provide

whole process by which lab ser-

larger system might have 50 to

cold chain storage and delivery,

vices are provided and collabo-

100 sites with ongoing needs for

lot track and trace, lot sequestra-

rating to determine a new strate-

point-of-care lab supplies. They

tion and shipments in low units of

gy that best serves their patients

need a vendor that can deliver in

measure, and additionally has re-

and provides the highest quality

vans to all those sites, and who

lationships with prime vendors to

in lab testing.”

32


Is she spending time on

patients or PAR levels? Take Control of your Non-Acute Continuum Free up your clinicians to focus on patient care with services and solutions designed for non-acute facilities: • Operational: Reduce supply chain operating expenses and improve productivity across each care setting • Financial: Drive down supply costs and eliminate waste, while enhancing revenue opportunities • Clinical: Build the infrastructure to expand patient access and improve outcomes • Change: Lead organizational change by aligning stakeholders around your most important initiatives

mckesson.com/takecontrol 800.811.8528

McKesson Delivers: • Medical-Surgical • Pharmaceuticals • Laboratory © 2018 McKesson Medical-Surgical Inc. All rights reserved.


MODEL OF THE FUTURE

Service your customers can trust Sentara Healthcare believes patients, the clinical staff and suppliers deserve nothing less than ISO-9001 certification How do you know if your supply chain team is doing a good job? How do you ensure that you keep getting better? The answer to the first might be provided with a snapshot – a point in time. So, costs may be low, fill rates and customer satisfaction good; inventory turns OK. Any number of indicators. But the answer to the second one, well, that calls for a journey. One that never ends. And it’s a journey that Sentara Healthcare – including supply chain – has undertaken. Sentara began its quality journey in 2010, when Sentara Williamsburg Regional Medical Center piloted the DNV accreditation process and ISO certification, explains Brian Gadsby, supply chain, director of operations and optimization. Supply chain became engaged in the effort in 2013. Today, all 12 Sentara hospitals as well as supply chain are ISO-9001-certified.

34

Who is ISO? ISO – the International Organization for Standardization – is an independent, international organization. Since its founding in 1946, ISO has published more than 22,000 standards covering technology and manufacturing, including healthcare. Headquartered in Switzerland, ISO has members from 161 countries and 778 technical committees and subcommittees. ISO 9001 is a quality management standard, based on seven principles: • Customer focus • Leadership

April 2018 | The Journal of Healthcare Contracting


think-tank and project work before turning his attention to quality in the supply chain in 2013. His current position was created in 2016. “My primary focus is on customer service, communications and leading the quality initiative for the supply chain,” he says. Every part of the Sentara organization is involved in the ISO 9001 quality process. Each of its 12 hospitals, for example has an accreditation coordinator or lead. “Historically, there was never an expressed interest in how services and goods were procured from a quality or audit [perspective],” he says. “This process was an exciting time to lay a foundation that could be used across the supply chain to improve customer service, reduce variability of service, identify best practices, and challenge reasons why we followed certain practices or made certain decisions. Now, all levels of the supply chain know that as decisions are made, we must consider our customers’ needs and wants.” Sentara identifies its customers as its clinicians and patients who come for care. ISO certification isn’t a fulltime job for Gadsby, but it does require a level of commitment, he says. A quality team of eight to 10 people routinely review risk assessments and change-management assessments. For example, when Sentara makes a change that may impact its vendors or processes – e.g., a change in distribution, vendor credentialing or delivery of care – the quality team assesses its potential impact on the organization. “We do customer service surveys, audit our processes at all hospitals as well as corporate functions,” he continues. “All of this has resulted in a need to develop dashboards and metrics to enable all levels of supply chain staff to have a line of sight to how their functional areas are performing in relation to goals that have been set.” The ISO standard is not prescriptive, that is to say, it doesn’t dictate how the organization should set up its quality management system, or even what that system should look like, says Gadsby. It does, however, demand that the organization adhere to the quality management principles. “In the end, it comes back to the three Cs: consistent service, customer service and continual improvement,” he says. “And as we implement it, we need to document what we do, do what we document, prove it and improve it.”

“In the end, it comes back to the three Cs: consistent service, customer service and continual improvement.” • Engagement of people • Process approach • Improvement • Evidence-based decision-making • Relationship management The principles themselves are simple, but implementing, maintaining and monitoring them introduce a certain amount of rigor to the quality management process, says Gadsby.

Leading the quality initiative Gadsby has been with Sentara for 29 years, though not in supply chain. In fact, he was a social worker and nursing home administrator for six years. He participated in some

The Journal of Healthcare Contracting | April 2018

35


MODEL OF THE FUTURE

ning to host another conference with a new set of vendors. “This leads to joint performance metrics,” he says. “So, we will work with our analytics team to figure out how we can measure our vendors’ performance and how they can measure ours. This will demonstrate the sustainability of our quality management system, and theirs.”

Suppliers are involved Suppliers are an essential part of the ISO process, says Gadsby. “Requirements are being actively worked on with our key suppliers that are actively engaged on the ISO journey with us,” he says. “These are specific to the relationship and services provided. “An example of a metric we could track for the benefit of both Sentara and the supplier is ‘the perfect order,’ that is, the percentage of orders processed correctly and through proper channels to minimize touches and deviations from the system.

A question of trust Brian Gadsby

“Currently, we can say that we have begun the journey to ensure products and services meet the level of service required by our customers,” says Gadsby. “Also, we have identified opportunities and gaps in service that we have been actively working on over the past several years. We have implemented risk and change assessment processes to guide us with vendor changes, supply changes or product outages similar to what occurred in 2017 during several of our natural disasters. “If you ask ‘Why ISO in healthcare?’ I state ‘Why not?’ As an individual, you rely and trust industries not realizing that they are ISO certified. You purchase vehicles, fly on airlines, take cruises, buy technology, use energy. The customers of all of these industries expect a certain service to have high reliability that their products and services will work as intended. From my perspective, we should expect the same thing of the products and services used in healthcare today. “Next time you use healthcare, do you expect the products and services to meet your needs and expected outcomes? If so, then the supply chain and healthcare system must have processes and expectations in place to meet them.”

“Now, all levels of the supply chain know that as decisions are made, we must consider our customers’ needs and wants.” “Another example is jointly looking at backorders. Oftentimes, backorders are a supplier’s issue. However, we have seen that our order process can lead to backorders due to ordering unexpected amounts, stocking up without prior discussion or preparing for the absence of someone. “Supply chain analytics can carry over from supplier to internal supply chain to customer” he continues. “The important aspect is to know what the data is showing and using it to improve.” In time, Sentara expects all of its major suppliers to be ISOcertified or ISO-compatible. And why not? Plenty of other industries – as well as many medical manufacturers – already are, he says. “I have reviewed several of our suppliers who have ISO certifications that are specific to their industry. That is acceptable, as long as their quality management system mirrors what we are looking to achieve.” Last year, Sentara hosted an ISO retreat for its top vendors, which collectively represent 40 percent of the IDN’s spend. A follow-up session is planned for this year. In addition, Sentara is plan-

36

April 2018 | The Journal of Healthcare Contracting


Quality management principles

ISO 9001 and related ISO quality management standards are based on the following seven quality management principles:

Understanding how results are produced by this system enables an organization to optimize the system and its performance.

1. Customer focus. Sustained success is achieved when an organization attracts and retains the confidence of customers and other interested parties. Every aspect of customer interaction provides an opportunity to create more value for the customer. Understanding current and future needs of customers and other interested parties contributes to sustained success of the organization.

5. I mprovement. Improvement is essential for an organization to maintain current levels of performance, to react to changes in its internal and external conditions and to create new opportunities.

2. Leadership. Creation of unity of purpose and direction and engagement of people enable an organization to align its strategies, policies, processes and resources to achieve its objectives. 3. Engagement of people. To manage an organization effectively and efficiently, it is important to involve all people at all levels and to respect them as individuals. Recognition, empowerment and enhancement of competence facilitate the engagement of people in achieving the organization’s quality objectives. 4. Process approach. The quality management system consists of inter-related processes.

6. E  vidence-based decision-making. Decisionmaking can be a complex process, and it always involves some uncertainty. It often involves multiple types and sources of inputs, as well as their interpretation, which can be subjective. It is important to understand cause-and-effect relationships and potential unintended consequences. Facts, evidence and data analysis lead to greater objectivity and confidence in decision-making. 7. R  elationship management. Interested parties influence the performance of an organization. Sustained success is more likely to be achieved when the organization manages relationships with all of its interested parties to optimize their impact on its performance. Relationship management with its supplier and partner networks is of particular importance.

Editor’s note: The quality management principles were developed and updated by international experts of ISO/TC 176, which is responsible for developing and maintaining ISO’s quality management standards. To view the principles, as well as their key benefits and actions your organization can take to achieve them, go to “Quality management principles,” an online ISO resource, at https://www.iso.org/files/live/sites/ isoorg/files/archive/pdf/en/pub100080.pdf

The Journal of Healthcare Contracting | April 2018

37


COMMUNITY

HOSPITAL CORP.

Suture and endomechanicals agreement with Suture Express helps maintain vitality of community hospitals, large and small

DAYS

2-to-3 contract load time VS. 60 DAY

DELAY

Community Hospital Corp. • Owns: 4 acute-care facilities • Owns: 11 long-term acute-care hospitals • Manages: 10 facilities • Provides GPO support services: 28 facilities • Suture Express customer since December 2017 Results: • 1.64% savings on annual spend for suture and endomechanicals • $348,000 net savings with Suture Express contract • 53 CHC locations eligible for Suture Express contract

38

$348,000 NET SAVINGS

53

CONTRACT

CONTRACT

WITH SUTURE EXPRESS

CHC locations

ELIGIBLE FOR

SUTURE EXPRESS

Challenge Tony Ybarra has his hands full. As senior vice president of CHC Supply Trust – the supply chain services arm of Community Hospital Corp. and CHC Consulting – he has supply chain responsibility for hospitals ranging in size from 19 beds to 500 beds. Bedsize differences aside, all share two things in common: They are locally owned and governed; and all need suture and endomechanical supplies, sometimes on short notice. CHC owns, manages, and consults with hospitals through three distinct organizations – CHC Community Hospitals, CHC Community Hospital Consulting and CHC ContinueCare. Currently, CHC owns four acute-care facilities and 11 long-term acute-care hospitals, manages 10 other facilities, and provides other services, including consulting, to an additional 28. In December 2017, CHC and Suture Express finalized an agreement making Suture Express the primary suture and endomechanical supplier for all the facilities CHC serves. Ybarra had investigated Suture Express several years beforehand, but a change in a national purchasing agreement convinced him to direct CHC’s suture and endomechanical purchases away

April 2018 | The Journal of Healthcare Contracting


Tony Ybarra from a general line med/surg distributor to Suture Express. The reasons lay beyond mere purchase price.

Solution “Every acute-care hospital that performs surgery and has an ER needs to buy suture and endomechanical products,” he says. But volume for a 25-bed critical access hospital can be low, relatively speaking. “Med/surg distributors are reluctant to bring stock into their distribution centers to serve them, since annual usage criteria cannot be met.” That’s not a problem with Suture Express, however. “Their core competency is stocking suture and endomechanicals in one location, so inventory exists and can be obtained next day,” says Ybarra “If one of our hospitals needs one box of suture a year, that’s OK with them – and that’s great for small community hospitals.” Suture Express is focused on a limited number of market-leading vendors, which is a plus when CHC brings onboard a new facility, he says. “With a general-line distributor, there may be a 60-day delay to load contracts before that hospital can start ordering products. But with Suture Express, a new facility can start ordering at GPO contract prices in two or three days. That is a favorable turnaround time for us and our new facilities, as we onboard them to CHC Supply Trust. “CHC is deeply experienced with the challenges facing hospitals today,” Ybarra continues. “By accurately assessing each of our client’s market, management, medical staff and governance, we are able to design a solution that will help each hospital face its challenges. Whether through ownership, management services or consulting services, our comprehensive services are designed to benefit community hospitals in four key areas – operational performance, financial strength, strategic vision and regulatory compliance.” The Suture Express agreement fits right in.

The Journal of Healthcare Contracting | April 2018

By accurately

assessing each of our client’s market, management, medical staff and governance, we are able to design a solution that will help each hospital face its challenges. – Tony Ybarra, senior vice president, CHC Supply Trust

39


CONFERENCE PREVIEW

Intalere to meet in Orlando in May Intalere says its upcoming member conference – Elevate 2018 – will be the best place to learn about solutions that deliver optimal cost, quality and clinical outcomes. The conference will be held May 20-23 at the Gaylord Palms Resort & Convention Center in Orlando, Florida. Attendees will have the opportunity to: • Meet more than 200 Intalere suppliers and learn about the latest products, services and cost-reduction opportunities. • Find inspiration from keynote speakers who have the knowledge to help members keep up to date in their careers and organizations. • Make connections and discover peer-tested ideas and actionable advice from healthcare professionals from across the country. • Earn continuing education credits to help maintain professional certifications.

For the second year, Intalere will feature the Solutions Spotlight Lounge, highlighting the GPO’s clinical and operational solutions and services. In addition, Intalere will hold its annual Emerging Technology Show on May 23. The event is intended to introduce suppliers to key Intalere staff and members to explore potential business opportunities. The 10th annual Intalere Healthcare Achievement Awards will recognize outstanding or innovative contributions by healthcare organizations to their patients, communities and business partners.

For more information, visit www.intalere.com

40

April 2018 | The Journal of Healthcare Contracting


D E N W O N D I REACHING 4,400 IDN EXECUTIVES, 2,400 HOSPITAL EXECUTIVES AND 700 GPO DECISION MAKERS. CALL US FOR MORE INFORMATION:

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TYLER MOSS 770-263-5279 e-mail: tmoss@sharemovingmedia.com

ALICIA O’DONNELL 770-263-5261 e-mail: aodonnell@sharemovingmedia.com


SPONSORED: ANSELL

Double-gloving:

A best practice made even better Double-gloving is a best practice, recommended by the Centers for Disease Control and Prevention, the American College of Surgeons, the Association of PeriOperative Registered Nurses, the American Academy of Orthopedic Surgeons and other professional organizations. However, it’s also a bit of a pain for your OR team. After all, donning two pairs of gloves can be time-consuming and awkward for the surgical team, as they must adjust the undergloves to ensure a tight fit and maximum tactility. Then there’s the excess packaging and waste associated with opening two pairs of gloves instead of one.

Pre-donned outer and inner gloves are packed in one poly-pouch and one inner-wrap to help make double-gloving easier and faster.

42

With the GAMMEX® PI Glove-in-Glove System™, Ansell has found a way to make double-gloving efficient and cost-effective. It’s called “Glove-in-Glove” because outer and inner gloves are pre-donned, so the surgical team can double-glove in just one don. The outer and inner gloves are aligned at the fingertips to minimize the need for adjustments upon donning. And the outer gloves come off easily; the smooth upper surface of the inner gloves makes it easy to accommodate any intraoperative changes. Pre-donned outer and inner gloves are packed in one polypouch and one inner-wrap to help make double-gloving easier and faster. And with 50 percent fewer inner packaging materials used, the system reduces the impact on the environment. Both outer and inner gloves used in the GAMMEX PI Glovein-Glove System are non-latex. And they are treated to eliminate the risk of Type I latex allergy and minimize Type IV allergies and skin sensitivities. So, make a best practice even better. Visit ansell.com/gigjhc2 or contact Customer Service at 1-855-868-5540 or customersolutionsus@ ansell.com for samples and more information.

April 2018 | The Journal of Healthcare Contracting


The New GAMMEX® PI Glove-in-Glove System™ PRE-DONNED GLOVE-IN-GLOVE, READY FOR DOUBLE GLOVING Experience double gloving convenience like never before. Ansell’s new GAMMEX® PI Glove-in-Glove System™ delivers a world first: pre-donned outer and inner synthetic surgical gloves ready for double gloving in just one don. Don in half the time. Don once and you’re done! It‘s that simple and it takes just seconds from un-wrapping to donning. Reduces environmental impact. By combining the glove-in-glove pairs in one poly-pouch and one inner-wrap, there is 50% less inner packaging waste, decreasing your carbon footprint.

For samples or more information, please visit ansell.com/jhcgig or contact Customer Service at 1-800-952-9916. Ansell, ® and ™ are trademarks owned by Ansell Limited or one of its affiliates. © 2018 Ansell Limited. All rights reserved. Patent pending.


CONFERENCE PREVIEW

Ed Jones

Sessions at HTU18 – whose theme is “Amplify Your Influence” – will spotlight how HealthTrust members, using evidence and operator insight, are exerting influence on the practice habits of hospitals and physicians to reduce variation and optimize clinical outcomes. Supply chain and clinical experts are expected to emphasize the unique methods, guidance and resources HealthTrust brings to members and clients to help them navigate the journey to clinical integration. As in past years, HTU will recognize outstanding members for excellence in five categories. CEO Ed Jones will honor the recipients of the 2018 Member Recognition Awards, announce the winner of the HealthTrust Innovation Grant, and name the Supplier of the Year.

HealthTrust in Nashville in July The HealthTrust University Conference (HTU) returns to Nashville, Tennessee, July 23-25, at the Gaylord Opryland Resort & Convention Center. A record number of GPO members, clients, suppliers, physician advisors, advisory board members and staff are expected to attend the annual conference, which will feature education and information sessions, two general sessions, networking events, and a two-day best-in-class Vendor Fair.

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April 2018 | The Journal of Healthcare Contracting


Send all upcoming events to Graham Garrison, managing editor, at ggarrison@sharemovingmedia.com

CALENDAR Association for Healthcare Resource & Materials Management (AHRMM) The AHRMM Conference & Exhibition Aug. 12-15, 2018

Premier Premier 2018 Breakthroughs Conference and Exhibition June 19-22, 2018 Gaylord Opryland Resort & Convention Center

Chicago, Ill.

Nashville, Tenn.

GHX

Intalere

2018 Healthcare Supply Chain Summit

Elevate 2018

May 7-9, 2018

May 20-23, 2018

Red Rock Resort,

Gaylord Palms & Convention Center

Las Vegas, Nev.

HealthTrust HealthTrust University Conference 2018 July 23-25, 2018

Orlando, Fla.

Vizient Vizient Spring Connections Summit May 1-3, 2018 Bellagio Hotel, Las Vegas, Nev.

Nashville, Tenn.

Federation of American Hospitals Share Moving Media

Public Policy Conference & Business Exposition

ANAE Annual Conference

March 3-5, 2019

July 17-18, 2018

Marriott Wardman Park Hotel

Chicago, Ill.

Washington, D.C.

The Journal of Healthcare Contracting | April 2018

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HSCA

Protecting Data in the Era of Cyberattacks Advances in technology have led to unprecedented developments in the healthcare sphere. Medical device and service technology are improving patient care and creating efficiencies in the healthcare system. However, medical devices and services, like any computer system, are vulnerable to cybersecurity threats that could jeopardize patient health, safety and privacy. The increased use of connected medical devices and software as a service By Todd Ebert (SaaS), adoption of wireless technology, and overall increased medical device and service connectivity to the Internet, significantly increase the risk of cybersecurity threats.

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The Healthcare Supply Chain Association and its group purchasing organization members are the sourcing and purchasing partners to America’s hospitals, long-term care facilities, surgery centers, clinics, and other healthcare providers. Given our unique line of sight over the entire healthcare supply chain, and our experience working on the front lines of the healthcare industry, HSCA has an intimate understanding of the challenges the healthcare industry faces as it seeks to protect patients’ privacy while improving patient care. As a result, HSCA has issued the following key cybersecurity considerations to medical device manufacturers, healthcare providers, and service providers: 1. Providers and suppliers should participate in one or more Information Sharing and Analysis Organizations (ISAOs) and ensure their policies and practices reflect widely accepted standards, such as those provided by the National Institute of Standards and Technology (NIST), the International Organization for Standardization (ISO), and Federal Information Security Management Act (FISMA) recommendations and requirements for cybersecurity. 2. Suppliers of network-accessible medical devices, software and services should warrant that they are compliant with current U.S. Food and Drug Administration guidance documents and industry standards. Providers should not acquire or use devices, software or services

April 2018 | The Journal of Healthcare Contracting


not so warranted unless no practical alternatives exist. In these cases, providers should ensure devices, software or services are deployed in a manner that reduces the risk of a security event. 3. Suppliers of network-accessible medical devices, software and services should, at their own expense, provide reliable and timely information regarding any issues or risks identified with one of their devices or services, the firmware, software and/or any other security issues, and provide guidance on what should be done to address any vulnerability. 4. Providers should avoid acquiring any device or service from a manufacturer that does not warrant that they actively participate in ISAOs. Providers are encouraged to participate in ISAOs as well. Information-sharing among the user community is a significant factor in battling cybercriminals, and participation in ISAOs is a platform for such sharing and a factor in improving the cybersecurity of all participants.

with medical devices and services, legacy devices and possible future noncompliance pose ongoing risks. Providers have a considerable investment in connected legacy devices, software and services that may not be compliant with current guidelines and standards but that are critical to maintaining patient care. Recognizing that it is not practical or feasible in the short term to retire or replace those assets, manufacturers should realize that acknowledging responsibility for the security of legacy devices and

Providers and suppliers should participate in one or more Information Sharing and Analysis Organizations (ISAOs) and ensure their policies and practices reflect widely accepted standards, such as those provided by the National Institute of Standards and Technology (NIST), the International Organization for Standardization (ISO), and Federal Information Security Management Act (FISMA) recommendations and requirements for cybersecurity.

5. Medical device manufacturers should provide a Manufacturer Disclosure Statement for Medical Device Security (MDS2) for any medical device that can be connected to a network (i.e., any device that has a MAC address). Providers should avoid acquiring devices for which a supplier is unable or unwilling to provide an MDS2. When suppliers provide MDS2s, those MDS2s should be reviewed by provider network security teams, or their designated third party, prior to the purchase, use, or implementation of any medical device. All medical devices and services should be installed and operated in a manner consistent with the organization’s security policies and practices.

Maintaining device and information security is a shared responsibility of the manufacturers and suppliers of connected devices and services, as well as the providers that use them. Providing this security is a continual effort that requires vigilance, adaptation, and ongoing communication as we continue to provide the best possible care to patients.

6. Although compliance with current guidelines can significantly reduce the cybersecurity risks associated

Todd Ebert, R.Ph., is the president and CEO of the Healthcare Supply Chain Association (HSCA).

working expeditiously to upgrade those to current security standards, or provide device upgrade paths to providers at no or minimal additional cost, may afford competitive position relative to future sales.

Todd Ebert, R.Ph., is president and CEO of the Healthcare Supply Chain Association.

The Journal of Healthcare Contracting | April 2018

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By Jeff Girardi, HIDA

HIDA PRIME VENDOR:

Getting the Most from Your Most Important Supplier

New Pricing Accuracy Solutions Make Four-Way Matching More Attainable Every day, pricing discrepancies increase operating costs for providers, group purchasing organizations (GPOs), manufacturers, and distributors. Different factors can cause these discrepancies, but the majority of issues could be moderated if involved stakeholders embrace better business practices. At HIDA’s annual Contract Administration Conference, contracts and chargebacks professionals examine and discuss various scenarios they typically encounter on a daily basis that lead to costly waste and rework. By doing so, participants are able to identify stakeholder pain points, but also share process improvements and suggestions that can benefit trading partners. These discussions served as the foundation for the latest output from HIDA’s Contract Administration Workgroup: Recommended Solutions for Common Contracts and Chargebacks Scenarios. This resource highlights 13 different examples of everyday issues companies encounter that lead to pricing inaccuracy, grouped under the categories of “Contract Eligibility,” “Contract Notification,” and “Chargebacks/Rebates.” For example: Affiliate/ownership – An IDN directs its distributor to extend pricing to all its affiliates. The manufacturer is only willing to offer the contract pricing to hospitals owned, managed, or controlled by the IDN. If the distributor follows the customer’s direction and applies pricing across all affiliates, significant denials are generated between the manufacturer and the distributor. Eligibility issues remain the number one obstacle to achieving pricing accuracy, according to a recent HIDA poll. In this specific example, some of the recommended solutions that can help minimize conflict and denials include: • Write clear contracts that define owned and managed entities. Any class of trade exclusions that occur should also be specified in the contract, and final terms should be communicated to all trading partners. • Use EDI (electronic data interchange) to share eligibility rosters and price/ sales catalogs. Manufacturers must communicate eligibilities to distributors, and it’s additionally helpful if providers confirm or acknowledge eligibility back to both manufacturers and distributors • Collaboratively work to address conflicts and educate partners. Distributors should get on the phone with both the provider and manufacturer

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together to sort out issues and clarify all locations up front. Manufacturers should educate providers and distributors on the distinction between owned and affiliate entities, as well as clarify how their business rules treat each type of location. Accompanying each individual scenario are voluntary actions companies may choose to pursue or adopt that are intended to achieve long-term fairness, efficiency, and pricing accuracy for the entire healthcare community. While each issue has its own unique solutions, all are consistent with the three guiding principles of our Pricing Accuracy Initiative: automate communications and transactions wherever possible, implement process and data standards, and follow timely contract notification practices. We recognize that some of these principles and solutions may be more difficult to implement than others. However, companies that are adopting them are already starting to realize efficiency gains, sharing results with their peers, and proving why the value of contracting standards has never been greater. As healthcare continues to become more sophisticated, automated, and connected, plenty of opportunities exist to take your first or next step toward improving pricing accuracy and achieving a four-way contract match. I encourage you to visit www.StreamliningHealthcare.org/Improving-PricingAccuracy, where you can download the free Recommended Solutions resource and other tools to help make the supply chain leaner and less costly.

April 2018 | The Journal of Healthcare Contracting


NEWS

Industry news Dr. Robert Redfield named CDC director HHS Secretary Alex Azar named Robert Redfield, MD, director of the CDC. Redfield currently is the Robert C. Gallo, MD Endowed Professor in Translational Medicine at the University of Maryland School of Medicine in Baltimore. He also co-founded the Institute of Human Virology and serves as its associate director. Redfield replaces He succeeds Brenda Fitzgerald, MD, who resigned as director of the CDC in January after six months amid reports she held investments in several tobacco and healthcare companies, which posed a conflict of interest.

where those terms stand compared to the market. Drinker Biddle will also examine invoices to confirm that a client’s current foodservice management contractor is billing in accordance with the terms of the client’s current agreement. At the conclusion of the audit and analysis, Drinker Biddle will provide each client with a formalized report that includes recommendations on ways to optimize the business and legal terms in the client’s current foodservice management agreement. The audit process also assists facilities in aligning foodservice management operational performance objectives as well as patient satisfaction, quality, and other key performance indicators.

HCA names new president of Far West Division HCA Healthcare (Nashville, TN) announced Brian Cook will be president of HCA’s Far West Division (Las Vegas, NV), effective May 1. Cook has been with HCA for fifteen years and is currently CEO of North Florida Regional Medical Center (Gainesville, FL). In his new role as Far West Division president, Cook will oversee operations for eight hospitals, nine surgery centers and numerous other outpatient locations in California and Nevada. Cook will succeed Bryan Rogers, who is retiring after nearly 20 years with HCA.

Intalere teams with Drinker Biddle to add contract audit service to nutrition consulting solutions Intalere (St. Louis, MO) will team with Drinker Biddle & Reath LLP, a national law firm, to provide nutrition contract audit and analysis service as part of Intalere’s Nutrition Consulting Solutions. As part of the nutrition contract audit and analysis service, Drinker Biddle will perform a market-focused review of a client’s current business and legal foodservice management contract terms to determine

The Journal of Healthcare Contracting | April 2018

Tenet completes divestitures of MacNeal Hospital and its hospitals in North Texas Tenet Healthcare Corporation (Dallas, TX) recently completed its divestitures of MacNeal Hospital (Chicago, IL) and its hospitals in North Texas. MacNeal Hospital and related operations were sold to Loyola Medicine, an affiliate of Trinity Health. Tenet’s minority interest in Baylor Scott & White Medical Center – White Rock was sold to Pipeline Health LLC. The company’s minority interest in Baylor Scott & White Medical Center – Centennial and Baylor Scott & White Medical Center – Lake Pointe were sold to Baylor Scott & White Health. Tenet’s minority interest in Baylor Scott & White Medical Center – Sunnyvale was transferred to Texas Health Ventures Group, an existing joint venture between Tenet’s United Surgical Partners International subsidiary and Baylor Scott & White Health. Tenet has received over $550 million of cash proceeds in Q1 2018 from these transactions and from the sale of two hospitals and related operations in Philadelphia.

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OBSERVATION DECK

Supply chain’s role in the big picture

Mark Thill

As a nation, we strategize, hypothesize and even fight about how we can provide affordable healthcare to all. Meanwhile, those in healthcare continue to go about their work, doing everything they can to improve patients’ health and lives. Supply chain executives are no exception. But hard-working, well-intentioned doctors, nurses, department heads, technicians, administrators, supply chain teams, dieticians, etc., can only go so far in creating a sustainable healthcare system. Two recent articles convinced me of that. A recent article in Health Affairs talked about the impact of socioeconomic factors on health. It’s not a new topic. Many have studied and written about the ill effects on people’s health of substandard housing, lack of transportation, violence, lack of education and lack of healthy food. But the problem is a nagging one. And then there’s the high percentage of elderly Medicare patients who receive surgery in the last year of life – another topic I read about recently. We are grateful for the extended lifespan that modern technology and medical practitioners have given us, of course. But we’ve got some problems in how we’re managing it. Solving the problems of poverty and endof-life care won’t lead to a perfect healthcare system. But they would go far in helping us find sustainable solutions. Can supply chain play a role? I’d like to hear your thoughts, at mthill@sharemovingmedia.com.

Many have studied and written about the ill effects on people’s health of substandard housing, lack of transportation, violence, lack of education and lack of healthy food. But the problem is a nagging one.

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April 2018 | The Journal of Healthcare Contracting


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