JHC Feb 2020

Providing Insight, Understanding and Community

February 2020 • Vol.16 • No.1

Contracting Professional of the Year Tony Johnson, senior vice president and chief supply chain officer at Baylor Scott & White Health

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CONTENTS »» FEBRUARY 2020 The Journal of Healthcare Contracting is published bi-monthly

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Publisher cannot accept responsibility for the correctness of an opinion expressed by

Tony Johnson

2 Editor’s Letter: 3 words 4 Two points of view. One solution.

Highmark Health applies the provider and the payer perspective to new medical technologiese

8

All hands on deck

TPC members believe success is all about engagement.

16 Bold steps

How this year’s Contracting Professional of the Year led his organization’s supply chain through a transformation – and realized $92 million in value during the past fiscal year – by moving to a more strategic model

28 What does your 2020 and 2021 look like?

34 Physician reimbursement What you need to know about physician payment changes

38 Physician productivity

Physician compensation is up.

But productivity isn’t.

40 Trending upward

Urgent care center growth up 6%

42 The healthcare landscape in 2020 Key trends to watch

44 Is change hard?

Do leaders make it harder?

45 Calendar 46 Contracting News & Notes

contributing authors.

The Journal of Healthcare Contracting | February 2020

1

EDITOR’S NOTE

Graham Garrison

3 words A few years ago, I heard of a unique approach to goal setting. The idea was to frame your new year’s direction with three words. So, instead of saying you wanted to run a marathon or go on a strict diet, you could frame the goal with a word like “healthy.”

I thought of this while talking with Tony Johnson, senior vice president and chief supply chain officer at Baylor Scott & White Health. The following are a few of many great insights from this year’s Contracting Professional of the Year:

Observe Before implementing a new strategic plan, Johnson took time to evaluate how his organization’s supply chain operated. What he noticed was that the integrated delivery network’s supply chain was designed to process orders. Purchasing and payment decisions were made at the hospital level. To move toward a more strategic model, the supply chain team took a step back to evaluate its marketplace position as well as how it made decisions on supplies. “We should take the $1 billion of spend that we have and make corporate decisions rather than hospital decisions on everything,” Johnson said.

Talent Johnson said Baylor Scott & White faced several challenges implementing the new model. One was having the right talent in place. “It takes a very different type of talent to process transactions than it does to mine through millions of transactions, discover what you’re doing, benchmark, understand where the market is, come up with a strategy, get alignment with the stakeholders, build teams that are led by the stakeholders, have targets that are achievable but aggressive targets, and then actually deliver,” he said. To ensure the right talent, Johnson recruited seasoned supply chain executives and leaders from different industries.

Facilitate The Baylor Scott & White supply chain team analyzed spending across the board, selected what programs that they were going to go after for that year, and presented that to their senior-level leadership. The team connected with the service line leaders for each area. The supply chain provided a very detailed, fact-based report with what they had been doing in the past, where they saw benchmarks, and where there was variation. While the supply chain team would present the data to the service lines, it was the service lines that would lead and make the decision, Johnson said. “We would be there as the facilitators to keep the process moving and bringing more data when they needed it. Of course, we were not short of opinions on the process. We gave them a program with opportunity that we could go after as an enterprise. They were very successful in doing that,” he said.

2

February 2020 | The Journal of Healthcare Contracting

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EXECUTIVE INTERVIEW

Two points of view.

One solution.

Highmark Health applies the provider and the payer perspective to new medical technologies

Supply chain executives and their contracting teams work hard to make new

As both provider and payer, Pitts-

technology decisions that make sense for patients and their families, clinicians, and the

burgh-based Highmark Health believes it

health system’s CFO. The tension between cost and quality is ever present.

is in a unique position to resolve – or at least reduce – that tension.

Highmark’s Allegheny Health Network provides healthcare delivery, research, medical education, and wellness services through an integrated delivery network of eight hospitals and more than 2,300 staff physicians. Meanwhile, Highmark Inc. and its affiliates operate health insurance plans in Pennsylvania, Delaware, and West Virginia, which serve more than 4.4 million members, and hundreds of thousands of additional individuals through its BlueCard program.

In 2015, Highmark Health created its VITAL Innovation Platform, which analyzes clinical and claims data to test the viability of FDA-approved technologies. Last fall, VITAL announced it would test Moving Analytics’ MOVN virtual cardiac rehabilitation solution for delivering cardiac rehab remotely to patients with heart disease.

“Highmark Health is in a unique position as a payer and clinician-led integrated system [to] make decisions with the best interests of the patient in mind, not thinking in a one-sided fashion,” says VITAL’s director of strategy, Matthew Tucker. “That allows us to look for the most innovative technologies to achieve a win-win for both improving patient’s

Matthew Tucker

4

health and better controlling costs.”

February 2020 | The Journal of Healthcare Contracting

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PATIENT CARE

INTERVENTIONAL CARE

ENVIRONMENT OF CARE

EXECUTIVE INTERVIEW

The Journal of Healthcare Contracting

VITAL’s evidence will show if the

ers aren’t trained to conduct value or

asked Tucker to talk about VITAL and

product can apply to a broad population

economic analysis on new innovations.

the broader question facing not only sup-

but also work just as well in a less-con-

That isn’t their role. They want to focus

ply chain executives, but developers of

trolled environment than the trial used for

on delivering great care to their patients.

new medical technologies as well: How do

FDA approval. The data generated by VI-

VITAL, however, provides a platform

we balance cost and quality?

TAL also can help to educate a payer or

to accelerate the further discovery of

IDN on a missed opportunity. There are

important new technologies by identifying

Journal of Healthcare Contracting:

a number of health conditions that could

and validating those that providers should

Talk about the challenges facing

be treated or diagnosed faster, or that

have in their tool kit to make patients

startup companies as they work to

could improve patient health or reduce

better, faster.

gain a market for their innovations.

costs, if payers or health systems know

Matthew Tucker: Innovative products

about an innovation and its impact.

and solutions often face post-approval

Journal of Healthcare Contracting: Startup companies frequently

challenges with adoption due to lack of

Journal of Healthcare Contracting:

point out that hospitals and health

clinical and economic evidence compel-

What are the difficulties that health-

systems demand objective evidence

ling enough to open access and availabil-

care providers face when trying to pre-

of the technology’s value in terms of

ity, thereby delaying the impact they can

dict the value – in terms of outcomes

outcomes and cost. But the startups

have on patient care.

and costs – of new technologies?

find it difficult to present such data, since they lack a track record. How do you help innovators deal with

“ Does the product lead to better patient outcomes and does it lead to a reduction in costs for our system, our insurance plan, and ideally, our patients?”

this problem?

Tucker: Every solution provider has to judge how much convincing they are going to need to do to gain adoption.

Not all products are the same, and many inherently solve bigger problems than others, clinically or economically. For the right company, Highmark Health’s VITAL platform can be extremely beneficial because we look for technologies that are high-impact within our system as a marker of their potential nationwide.

By sizing the impact they could have and

Increasingly, payers and health sys-

Tucker: Real-world evidence is playing

validating it inside our system, VITAL

tems across the nation feel that evidence

an increasing role in healthcare deci-

can give others a relative benchmark of

generated for approval or clearance by

sions. The healthcare community is

the impact they might see.

the FDA doesn’t give a complete picture

using these data to support coverage

of the potential impact a product could

decisions and to develop guidelines

Journal of Healthcare Contracting:

have on clinical care or cost reductions.

and decision support tools for use in

How far (how much) should our

To answer these questions, Highmark

clinical practice.

readers invest in a new company or

Health’s VITAL platform generates real-

6

Providers are interested in this

new technology that lacks a real-

world evidence to validate efficacy and

type of evidence because it confirms

world track record? Is it possible to

also, to size the economic impact of a

which technologies are valuable. But the

“test the waters” before diving in?

given technology.

important thing to note is that provid-

Tucker: The problem you state is exactly

February 2020 | The Journal of Healthcare Contracting

why VITAL was started. We take new

Journal of Healthcare Contracting:

Journal of Healthcare Contracting:

technologies that lack a track record,

What are some of the components

Will programs such as VITAL su-

do a deep dive to determine if we have

of the cost of a new technology that

persede the work currently being

confidence they will benefit patients,

VITAL measures?

done by value analysis teams in

and test them on a small scale to validate

Tucker: We view the cost of the technol-

health systems?

that they work as expected. What makes

ogy to be both the acquisition cost and

Tucker: We think they complement each

us different than a ‘pilot’ is that we are

any implementation costs. If a technology

other. The evidence we generate in VI-

doing this in our closed system, which

is difficult to implement, requires sig-

TAL helps make value analysis or medical

reduces variability and has been designed

nificant training, or involves a significant

policy decision-makers’ jobs easier or

to deliver to the solution provider a data

infrastructure for it to work, we will take

more effective, but each of those groups

package that can be used with other pay-

that into account.

look at a number of important factors in

ers or systems as well.

addition to clinical or economic evidence.

Not every product is a fit for VITAL. We

Journal of Healthcare Contracting: VITAL says it can provide innovators with “accelerated real-world tests.”

Can you elaborate?

Tucker: Due to our integrated system, we are able to align the insurance side and clinical side to perform tests in a real-world environment and generate results faster. Most health systems or payers aren’t working together in the way we do, so it takes significantly longer

“We are looking for innovations that push care forward rapidly.”

are looking for innovations that push care forward rapidly, and there still needs to be a place to evaluate products leading to more incremental improvements.

Journal of Healthcare Contracting: Finally, in what areas of technology are you finding some of the most exciting innovations?

Tucker: We have been focusing on technologies that help us solve the big-

to align everyone around a new and in-

gest problems out there. Those problems

novative idea that can improve care and

represent the costliest disease states with

economics, and to generate the evidence

Journal of Healthcare Contracting:

the most patients, and they include areas

to prove the outcomes it can produce.

Clinician input and satisfaction –

such as cardiology, diabetes, orthopedic

as well as patient satisfaction –

and musculoskeletal, and kidney disease.

Journal of Healthcare Contracting:

can determine whether a technology

Because of the market opportunity, inno-

What markers does VITAL use

is accepted and widely used.

vations are also very much focused here.

to gauge the outcomes of a new

How do you measure this in a

It can get difficult to find the needles in

technology? How do you decide

fairly objective way?

the haystack, but the payoff when you do

what to measure?

Tucker: To this point, we have evaluated

is worth it.

Tucker: What we measure really depends

technologies through qualitative means by

on the technology we are testing. As I

asking for clinician and patient feedback.

ing how to treat people and their condi-

mentioned before, all products are very

That has been sufficient to help make

tions on an individual level. Technologies

different, and we customize based on

adoption decisions. As we expand the

that facilitate a clinician’s ability to treat

that. Generally, we are looking for clinical

program, however, we want to generate

a patient more effectively and get them

and economic impact: Does the product

quantitative measures of experience that

healthier, faster is very important. There

lead to better patient outcomes and does

can then be leveraged by our customers

are some very unique and interesting

it lead to a reduction in costs for our

so they can more effectively explain the

diagnostics we are seeing that help de-

system, our insurance plan, and ideally,

importance and impact of greater pro-

termine optimal therapies or help avoid

our patients?

vider and patient satisfaction.

interventions that are unnecessary.

The Journal of Healthcare Contracting | February 2020

We are also interested in understand-

7

RPC PROFILE: TPC

All hands on deck TPC members believe success is all about engagement.

Roger Nolan

Familiarity leads to trust, which leads to commitment, then accountability,

represent approximately $1 billion in pur-

and finally, results.

chasing volume, and have achieved more than $300 million in savings since 2009.

“For over 30 years, our mission has

It is a formula that has worked for

together to improve their operations for

remained consistent,” says Roger Nolan,

the members and owners of the TPC for

decades. With a model of trust and co-

who became president and CEO of TPC

quite some time.

operation in place, TPC has expanded its

in September 2019. “We foster an envi-

Based in Plano, Texas, TPC was

8

scope and size, so that today, it represents

ronment in which our members can thrive

formally created in 2009, but some of

11 health systems in Texas, Missouri,

and best serve their communities while

its member/owners have been working

Arkansas and Colorado. Together they

maintaining their independence.”

February 2020 | The Journal of Healthcare Contracting

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RPC PROFILE: TPC

Performance improvement

of our executive suites, including CEOs,

TPC members continue to demonstrate

“TPC has created a disciplined envi-

CFOs, COOs, CNOs and CMOs. The

an extraordinary ability to operate

ronment, which has allowed for our

uniqueness and challenge of managing

effectively together to address these chal-

relationship with our members to go

a virtual system of providers is to have

lenges while maintaining local control of

beyond traditional purchasing activities,”

them engaged.”

the decisions that impact their patients.

says Nolan. “Our model goes beyond

Nolan has plenty of experience keep-

“The benefit of them doing so is

the basics of commodities, and we’ve

ing people engaged, given his 30 years

we get to address the more challenging

found a niche in successfully navigating

of experience in healthcare consulting,

opportunities that often offer a higher

more difficult categories, like physician

operations improvement and business

reward. We have worked closely with

preference items. We have partnered

development. He has held senior titles

our members to evolve their engage-

with our members in areas that are typi-

with several GPOs, including MedAssets,

ment with TPC with the purpose

cally addressed at the local level, and we

Broadlane and Vizient. “I’ve been build-

of driving incremental value in our

have collectively realized significant wins

ing unifying platforms for 30 years, from

strategic programs.

in tough categories that other coalition

cardiac emergency networks to centers of

groups may not consider.”

excellence,” he says.

“Together we are able to drive the highest value in the most difficult categories when members trust the process

“ Together we are able to drive the highest value in the most difficult categories when members trust the process and hold each other accountable.”

and hold each other accountable. This is both a testament to our members’ willingness to actively participate on a regular basis, and our greatest example of success. The physicians and clinicians engaged in TPC’s initiatives understand that better patient outcomes come from sharing best practices. In addition, our physicians and clinicians are highly motivated to keep healthcare decisions at the local level. They do not want to be told how to practice medicine from a corporate office. TPC gives our healthcare providers the ability to voice their opinions and make better decisions for

Nolan refers to TPC not as a regional

their patients.

“The TPC value proposition continues to

mance improvement coalition.

reflect our historical principles as a virtual

dous value in working together to address

system – that is, aggregate our individual

their respective local needs and missions,

more traditional supply chain arena has

resources, expertise and capabilities to

and we welcome others with the desire

led to an expanded focus, which today

create greater collective value.

and commitment to do the same, regard-

“Our demonstrated success in the

includes revenue cycle, purchased ser-

“The communities our members

“TPC members have found tremen-

less of geography,” he continues.

vices, insurance services and performance

serve, as with all of healthcare, are grow-

improvement,” he says.

ing more complex each year. There is

everyone. But those wanting a voice

more pressure for independent provid-

to maintain independence and local

similar approach – active member partici-

ers to maintain – if not exceed – the

control realize active participation and

pation at every level, to include our physi-

cost, quality and market performance of

member-to-member engagement is the

cians, clinicians and the full complement

larger health systems than ever before.

cost of admission.”

“Each of these categories follows a

10

A virtual system

purchasing coalition, but as a perfor-

“Our model is admittedly not for

February 2020 | The Journal of Healthcare Contracting

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When it comes to the future of health care delivery, location matters – just not

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related telehealth consultations have grown

consumers would consider seeing a provider virtually.

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While patients are keen to take advantage of virtual visits, providers have struggled to find a solution for the

12

care in innovative ways, without sacrificing diagnostic capabilities.

Providers and patients alike increasingly view telehealth as a cost-effective

Virtual visits are increasing in frequency

and efficient method to deliver and

inefficient, centralized nature of care

as traditional physician office visits are declin-

expand access to quality care. As changes

and the high cost of physicians’ time.

ing. According to FAIR Health, telemedicine

to legal, regulatory, and reimbursement

However, the introduction of new tech-

utilization grew 53% from 2016 to 2017.

rules increase telemedicine’s feasibility,

nology is opening doors and enabling

More traditional care settings saw much

telemedicine is coming to the forefront of

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more modest utilization growth, such as

the care delivery model.

February 2020 | The Journal of Healthcare Contracting

Is your health system in a position to

ʯ Enable patients who feel too sick

demand continues to grow faster than

reap the benefits of telemedicine, including

to travel to be consulted from the

supply, and will lead to a shortfall of

cost savings, increased efficiencies and pro-

comfort of their own home, and

122,000 physicians by 2032. The AAMC

ductivity, and reducing physician burnout?

ʯ Reduce the chance that the patient

research found the increased demand is

will look for another, more

driven by the aging population; the num-

convenient option for care.

ber of individuals 65 or older will grow

Telehealth helps lead to cost savings Patient no-shows not only impact a provider’s ability to accurately plan and manage resources, but also their bottom line. When a patient simply doesn’t show up for his or her appointment, the providers still incur staffing and overhead costs, but have no opportunity to fill that slot with revenue generating activities. On average, a no-show patient costs practices $200 according to the National Center for Biotechnology Information. Given that the average no-show rate across outpatient settings is 14.2%, what are

by 48% by 2032. Physicians themselves account for part of this growth – within

One way to help your talent strategy stand out is to remember that compensation is not just about money – it’s also about work-life balance.

no-shows costing your organization?

be 65 or older.

Telehealth has the potential to reduce the gap between physician demand and supply. Because telehealth removes the physical barriers of traditional patient visits, it enables physicians to provide care for more – and more geographically diverse – patients.

Telehealth can improve a practice’s efficiency by helping to optimize resource allocation – no matter where those resources may be located. If a

The reasons for no-shows run the gamut: from transportation logistics to

the next decade 33% of physicians will

practice has multiple locations, telehealth All of these benefits enable patients

allows clinicians to consult patients from

child care obligations to simply forget-

to keep their appointments and ensure

any site, on demand. This capability can

ting. Implementing a telehealth strategy

that the provider’s resources are being

reduce the need to pay staff overtime or

can help reduce the number of no-

employed efficiently.

to hire temps to meet patient demand.

issue, 7% due to a problem with transpor-

Telehealth’s flexibility helps optimize resources

Make telehealth part of your talent strategy

tation, and 5.5% due to being too sick to

According to research by the Association

With physician-employment at an all-time

come into the practice.

of American Medical Colleges, physician

high, your organization must be competitive

shows. The Journal of Family Medicine reports that 16% of patients missed their appointment due to a personal or work

No matter the reason, the end result is the same for health care providers: lost revenue and idle resources. Implementing telehealth in your non-acute settings can help reduce the number of no-shows by making appointments convenient and reducing total cost for the patient. By conducting a patient visit virtually, health care providers can:

ʯ Eliminate the time and cost of

Virtual visits on the rise According to a FAIR Health white paper: ʯ Telemedicine utilization grew 53% from 2016 to 2017, while more traditional care settings grew 14% for urgent cares. ʯ Discharge-related telehealth consultations are up by 407% in rural areas, and 157% in urban areas (from 2014 to 2018)

traveling to and from a physical practice for patients,

The Journal of Healthcare Contracting | February 2020

13

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What should you consider when implementing telehealth?

Before integrating a telehealth program, ask the following questions:

ʯ Do your patient demographics and preferences support a telehealth strategy?

ʯ Which telehealth applications will be most valuable for your organization and why?

ʯ What resources are needed to implement telehealth into your organization?

Once you have evaluated whether pursuing telehealth is the right strategy, look in its compensation packages. The

same flexibility to health care providers

for a telehealth partner. A valuable tele-

Advisory Board reports that, in 2014,

themselves. This flexibility can help your

health partner will offer you an unprec-

46% of final-year residents had been

organization retain and acquire talent,

edented level of options for achieving

contacted more than 100 times about

ultimately minimizing the risk of staff

high quality doctor-patient encounters,

employment opportunities. They also

shortages. Telehealth can help clinicians

enhancing information-sharing among

report that 92% of hospital executives

to achieve work-life balance (however

care team, and delivering real-time and

expect to experience a clinician short-

they define it), by enabling them to

store-and-forward communications.

age within the next 10 years. Physician recruitment is more competitive than ever, and your organization’s talent strategy must reflect that.

One way to stand out is to remember that compensation is not just about money – it’s also about work-life balance. As more millennials and more women come into the physician work-

Reasons for Missed Appointment Personal/work issue Problem with transportation Too sick to come Used another source of care Thought the appointment was not essential

Percentage of Patients 16.1% 6.9% 5.5% 3.7% 2.8%

force, work-life balance and flexible hours will be key differentiators. In fact,

Source: The Journal of Family Medicine

final-year medical residents ranked both “availability of free time” and “earning a good income” as top considerations of employment.

Telehealth doesn’t just enable patients to engage with their health care

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14

February 2020 | The Journal of Healthcare Contracting

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Tony Johnson, senior vice president and chief supply chain officer at Baylor Scott & White Health

16

February 2020 | The Journal of Healthcare Contracting

BY GRAHAM GARRISON

Bold steps How this year’s Contracting Professional of the Year led his organization’s supply chain through a transformation – and realized $92 million in value during the past fiscal year – by moving to a more strategic model

Tony Johnson has had the confidence to tackle big projects since early in his

ready to leverage your training, think

career. He credits the U.S. military for giving him that confidence.

through any objective, develop plans and execute. And of course, we learned very early that transportation, when it comes

Johnson specialized in healthcare

sent to Entebbe, Uganda, as the senior

to pure logistics, is always the Achilles

supply chain in the military. While being a

healthcare logistics officer on a Depart-

heel. You have to figure out how you’re

supply chain leader in a military hospi-

ment of Defense joint task force. He was

going to get the stuff there.”

tal was not much different than being a

given a laptop and an Inmarsat satellite

Johnson has used that and similar

leader or manager in a commercial hospi-

communications dish to connect with

experiences to build a successful career in

tal, the difference was the mission and the

the medical logistics hub in Europe and

healthcare supply chain, including in his

scale of the military, he said.

the national inventory control point in

current role as senior vice president and

Pennsylvania. His mission was to set up a

chief supply chain officer at Baylor Scott

sion: Protecting our forces around the

system to pull supplies into central Africa

& White Health. Johnson is this year’s

globe and being able to support them

and distribute them to refugee camps in

Contracting Professional of the Year.

in any place, any time. The military is

Rwanda, Tanzania, Democratic Republic

designed to basically move an entire ware-

of the Congo, Kenya and Uganda. As the

house from point A to point B, set it up

senior healthcare supply chain person in

From transactional to strategic

and have it operational within a couple of

the conflict region, he found himself sup-

When Johnson first arrived at Baylor

days if it has to,” Johnson said.

porting the U.S. Department of Defense,

Scott & White in 2016, he took some time

U.S. Department of State, the Centers

to observe how the organization operated

pieces and sheer mass involved with

for Disease Control and Prevention, the

before implementing changes. What he

military operations forced you to think

United Nations High Commissioner for

noticed was that the integrated delivery

bigger, he said, “and, because you’re so

Refugees and several non-governmental

network’s supply chain was designed to

used to dealing with so much scale, it

organizations like Doctors Without

process orders. Purchasing and payment

takes away the fear of doing something

Borders. Johnson and a 12-person medi-

decisions were made at the hospital level.

that you haven’t done before.”

cal logistics team planned the shipment

“We always had that underlying mis-

Photography by Rusty Schramm

The systems, transportation links,

Military personnel are given the op-

of approximately 40 tons of medical

“That’s what we were staffed for and that’s what we did,” said Johnson.

As a result, the organization was pay-

portunity to do some extraordinary things,

supplies, pharmaceuticals and equipment

Johnson said, “so I think it gives you the

into Uganda and executed the shipment

ing two to three times more for the same

confidence to feel that you could take bold

and delivery of those supplies to multiple

product from one hospital to the next.

steps and you’re going to be okay.”

countries and organizations from Uganda.

There was no consistency, Johnson said.

For instance, in 1994 immediately after the Rwandan genocide, Johnson was

“We did this with no process manual or instructions,” he said. “You must be

The Journal of Healthcare Contracting | February 2020

“Vendors were charging each one based on negotiations at that individual

17

CONTRACTING PROFESSIONAL OF THE YEAR

hospital,” he said. “We saw that across

an enterprise. And then delivering the

source-to-settle as a work environment

the board. Not only did it cost us, but it

results,” Johnson said.

or an ecosystem where all processes are

increased the numbers of contracts exponentially when you had to have a contract for every facility with different terms and conditions and different pricing.”

The second challenge was having the

integrated and that uses the same set of data for everything related to:

right talent.

“It takes a very different type of talent to process transactions than it does to mine

To move toward a more strategic

through millions of transactions, discover

model, the supply chain team took a step

what you’re doing, benchmark, understand

back to evaluate its marketplace position as

where the market is, come up with a strat-

well as how it made decisions on supplies.

egy, get alignment with the stakeholders,

“ We created a very programmatic way of analyzing our spend, identifying opportunity, building the teams to go after that opportunity, developing an enterprise-wide strategy, and then going into the market as a single entity of Baylor Scott & White.”

ʯ Analyzing ʯ Purchasing ʯ Planning and executing strategic sourcing events

ʯ ʯ ʯ ʯ

Writing, storing and managing contracts Ordering products from the contracts Receiving and invoicing Instructing the ERP to pay the bills

“That puts our operation on steroids in a sense, that we can see what we’re doing real-time,” he said. “It’s more of a point and click or web-based kind of environment. It unleashes the power of research at the fingertips of the users versus having to send a query over to the report writing team for something very detail specific … and hoping that they can figure out a way to get your information back. So this basically pairs down the research and the decision-making capability, and puts everything at your fingertips.”

Before source-to-settle, the supply

“We should take the $1 billion of

build teams that are led by the stakeholders,

chain team “didn’t even have a clue as to

spend that we have and make corporate

have targets that are achievable but aggres-

how many contracts we had,” Johnson said.

decisions rather than hospital decisions

sive targets, and then actually deliver,” he

“Today, the first thing I see when I log on, is

on everything,” Johnson said.

said. To ensure the right talent, Johnson

how many active contracts we have and how

recruited seasoned supply chain executives

many of them are expiring within the next

and leaders from different industries.

120 days. That’s on the top of my screen.

Johnson said Baylor Scott & White faced several challenges implementing the new model. The first was cultural.

“When you have an organization as

Data, too, posed a problem. “The data

There’s a panel with my to-do list. Now,

large as this, with a lot of prestigious

with it was problematic, so we had to

there are still things that I need to approve

physicians on staff, if it’s not approached

work through that,” Johnson said.

or take a look at. But all of those things were

in the right way, people may think that

disjointed coming from different systems

you are taking an administrative func-

18

There’s a shopping cart, graphs and analytics.

was there but being able to do something

before. Now it’s all tied together.”

tion and basically telling the clinical side

Source-to-settle

what they should do or how they should

One concept that helped Baylor Scott

practice. That was not the intent at all.

& White’s supply chain team implement

Improvements

It was getting the culture to take a step

the new strategic model was a source-to-

While technology played a critical role

back and decide what it wanted to do as

settle system. Johnson said he looks at

bringing in $92 million in value to the

February 2020 | The Journal of Healthcare Contracting

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CONTRACTING PROFESSIONAL OF THE YEAR

organization, so did interpersonal dy-

supply chain team wanted to find some-

that we’re not accountable for, but even

namics. The team created a commodity

thing measurable through the financials

then you see that number start to move

management process where MBA-level

that would indicate that something good

south in 2018, when we launched this

team members analyzed purchases like

was happening or recognize that nothing

process,” he said.

orthopedic or cardiac products.

was happening.

“So, we analyzed our spending across the board, we selected what programs

supply chains saying, ‘I saved this or I

Gaining more visibility

that we were going to go after for that

saved that’ and they put some astronomi-

Johnson said the next phase involves

year, and we presented that to our senior-

cal numbers up, but when you look at the

creating dashboards so that every user

level leadership. They bought into it,”

financials, it all looks the same or it’s just

in Baylor Scott & White, and every

Johnson said.

random noise in the financials,” Johnson

administrator, will have access to these

said. “We’re actually held accountable to

dashboards. The dashboards will give

line leaders for each area. The supply

lowering that number. And for us, every

them data on their specific piece of the

chain provided a very detailed, fact-based

half a percentage point we lower that num-

operation and what they need to do.

report with what they had been doing in

ber, it’s $32 million of cost permanently

the past, where they saw benchmarks, and

taken out of the system. We’ve lowered at

systems I’ve been involved with … they

where there was variation.

approximately 2 percentage points already.”

will do accruals at the end of the year, but

The team connected with the service

While the supply chain team would

When looking at the company finan-

“Healthcare, at least the healthcare

they basically book expenses when bills

present the data to the service lines, it was

cials for the last eight years, Johnson said

are paid. So, there’s a lag between that and

the service lines that would lead and make

he could see a noticeable change in 2018.

when you have actually placed an order,”

the decision, Johnson said.

“We would be there as the facilitators

“Now, when you look at the financials, the supply line has all sorts of things in it

he said.

To illustrate, Johnson uses a check-

to keep the process moving and bring-

book metaphor, where you write a check

ing more data when they needed it. Of

for a product, but when it clears the

course, we were not short of opinions on the process. We gave them a program with opportunity that we could go after as an enterprise. They were very successful in doing that,” he said.

People didn’t feel they were in turf fights, Johnson said, “and the very highest levels of the organization, our C-suite executives were involved in some of these discussions. They really pushed us across the board to do the right thing. We created a very programmatic way of analyzing our spend, identifying opportunity, building the teams to go after that opportunity, developing an enterprise-wide strategy, and then going into the market as a single entity of Baylor Scott & White.”

Part of that value involves using supply expense as a percentage of net patient revenue as a key indicator. The

20

“I think historically, you see a lot of

“Military personnel are given the opportunity to do some extraordinary things, so I think it gives you the confidence to feel that you could take bold steps and you’re going to be okay.”

bank is when it actually shows up as an expense. “Well, we’re going to show the checks that have been written. We’re going to show the things that have cleared the bank and we’re going to show those things that haven’t cleared the bank, that are waiting, so that every user has a look at those all the time and can make the appropriate decisions.”

Johnson said he expects to have that capability within six months. “The key to that, again, is the data. The very good data that we can now put together.”

Baylor Scott & White is focused on clean, consistent and complete data and on business intelligence tools to unlock the power of data. Johnson expects many more improvements by unlocking information from millions of transactions each year.

February 2020 | The Journal of Healthcare Contracting

CONTRACTING PROFESSIONAL OF THE YEAR

Building a team What does it take to build a successful healthcare supply chain team?

A combination of thinking inside – and outside – the box.

Front row: left – Janet Watson, Vice President, Strategic Sourcing; Pamela Wiseman, Vice President, Operations Back row: left – Julio Carrillo, Vice President Logistics; Tony Johnson, SVP & Chief Supply Chain Officer; Alan Koreneff, Vice President, Healthcare Technology Management

Tony Johnson, senior vice president and chief supply chain officer at Baylor Scott & White Health, is a big believer in having a well-rounded supply chain team with backgrounds inside and outside of healthcare.

“I think it’s absolutely necessary to have people from healthcare, and I also think it’s absolutely a good idea to bring people from outside of healthcare and let them work together and share. That blended expertise, I think, far exceeds the expertise that would come up in healthcare only,” he said.

22

Johnson gets excited talking about the supply chain leadership team Baylor Scott & White has assembled: Janet Watson, vice president of strategic sourcing, came from Entergy, an energy company based in New Orleans. “She grew up in the oil industry, and is an absolute superstar,” said Johnson. “I don’t think we could have found anyone better.

She has an MBA, she runs all the sourcing events, and she’s the person that’s driving the value capture for us.” Watson had no healthcare background, but was “just an incredible leader, an

February 2020 | The Journal of Healthcare Contracting

incredible manager,” Johnson said. She put on scrubs, visited the operating rooms and cath labs, and made it mandatory for her team to watch the procedures of everything that they were supporting. The physicians became enamored with her team because they showed so much interest, “and they are incredibly bright and smart people,” Johnson said.

“These guys maintain 150,000 devices for Baylor Scott & White, and his team has basically insourced the maintenance of 95% of the equipment. They’ve even built a center that repairs surgical scopes significantly reducing maintenance costs, and they plan to cut it more this year, even though the size of the company has grown, and that’s over the last two years.”

Pamela Wiseman, vice president of operations, runs the data, systems and technology group. She was the lead on the implementation of Baylor Scott & White’s sourceto-settle system. Wiseman came from GE and previously worked with Medtronic. Wiseman has a combined bachelor’s degree in geology, physics and math, a master’s degree in electrical engineering, and she also has an MBA. “Just a brilliant, brilliant person,” Johnson said.

“She has brought so much to the table in terms of perspective, and being able to take stats from all of the hospitals across Baylor Scott & White, from South Austin to North Dallas, and create standard practices. I mean, she’s just built an incredible team across the company. And to get the data and the systems and get a value and implement it, she’s done a great job.”

Infusing thoughts and ideas People from outside healthcare can bring skillsets that are hard to find in people who have focused on the healthcare environment, Johnson said. “They bring a different set of perspectives. They’ve seen supply chains and multiple

Johnson said today’s supply chain executives need very good quantitative skills.

“In fact, they need to be top percentile when it comes to quantitative skills,” he said.

Julio Carrillo, vice president of logistics, brought a background of working with automotive supplier companies.

He previously worked for Tenneco, GE Transportation, and Kongsberg Automotive, and has run distribution centers. “Julio is our director of logistics, so he is responsible for running our distribution center, transportation, and courier services,” Johnson said. “Julio came on board at a time when we were being challenged, trying to get our center stood up, and he’s done a phenomenal job with that. Again, no healthcare background, and he has just done a great job.”

Alan Koreneff is vice president of healthcare technology management. Koreneff worked with Johnson at Novant Health, retired, and then Johnson brought him on board as a contractor at Baylor Scott & White. Like Johnson, Koreneff has a military background. Koreneff’s group is responsible for repairing the equipment across the enterprise, Johnson said.

The Journal of Healthcare Contracting | February 2020

industries work, and they bring fresh ideas to the table.

And their talent level is ... I mean, they’re the best of the best. Supply chain, if you look strictly in healthcare, you’re basically growing from within. You know what you know, or you know what you’ve been taught, and I believe strongly in infusing thoughts and ideas and talents from multiple places and letting them teach each other.”

Johnson said today’s supply chain executives need very good quantitative skills. “In fact, they need to be top percentile when it comes to quantitative skills,” he said. “The same with communication skills or the ability to engage and to gain the trust of stakeholders. If they can’t do that, I don’t care how much you may know or think you know about supply chain and process, if you can’t gain the trust of your stakeholders to the point that they are going to trust you to be at the table, to help them make the best decision, then it’s meaningless. You’ve got to be smart and you’ve got to be able to connect with the clinicians.”

23

SPONSORED

MCKESSON MEDICAL-SURGICAL

How a war room and the power of collaboration improved standardization by 66%

Supply chain executives must rely on all kinds of people and things in order

non-acute distribution portfolio for

to integrate their non-acute members into the health system’s supply chain. Data is es-

Novation (now Vizient) from 2013 to

sential. Formularies too. A reliable med/surg distributor is a must.

2015, and having worked closely with Vizient’s non-acute arm, Provista, to drive value for its non-acute members.

But beneath it all, supply chain execu-

than 700 facilities across nine states,

“Unlike acute care settings, with

including hospital campuses, urgent-

their purchasing or strategic sourc-

care centers, home-health and hospice

ing departments, in non-acutes, office

show our value to our customers by meet-

agencies, and nursing homes. Adams has

managers or clinicians are often

ing them where they are,” says Darrick

supply chain responsibilities for all non-

responsible for purchasing,” he says.

Adams, director of non-acute supply

acute-care sites.

“They know a lot about products,

tives must rely on themselves.

“I had a manager who said that we

chain, AdventHealth. It is a lesson that

“My focus was to cultivate relation-

proved essential when he joined the sys-

ships with our 12 physician groups and to

tem in February 2019 as its first director

align their purchasing habits with those

of non-acute supply chain.

of the system,” said Adams.

Headquartered in Altamonte Springs, Florida, AdventHealth comprises more

24

but less about purchasing, pricing or distribution.

“AdventHealth felt it was important to standardize our purchases to our

He brought valuable experience with him, having managed the

preferred contract suppliers in order to maximize savings.”

February 2020 | The Journal of Healthcare Contracting

Face to face He started where he had to – building trust among people and departments who barely knew him.

“It was important to cultivate relationships with each physician group, because as their liaison to corporate, I needed them to get to know me and understand my role,” he says.

“I am their support system and give them a voice at the corporate supply chain level.”

He set up weekly meetings with the physicians in central Florida, which comprise about 40% of AdventHealth’s physicians.

During these visits, he learned about issues the groups were experiencing from a prod-

Keeping it lean Setting up a formulary isn’t easy. Maintaining it – and preventing product “creep” – may be even more difficult. Here are a few ways Adams and the AdventHealth team plan to manage formulary in the months ahead: ʯ All “adds” to the formulary must be approved by designated parties. ʯ The formulary will be reviewed every six months. Items with limited purchases over the last rolling 12-month period will be dropped. ʯ “Special” orders will be reviewed every six months to determine if an alternative product exists on formulary, or whether the special orders should be added to it. ʯ Each physician group will receive a detailed compliance report of their purchases. (The goal is to have 95% compliance to the formulary by the end of 2020.)

uct or supplier standpoint. More important, “any time you have face-to-face interaction and actually learn about their business, you gain credibility in the room,” he says. formulary many times prior to Adams’

for several days, and just start working

prepared for the hard task ahead – slim-

arrival, said Francis D’Avanza, vice

on it,” he said. The McKesson team is on

ming down the 8,000-plus SKUs that

president, strategic accounts, McKes-

hand as well, providing data about prod-

were being purchased by the 12 physician

son Medical-Surgical. “They knew they

uct usage, brands and pricing. “It takes

groups into a workable formulary.

needed to get there, but they were waiting

time, and you’ll have your tug-of-wars.

for the PeopleSoft implementation. After

But the results are worth it.”

Having laid that groundwork, Adams

In addition to his non-acute experience, he enjoyed two advantages that

they hired Darrick, and with the People-

other supply chain executives often lack.

Soft implementation in place, the light

said Adams. “For us to be able to get this

went on. It was ‘go’ time.”

done and get it done quickly, we needed

The first was the recent IDN-wide

“The war room was Francis’s idea,”

To proceed, D’Avanza suggested a

McKesson’s support and effort. We

“The PeopleSoft implementation was criti-

strategy that McKesson and its customers

couldn’t have done it without them.”

cal,” says Adams. It helped with information-

had found successful in the past – a “war

gathering, and it gave the physician groups

room” event.

implementation of Oracle PeopleSoft.

The time and dates were set: The war room would take place on AdventHealth’s

easy access to the formulary, once it had been

“The idea is to bring key people –

campus from Monday morning, April 22,

created. “By clicking on the link, requestors

clinical and supply chain – into one place

2019, to Wednesday afternoon, April 24.

had instant access to the AdventHealth preferred products in one centralized location.”

The second advantage was AdventHealth’s longstanding relationship with McKesson Medical-Surgical.

‘Go’ time The health system and its distributor had discussed the need for a non-acute

“Since July, 87% of products purchased and 89% of spend is from the new standardized formulary. This puts us on track to reach our goal of 90% compliance within the first six months.”* — Darrick Adams, director of non-acute supply chain, AdventHealth

The Journal of Healthcare Contracting | February 2020

25

SPONSORED

MCKESSON MEDICAL-SURGICAL

Who to invite

and SKUs, were eye-opening to all,

tions to the formulary. He found that the

“Absolutely critical to the success of a

and in some ways, helped energize the

groups were happy about the decision to

war room is participation by key clini-

proceedings. There emerged kind of a

standardize, and grateful for the opportu-

cal players throughout the system,” said

competition to see how many reductions

nity to participate in the process. In fact,

Adams. “You want those in charge of

we could make.”

some asked for a monthly report of those

patient care to be a part of decisions that

By Wednesday afternoon, the group

ultimately affect patients. Their opinions

had winnowed its non-acute formulary

were critical to the decisions that were

from 8,000-plus SKUs to just about 2,500.

made over those three days.

requestors who were out of compliance.

“Since July, 87% of products purchased and 89% of spend is from the new standardized formulary,” said Adams. “This

“I framed the invitations by telling

puts us on track to reach our goal of 90%

them, ‘This is your opportunity to have

Epilogue

a voice.’ The promise of that dialogue

Following the war room, Adams em-

was what made them want to be a part of

barked on a “road show” to reinforce

reduce our non-acute formulary by 66%

what we were doing.”

the decisions made in the war room and

over the course of three days. It demon-

to gauge the 12 physician practices’ reac-

strates the power of collaboration.”

During the weeks leading up to the

compliance within the first six months.”* “I am still amazed that we were able to

war room, the McKesson team compiled and categorized data, including pricing by unit of measure, as directed by Adams. As displaying physical product samples was not to be part of the proceedings, AdventHealth would use its audiovisual system to display photos, descriptions and product numbers (for comparison of like products) from the McKesson catalog.

Adams and his team decided that participants at the war room would tackle relatively “easy” product categories – that is, those with the fewest number of SKUs – first. Gloves was one of them. In addition, the team categorized products as “preferred” if they were on contract.

“One of the key things that McKesson provided for the war room was the presence of Dalisay Watkins, strategic account manager, for all three days,” said Adams. “She recorded every single decision that was made in that room, and after it was over, compiled all that data in an easy-to-read format, so I could present it to the participants.”

Decisions for many categories were

Thinking of organizing your own ‘war room?’

Do you want to stage your own “war room” to hammer out a non-acute product formulary? Francis D’Avanza, vice president, strategic accounts, McKesson Medical-Surgical, has helped health systems do just that.

Here are some of his suggestions. ʯ Before all else, get buy-in and commitment from leadership. ʯ Compile clean 12-month usage data. ʯ Invite key stakeholders from the health system (i.e., clinical, financial, supply chain,) and the med/surg distributor, but try to limit participation to 12 or so people. ʯ Hold the war room at the health system’s corporate headquarters. A good audio/visual system helps. ʯ Don’t rely on an outsider to lead the proceedings. Instead, the director of non-acute or the vice president of supply chain – i.e., someone with skin in the game – should “emcee” the proceedings. ʯ At the outset, communicate the objective of war room at a high level (e.g., SKU reduction, savings targets, GPO compliance, clinical efficiency and alignment within the continuum of care). ʯ Communicate to all participants a clear “hierarchy of importance” to guide product selection (e.g., clinical considerations first, followed by financial, GPO contracts, etc.). ʯ Plan for lunch and breaks throughout the day to keep people refreshed. ʯ Follow up with participants with monthly reports on formulary compliance, financial savings, etc.

reached fairly quickly, he added. “Our successes, including reductions in pricing *Per internal data by McKesson.

26

February 2020 | The Journal of Healthcare Contracting

The non-acute continuum is complicated.

We’ve got your roadmap.

Did you know 34% of health system leaders say that aligning their non-acute supply chain is their biggest challenge?*

McKesson can help you take control of:

Supply chain leaders are challenged with balancing the many needs

• Operations • Analytics • Process Automation

of their non-acute facilities — from surgery centers to doctors’ offices to long-term care facilities and even to patients’ homes. McKesson can help you implement comprehensive strategies that drive out costs and provide better care across the non-acute continuum.

McKesson.com/TakeControl Medical-Surgical. Pharmaceutical. Lab. Equipment. © 2019 McKesson Medical-Surgical Inc. All rights reserved. *HIDA Hospital And Health System Provider Survey, June 2018.

• • • •

Supply Cost Management Visibility Standardization Post-Acute Care

• Laboratory • Pharmaceuticals • Leading Change

MODEL OF THE FUTURE

What does your 2020 and 2021 look like?

Last year, the Journal of Healthcare Contracting asked supply chain execu-

ERP systems and two prime distributors.

tives, “What are you looking forward to in the next 12 to 18 months.” Here are just a

This year we will evaluate ERP systems,

few of their responses. Some of them will sound familiar to JHC readers; others may

partnering with IT and Finance. After

lie further out.

we make our decision, we will develop a strong implementation plan. I am also looking forward to selecting one med/surg

28

Integrating two legacy supply chains

plate. “Key projects will center around

distributor, freight management company

the integration of our two legacy supply

and vendor credentialing supplier. Finally,

Joel Prah, vice president of supply chain

chains,” he said. “Mercy Health and Rock-

we will be evaluating the opportunity to

for Mercyhealth in Janesville, Wisconsin,

ford Health came together in 2015, but

design and develop a centralized integrated

and Rockford, Illinois, has a lot on his

we have been operating with two different

service center for Mercyhealth.”

February 2020 | The Journal of Healthcare Contracting

MODEL OF THE FUTURE

Reducing unnecessary variation

the next year is to … develop a success-

transparency and enhancing clinical en-

Michael Gray, system vice president

ful strategy within nutritional services.

gagement. Investment in these tools helps

and chief supply chain officer for SSM

I would like to support dieticians and

supply chain champion evidence-based

Health in St. Louis, told JHC he is

nurses by developing lean processes,

decision-making while optimizing total

looking forward to continuing to work

ensuring we get product to the patient

value, reflecting the needs of our patients

systemwide with physician leaders and

floors, seeing that it’s well managed, mak-

and providers.”

others to reduce unnecessary variation

ing sure we have no issues with expiration

in vendors, products, and processes.

dates. We can provide tools, and, they – as

“We should be able to measure which

experts in the field – will determine how

Managing software as an asset

products are used where, and which

to use them.”

Jonathan Kempton, category leader, Intermountain Healthcare, Salt Lake

products lead to favorable outcomes

City, Utah, said he is “excited about the

for the majority of patients. It’s exciting getting all these groups together. Rather

Investing in information systems

opportunity to get more involved in

than calling them ‘value analysis groups,’

Adrienne Ainsworth, director of strate-

developing our maturity in software asset

I call them ‘solution groups.’”

gic sourcing for Advocate Aurora Health

management.” [“Software asset manage-

in Milwaukee, said that “as Advocate

ment” refers to the management and

Aurora Health moves to a common EMR

maintenance of a software license after

A strategy for nutritional services

and ERP platform over the next year,

a contract is signed, including staying

Herman Lovato, director of support

our team will be able to better normalize

in compliance with contract terms and

services for Centura Health in Centennial,

disparate data and enrich our quality and

realizing the full value of what has been

Colorado, said, “One of my goals over

cost-per-case tools, allowing for more

purchased.] “I have been a part of the governance team, and feel there are a lot of improvements that the group is looking to make in our process and tools

“ It is so helpful in supply chain to have good data to understand the needs of the organization and how to maximize the value of technology contracts.”

– Jonathan Kempton, category leader, Intermountain Healthcare

in the coming years. It is so helpful in supply chain to have good data to understand the needs of the organization and how to maximize the value of technology contracts. That is why I feel strongly about software asset management’s role as an input to supply chain.”

Pulling off a makeover Ryan Rotar, executive director of supply chain, UNC Health Care, Chapel Hill, North Carolina, said, “Seldom does someone in supply chain leadership get the opportunity to build a system from the ground up. Often, you settle for incremental change. But a year from now, our supply chain will look 180 degrees different than it does today. I’m blessed to be a part of all these changes.”

30

February 2020 | The Journal of Healthcare Contracting

SPONSORED

HEALTH O METERS PROFESSIONAL SCALES

Facing the challenges of weighing immobile patients and the need for an accurate and efficient solution

Acquiring a critical or immobile patient’s weight is not easy. It takes time, and

Traditional options

disrupts clinical workflow. Despite the difficulties in obtaining weight measurements, a

Currently, the three most commonly

patient’s body weight is a critical measurement in calculating the appropriate dosage of

used options for weighing time-crit-

life-saving drugs. In addition to providing patients with the proper drug dosage, drugs

ical, immobile patients are weighing

need to be administered quickly, as in some cases every minute is a factor in a patient’s

beds, hoist scales, and estimation. How-

outcome. Faster treatment is also a goal of Process Improvement teams as hospitals

ever, these methods are problematic as

across the country are focused on shortening door to needle times to meet American

they are difficult to use, time-consum-

Heart Association 2020 credentialing guidelines and to be designated as a “Stroke

ing, inaccurate, and uncomfortable for

Honor Roll Elite Plus” certified institution.

the patient.

The Journal of Healthcare Contracting | February 2020

31

SPONSORED

HEALTH O METERS PROFESSIONAL SCALES

Typically most emergency rooms

commonly used in the ICU are dosed

now offers the Patient Transfer Scale.

or stroke centers will weigh immobile

based on precise patient weight, and an

The new PTS-1000KL is an innova-

patients using a stretcher or bed with a

over or underestimated weight measure-

tive piece of equipment that combines

weighing scale inside of it. This is not

ment can lead to fatal drug levels or

a transfer board with a weighing scale

a reliable solution – weighing beds are

inadequate treatment. Weight estima-

inside, allowing clinicians to quickly

not always available, as they are often

tion should only be considered as a last

and accurately weigh immobile patients

in use or have been moved. Clinicians

resort when time is critical to providing

without changing their workflow. This

are not confident in the use of weigh-

life-saving treatment.

easy-to-use scale can be quickly zeroed

ing beds as they can be inaccurate due

It is evident that a more efficient and

for immediate use, is always available

to not being calibrated regularly or

accurate method of weighing immobile

using its convenient wall-hanging stow-

properly zeroed before use. In some

patients would provide better patient

ing system, and decreases the number

instances using a weighing bed can in-

outcomes, enhance workflow, and reduce

of patient transfers. All departments in

crease the number of patient transfers.

the burden on staff.

the hospital can benefit from the Patient

In the case of an immobile stroke patient, the patient is transferred from an EMS stretcher, to a weighing bed and then to a CT scanner. This extra transfer is a risk to the patient’s safety and a burden on staff ’s physical health. Lastly, weighing beds can be very expensive, costing over $15,000 in many cases.

Another less common option to weigh immobile patients is to use a hoist scale. Hoist scales lift patients from a bed to obtain a weight measurement. These scales are not a popular choice as they are difficult to use, timeconsuming as well as being uncomfortable and stressful for the patient.

Obtaining a weight using a hoist often involves several steps to set up the

All departments in the hospital can benefit from the Patient Transfer Scale, particularly stroke units, the emergency room, ICU, and radiology.

In addition to the practical benefits, the Patient Transfer Scale is also an effective costsaving alternative to other weighing options.

scale and properly position the patient.

And as previously stated, these patients need to be treated quickly and every

The Patient Transfer Scale

Transfer Scale, particularly Stroke

minute counts.

As a leading manufacturer in the health-

Units, the Emergency Room, ICU, and

care market, Health o meter Profes-

Radiology. In addition to the practical

weight measurement of an immobile

sional Scales focuses on developing

benefits, the Patient Transfer Scale is

patient is estimation. Staff can estimate

and introducing healthcare products

also an effective cost-saving alternative

weight by what is told to them by the

that can make marked improvements

to other weighing options.

patient or by a visual estimate. But

on patient care and outcomes. To help

estimation is not accurate and can be

healthcare facilities overcome the chal-

choose the brand that makes it weigh easi-

very dangerous when weight is used

lenges of weighing immobile patients,

er for you, the customer and the patient,

to determine drug dosing. The drugs

Health o meter Professional Scales

Health o meter Professional Scales.

A third method used to obtain the

32

When choosing the right brand,

February 2020 | The Journal of Healthcare Contracting

Every Minute Counts . . .

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TRENDS

Physician reimbursement What you need to know about physician payment changes

On November 1, 2019, the Centers for Medicare and Medicaid Services (CMS)

Gary LeRoy, M.D., president, AAFP:

issued a final rule that includes updates to payment policies, payment rates, and quality

[Although the American Academy of

provisions for services furnished under the Medicare Physician Fee Schedule effective

Family Physicians had yet to formally

on or after Jan. 1. JHC asked the American Academy of Family Physicians (AAFP) and

respond to CMS’s final rule at press time]

the Medical Group Management Association (MGMA) for their reactions.

AAFP is likely OK with their decision to maintain the weights … given ongoing concerns with the cost category. One

34

The Journal of Healthcare Contracting:

evidence that they provided high-quality,

downside to maintaining the quality and

For 2020, CMS will maintain the

efficient care supported by technology.

cost weights is that there will be a more

weights of the cost (15%) and quality

To do so, they must submit information

significant shift in those weights later,

(45%) performance categories for

on “quality” (e.g., processes, outcomes),

since – by law – they both must be 30%

the Merit-based Incentive Payment

“promoting interoperability require-

by the 2022 performance year.

System, or MIPS.

ments” (e.g., electronic exchange of infor-

Background: Under the Medicare Ac-

mation), “improvement activities” (e.g.,

Mollie Gelburd, J.D., associate director

cess and CHIP Reauthorization Act of

expanding practice access, promoting pa-

of government affairs, MGMA: MGMA

2015, or MACRA, physicians earn a pay-

tient safety) and “cost” (i.e., the resources

is pleased to see that CMS maintained the

ment adjustment (up or down) based on

clinicians use to care for patients).

category weights for 2020, particularly after

February 2020 | The Journal of Healthcare Contracting

originally proposing that the “cost” category

Effective Jan. 1, 2021, changes to CPT

coding changes allow clinicians to choose

be weighted at 20%. We have concerns

codes will allow clinicians to choose

the E/M visit level based on either medical

about this category, because certain mea-

the E/M visit level based on either

decision-making or time, rather than on

sures contain methodological flaws, which

medical decision-making or time.

a combination of three variables: history,

inappropriately hold physicians accountable

Background: CMS is aligning its E/M

exam and medical decision-making. They

for costs beyond their control. For example,

coding with changes adopted by the Amer-

also revise the time and medical decision-

the Total Per Capita Cost measure holds

ican Medical Association Current Proce-

making process for all of the codes, and

physicians responsible for the cost of a

dural Terminology (CPT) Editorial Panel

require performance of history and exam

patient’s care even after that patient is no

for office/outpatient E/M visits. The CPT

only as medically appropriate.

longer in the physician’s care, but in the care of another physician. In addition, because CMS has not yet provided feedback on cost measure performance, clinicians can’t change their clinical workflows in order to become more efficient and improve category performance. Until CMS fixes these performance flaws and provides feedback, MGMA believes the current MIPS category weights should be maintained.

The Journal of Healthcare Contracting: Effective Jan. 1, CMS is increasing the performance threshold from 30 points to 45 points.

Background: Eligible Medicare Part B clinicians are scored on a 100-point MIPS performance scale. Payments are adjusted up or down based on the MIPS performance score. (These adjustments are applied to the Medicare payment for every Part B service billed by the clinician two years after the performance year.)

Mollie Gelburd: The performance threshold is critical, because if the physician’s score is lower than the threshold floor, then Part B payments are reduced; if the score exceeds it, payments are adjusted upward.

The Journal of Healthcare Contracting: The 2020 Medicare Physician Fee Schedule introduces several changes regarding evaluation/management

Physician assistants get more responsibility Physician assistants may gain expanded responsibilities as a result of the final 2020 Physician Fee Schedule Rule, issued in November by the Centers for Medicare and Medicaid Services (CMS).

The rule loosens Medicare’s supervision requirements for PAs by largely deferring to state law on how PAs practice with physicians and other members of the healthcare team.

“In recent years, 11 states have replaced the outdated term ‘supervision’ with other terms, such as ‘collaboration,’ to better reflect current PA practice,” says Michael Powe, vice president of reimbursement & professional advocacy for the American Academy of PAs. “Another state, North Dakota, has eliminated the legal requirement for a specific relationship between a PA, physician, or any other healthcare provider in order for a PA to practice to the full extent of their education, training, and experience.”

“Deferring to states on how PAs work with other healthcare providers ensures that Medicare policy aligns with the direction many states are already heading when it comes to how healthcare is delivered,” David E. Mittman, PA, DFAAPA, president and chair of the Board of Directors for AAPA, said in a statement.

The final rule also: ʯ Authorizes PAs to prescribe medications in their role as “attending physicians,” similar to physicians and advanced practice registered nurses, under Medicare’s hospice benefit. ʯ Allows physicians, physician assistants, and advanced practice registered nurses (APRNs, that is, nurse practitioners, clinical nurse specialists, certified nurse-midwives and certified registered nurse anesthetists) to review and verify (i.e., sign and date) – rather than re-document – notes made in the medical record by other physicians; residents; medical, physician assistant, and APRN students; nurses; or other members of the medical team.

(E/M) services provided by doctors.

The Journal of Healthcare Contracting | February 2020

35

TRENDS

Gary LeRoy: Focusing on medical

ing CPT code 99201 [i.e., office or other

beneficiaries with chronic condi-

decision-making (MDM) or time as a single

outpatient visit for the evaluation and

tions,” CMS says specialists can now

variable for choosing the level of service

management of a new patient] and reduc-

bill Medicare for providing principal

simplifies code selection. That said, the re-

ing the number of levels of new patient

care management to patients with

vised CPT interpretive guidelines for medi-

office/outpatient visits makes sense. This

one complex chronic condition while

cal decision-making represent a significant

is particularly relevant since CPT codes

the patient is receiving chronic care

change in the way physicians and coders are

99201 and 99202 have the same type of

management services from a pri-

accustomed to thinking about MDM. They

medical decision-making, i.e., straight-

mary care doctor.

will require some study and education be-

forward. In some sense, this will simplify

Gary LeRoy: [In its response to the

fore they become effective on Jan. 1, 2021.

matters for physicians, because they’ll

proposed rule, the American Academy of

have only four rather than five levels from

Family Physicians commented] the addition

which to choose. The impact should not

of new principal care management (PCM)

be significant, since new-patient visits are

codes would move away from the con-

less numerous than established patient visits,

tinuous, comprehensive, and coordinated

and level-one new-patient visits are among

value-based care and primary care CMS has

the least frequent of new-patient visits.

otherwise been encouraging as a cost-effec-

We believe reporting requirements should be aligned with clinical improvement as well as cost efficiency.

Likewise, the time element is changing

tive way to care for Medicare patients.

The Journal of Healthcare Contracting: CMS is implementing several changes

eficiaries have two or more chronic

for “care management” services (i.e.,

conditions for which AAFP members are

“transitional care management,”

already caring in a continuous, compre-

“chronic care management” and

hensive, and coordinated way via existing

significantly. Currently, it represents face-

“principal care management”).

chronic care management, I do not expect

to-face time in the office or outpatient

Regarding chronic care management

the creation of PCM codes by Medicare

setting and can be used only to choose

(i.e., services provided to beneficiaries

to have a significant impact on how

level of service when counseling and/or

with multiple chronic conditions over

AAFP members care for these patients.

coordination of care dominates the en-

a calendar month), a Medicare-specific

counter. In 2021 and beyond, the relevant

code will be assigned for additional

The Journal of Healthcare Contracting:

time will be time on the date of service,

time spent beyond the initial 20 min-

Taking a step back, what is your orga-

not just face-to-face time, and it can be

utes allowed in the current coding.

nization’s reaction to these changes?

used to select level of service for any

Gary LeRoy: CMS’s creation of a code for

Mollie Gelburd: MGMA would like to

encounter, not just those dominated by

additional time spent beyond the initial 20

see MIPS become more clinically relevant.

counseling and/or coordination of care.

minutes is consistent with a proposal that

Currently, our members see it primarily as

the AAFP and others submitted to the CPT

a compliance program, that is, a means to

The Journal of Healthcare Contracting:

Editorial Panel. We are supportive of it until

either avoid financial penalties or gain ad-

Regarding E/M services, the CPT cod-

such time as a similar code can be incorpo-

ditional reimbursement. But as they stand,

ing changes retain 5 levels of coding

rated into CPT. The code will more appro-

the MIPS measures don’t further clinical

for established patients, reduce the

priately compensate AAFP members for the

goals. We believe reporting requirements

number of levels to 4 for office/outpa-

additional time they and their staffs spend in

should be aligned with clinical improve-

tient E/M visits for new patients, and

support of patients with chronic conditions.

ment as well as cost efficiency. In a well-

revise the code definitions.

36

To the extent most Medicare ben-

functioning program, an investment in a

Gary LeRoy: Given that physicians will

The Journal of Healthcare Contracting:

practice’s clinical program would also be

be allowed to choose the level of service

“Recognizing that clinicians across

an investment in MIPS. As it stands, those

on medical decision-making alone, delet-

all specialties manage the care of

two things are separate.

February 2020 | The Journal of Healthcare Contracting

Will MVPs bring a simpler future?

There’s nothing simple about the Medicare Physician Fee Schedule, including the Merit-based Incentive Payment System, or MIPS. But credit the Centers for Medicare and Medicaid Services (CMS) for trying.

For 2021, CMS has proposed a next-generation MIPS program, called MIPS Value Pathways (MVPs). The goal is to move away from siloed activities and measures, and move toward an aligned set of measure options that are relevant to a clinician’s scope of practice.

Currently, MIPS-eligible physicians must submit information on a variety of measures in each of four categories: Cost, Quality, Promoting Interoperability, and Improvement Activities. The MVP framework would align and connect measures and activities across all four. A clinician or group would be in

one MVP associated with their specialty or with a condition, reporting on the same measures and activities as other clinicians and groups in that MVP. “We believe the MVP framework would help to simplify MIPS, create a more cohesive and meaningful participation experience, improve value, reduce clinician burden, and better align with APMs [Alternative Payment Models] to help ease the transition between the two tracks,” CMS said in a statement.

Simple, right? That remains to be seen.

“We recognize that this would be a significant shift in the way clinicians may potentially participate in MIPS,” says CMS. “Therefore we want to work closely with clinicians, patients, specialty societies, stakeholders, third parties and others to establish this new framework.”

How MVPs would change physician reporting and reimbursement

Overall direction of program

Example: Diabetes

Current state of MIPS (2020)

New MIPS Value Pathways Framework (in next 1-2 years)

Future state of MIPS (in next 3-5 years)

ʯ Many choices ʯ Not meaningfully aligned ʯ Higher reporting burden

ʯ Cohesive ʯ Lower reporting burden ʯ Focused participation around

ʯ Simplified ʯ Increased voice of the patient ʯ Increased CMS-provided data ʯ Facilitates movement to

pathways that are meaningful to clinician’s practice/specialty or public health priority

Alternative Payment Models (APMs)

ʯ Endocrinologist chooses from ʯ Endocrinologist reports same

ʯ Endocrinologist reports on

same set of measures as all other clinicians, regardless of specialty or practice area ʯ Four performance categories (Cost, Quality, Promoting Interoperability, Improvements Activities) feel like four different programs ʯ Reporting burden higher and population health not addressed

same foundation of measures with patient-reported outcomes also included. ʯ Performance category measures in endocrinologist’s Diabetes Pathway are more meaningful to their practice ʯ CMS provides even more data (e.g. comparative analytics) using claims data and endocrinologist’s reporting burden even further reduced

“foundation” of Promoting Interoperability and population health measures as all other clinicians, but now has a MIPS Value Pathway with measures and activities that focus on diabetes prevention and treatment. ʯ Endocrinologist reports on fewer measures overall in a pathway that is meaningful to their practice ʯ CMS provides more data; reporting burden on endocrinologist reduced

Source: Centers for Medicare and Medicaid Services

The Journal of Healthcare Contracting | February 2020

37

TRENDS

Physician productivity Physician compensation is up. But productivity isn’t.

Value-based incentives for physicians are growing, but they still constitute a

major specialty group to see an increase

small percentage of total cash compensation for most specialties, reports Chicago-

greater than 1.5%.

based SullivanCotter, a consulting firm in the assessment and development of rewards

“With growing concerns regarding

programs for the healthcare industry and non-profit sector. What’s more, even as market

provider supply and demand, organiza-

supply-and-demand for physicians continues to drive increases in compensation, physi-

tions are evolving their compensation

cian productivity is stagnant.

programs to align with an increasingly competitive talent market,” said Dave Hesselink, principal, SullivanCotter, in

From 2018 to 2019, the prevalence of value-

Productivity stagnant

a statement. “With a looming physician

based incentives, which rewards performance

Despite continued year-over-year in-

shortage placing pressure on orga-

on measures such as clinical quality, patient

creases in median compensation across

nizational recruitment and retention

experience and access, increased by 5-7%

all major specialty categories, productivity

strategies, this demand continues to push

across all four major specialty categories:

remains relatively flat and in many cases is

physician compensation upwards with-

even declining.

out being supported by corresponding

ʯ For primary care, the prevalence of value-based incentive components in plan design was up 5% from last year, with 62% of organizations incorporating these incentives into their physician compensation programs.

ʯ Medical, surgical and hospital-based specialties all fell in the range of 55-57%.

“ We expect to see continued growth in valuebased incentives as organizations work to further develop and refine these programs to ensure they have credible measurement and reporting systems in place before moving forward.”

– Mark Ryberg, principal, SullivanCotter

The actual amounts paid for valuebased performance remain relatively small, at 6.2% of total cash compensation across

From 2014-2019, median total cash

gains in productivity or reimbursement

all specialties at the median, according to

compensation for primary care physicians

– resulting in higher levels of organiza-

the firm. However, this is up from 5.6% in

increased by 14.7% (reflecting a growing

tional investment per physician.”

2018. Primary care is highest at 7% of total

demand for primary care providers by

cash compensation, with hospital-based

healthcare organizations), but work RVU

ter’s “Physician Compensation and Pro-

specialties following at 6.3% and medical

(wRVU) productivity declined by 0.2%,

ductivity Survey” is now in its 27th year.

and surgical specialties at just below 6%.

according to SullivanCotter. (Work RVU

With data from nearly 700 organizations

reflects the relative time and intensity asso-

on more than 206,000 individual physi-

in value-based incentives as organizations

ciated with furnishing a Medicare Physician

cians and advanced practice providers,

work to further develop and refine these

Fee Schedule service.)

this survey is intended to provide insight

“We expect to see continued growth

38

Released in December, SullivanCot-

programs to ensure they have credible

Over the same five-year time

into base salary, total cash compensation,

measurement and reporting systems in

period, hospital-based physicians saw

and productivity data and ratios, includ-

place before moving forward,” said Mark

the largest growth in median wRVU

ing wRVUs, collections, patient visits and

Ryberg, principal, SullivanCotter.

productivity at 5.2%. This was the only

panel sizes.

February 2020 | The Journal of Healthcare Contracting

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TRENDS

Trending upward Urgent care center growth up 6%

The Urgent Care Association reports industry growth of almost 6% in 2019,

54.1% of centers were physician owned

with 9,279 urgent care centers in the United States as of June 2019, up from 8,774 in

while hospitals represented 24.8% of the

2018 and 8,125 in 2017.

total. But by 2014, physician ownership had dropped to 40% and hospital (or healthcare system) ownership had increased to 37%

In a recently updated white paper,

of respondents. Many multisite urgent care

“The Essential Role of the Urgent Care

centers have taken on private equity part-

Center in Population Health,” the as-

ners, according to the association.

sociation reports that urgent care centers handle more than 112 million patient

Typical services: Non-life- or-limb-threat-

visits per year, representing 23% of all

ening illnesses and injuries typically seen

primary care visits and 12.6% of all out-

in urgent care centers include, but are not

patient physician visits.

limited to:

ʯ ʯ ʯ ʯ ʯ ʯ

UCA’s membership includes more than 3,000 urgent care centers. The association defines urgent care services as:

ʯ A medical examination, diagnosis and treatment for non-life or limb threatening illnesses and injuries that

Patient volume: In the UCA’s 2018

are within the capability of an urgent

Benchmarking Report, representing 2017

care center which accepts unscheduled,

data, respondents reported a median

walk-in patients seeking medical

patient volume of 35 patients per day.

attention during all posted hours

Urgent care volume can be seasonal, typi-

of operation and is supported by

cally spiking during late fall and winter.

on-site evaluation services, including radiology and laboratory services.

of the UCA benchmarking survey, 25-40%

procedure and treatment to the

of urgent care patients lack a primary care

extent they are within the capabilities

physician. A large demographic that often

of the staff and facilities available at

chooses urgent care for their acute needs

the urgent care center.

are young, healthy adults devoid of chronic health conditions, according to UCA.

The UCA’s database does not include

40

retail clinics housed inside retail operations

Ownership: Urgent care centers emerged

and typically alongside in-house pharma-

largely as a physician or physician group

cies, or traditional primary care practices

strategy. In an early UCA Benchmarking

with extended hours for their patients.

Report based on the calendar year 2008,

Asthma.

Burns, minor.

Cough/cold/influenza.

Conjunctivitis (pink-eye).

Dermatological conditions (rashes, infections, including incision and drainage as a procedure).

ʯ ʯ ʯ ʯ ʯ

Dehydration.

Ear infections.

Fractures.

Gastrointestinal disorders.

Gynecological infections and disorders.

Patient profile: Depending on the year

ʯ Any further medical examination,

Allergies.

ʯ ʯ ʯ ʯ ʯ ʯ ʯ ʯ

Headaches/migraines.

Influenza.

Lacerations, including suturing.

Pharyngitis (sore throats).

Sprains/strains.

Upper respiratory infections.

Urinary tract infections.

Work-related illness, injury, screening and wellness.

ʯ Detection of complications of chronic illness.

February 2020 | The Journal of Healthcare Contracting

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HSCA

The healthcare landscape in 2020

BY KHATEREH CALLEJA, J.D.

Key trends to watch

42

The year 2019 was a busy one for the healthcare sector. Policymakers on

Here are a few of the trends we are seeing

Capitol Hill explored solutions to a variety of healthcare issues ranging from drug pric-

as well as areas of focus and policy priori-

ing to the opioid crisis. Natural disasters have strained the resources of healthcare pro-

ties that HSCA will continue to pursue in

viders across the country and exacerbated ongoing critical prescription drug shortages.

the coming year:

The Healthcare Supply Chain As-

clinics, and other healthcare providers.

Drug shortages

sociation (HSCA) represents the nation’s

Given our unique line of sight over the

Ongoing critical prescription drug short-

leading healthcare group purchasing

entire healthcare supply chain and our

ages continue to be a public health crisis

organizations (GPS), the sourcing and

experience working on the front lines

and endanger patient care. As the U.S.

purchasing partners to virtually all of

of the healthcare industry, HSCA has an

Food and Drug Administration (FDA)

America’s 7,000-plus hospitals, as well

intimate understanding of the challenges

has noted, drug shortages are a complex

as the vast majority of the 68,000-plus

the healthcare industry will continue to

problem that requires a multi-stakehold-

long-term care facilities, surgery centers,

face as it enters the 2020.

er solution. HSCA supports bipartisan

February 2020 | The Journal of Healthcare Contracting

legislation called the MEDS Act, which

legislation. The CREATES Act encour-

provide top-quality care to patients in

provides the FDA with additional

ages generic drug competition and will

every situation.

authority to address drug shortages,

help end anti-competitive abuses utilized

strengthens manufacturing reporting

by some brand name manufacturers. In

requirements and develops new market-

the year ahead, HSCA will continue to

Healthcare data standards

based incentives to help ensure a stable

advocate for policy solutions that in-

In an increasingly connected world,

supply of critical prescription drugs.

crease competition and foster innovation

healthcare supply chain data standards

This bill will help provide significant

throughout the marketplace.

play a critical role in helping to deliver

relief for patients struggling to access their medications.

In 2019, HSCA submitted comments to Drug Enforcement Administration (DEA) providing recommendations on ways to help control narcotics abuse while also protecting provider access to injectable opioids that are critical to patient care. HSCA also weighed in with FDA as the Agency continues to foster improvements to medical device sterilization processes and work to reduce the healthcare industry’s use of Ethylene Oxide (EtO) for sterilization. As we

Patients have long relied on generic drugs to reduce costs and increase access to essential medications, and price spikes for commonly used drugs create hardship for patients and providers alike.

begin a new year, HSCA will continue to support the MEDS Act and work with policymakers to pursue solutions to pre-

Emergency preparedness

important supply chain data to clinicians

vent and mitigate drug shortages.

In 2019, the country experienced a

and patients. In 2019, HSCA’s Committee

wave of natural disasters and other

for Healthcare eStandards (CHeS) submit-

emergencies that put stress on hospi-

ted comments to the American National

Drug pricing and generic drug competition

tals and healthcare providers as they

Standards Institute (ANSI) providing

served affected communities. GPOs

recommendations on healthcare supply

Significant price spikes for critical gener-

were on the front lines of those

chain data standards to help improve accu-

ic drugs and ongoing prescription drug

emergencies, providing support to

racy, efficiency, and patient safety. HSCA

shortages continue to jeopardize patient

healthcare providers and working with

will continue to advocate for policies that

access to affordable healthcare. Patients

manufacturers to identify and locate

accelerate the adoption, implementa-

have long relied on generic drugs to

supplies of much-needed resources.

tion, and active usage of industry-wide

reduce costs and increase access to es-

As we enter 2020, HSCA will work

data standards for improving efficiencies

sential medications, and price spikes for

with lawmakers and healthcare sup-

throughout the supply chain.

commonly used drugs create hardship

ply chain stakeholders to provide key

for patients and providers alike. HSCA

insights into improving emergency

members remain committed to helping

supported the CREATES Act, which

preparedness and offer strategic policy

hospitals and healthcare providers deliver

was ultimately passed at the end of 2019

recommendations that will enable the

the most effective and affordable care

as part of Congress’ year-end spending

healthcare industry to continue to

possible to the patients they serve.

As we head into 2020, HSCA and its

Khatereh Calleja, J.D., is the president and CEO of Healthcare Supply Chain Association (HSCA).

The Journal of Healthcare Contracting | February 2020

43

LEADERSHIP

BY LISA EARLE MCLEOD

Is change hard?

Do leaders make it harder?

It’s nice to think that everyone is

Traditional thinking tells us people don’t like change.

But if that were true, no one would ever get married or have a baby. Or move, or go

all-in to improve the company. But it’s

to college, or change jobs, or the myriad of other changes we humans regularly impose

naïve to believe employees will happily

on ourselves.

jump through hoops to increase share price. Even when employees own stock in the company, dandling a potential

People make huge sweeping changes

future earnings increase doesn’t win

every single day. They don’t do it because

hearts and minds.

they’re forced to; they do it because they

Talk to any kid whose parents have

want to. The change people don’t like is

divorced and they’ll tell you: making my

change that is thrust upon us and that has

life harder so your life can get better is

no clear benefit for us.

not a change anyone in their mind gets

In the work world, we often assume

excited about.

people’s resistance to new programs and

When people hear about a change, the

ideas is because they can’t handle change.

first things they think are, why is this hap-

Often, intelligent people resist change

pening and how is this going to affect me?

because they don’t want to do a lot of

In Gill’s case, he figured out quickly,

work for something that does not matter

he needed to level with people. The truth

to them.

was, if the company didn’t change, their

A friend of mine, Gill, told me about

competition would clean their clock. Gill

how their company approached a recent reorganization. They held a big meeting to tell everyone about their plans. Senior leadership laid out the new structure.

They discussed the efficiencies the com-

was also honest about how much work This is going to be soooo much work.

it was going to be. He said, “It’s going to

This is pointless. I bet some consul-

be chaotic for the next month. Then for

tant sold them on this.

the month after, when we’re working out

After hearing the complaints, Gill

the kinks it will likely still be harder than

pany would gain, and how it would better

thought, “HR told me this would probably

normal. By month three things should

them in the marketplace. Leadership

happen. People don’t like change.” As a

start to get easier.”

closed by emphasizing the anticipated

well-intentioned leader, he thought his job

When you sugarcoat things, people

increase in earning and share price.

was to help people cope with the change.

are less likely to trust you. Whether you’re

But the problem wasn’t that his

telling your kids you’re moving, or telling

Gill attended the meeting with all his direct reports. His team was clearly less

people couldn’t handle change. The prob-

your team the company is reorganizing, be

than delighted by the changes. They left

lem was the senior leaders hadn’t outlined

honest. If it’s going to be hard, tell them.

the meeting grumbling, and by the time

any clear benefits for anyone other than

they got back to their area, the grumbles

shareholders. Meanwhile, people’s jobs

especially when the leaders consider the

turned into full-throttled complaints.

and lives would be turned upside down.

team’s perspective.

People can and do adapt to change,

Lisa Earle McLeod is a leading authority on leadership and the author of four books including the bestseller, Selling with Noble Purpose.

Companies like Apple, Kimberly-Clark and Pfizer hire her to help them create passionate, purpose-driven organization. Her NSP is to help leaders drive revenue and do work that makes them proud.

44

February 2020 | The Journal of Healthcare Contracting

CALENDAR

Calendar of events Association for Health Care Resource & Materials Management (AHRMM) AHRMM20 Conference and Exhibition July 26-29, 2020 Austin, Texas

Federation of American Hospitals 2020 Public Policy Conference & Business Exposition March 1-3, 2020 Marriott Wardman Hotel Washington, D.C.

IDN Summit Spring IDN Summit & Reverse Expo April 27-29, 2020 Omni Orlando Resort at ChampionsGate Orlando, Fla. Fall IDN Summit & Reverse Expo August 24-26, 2020 JW Marriott Desert Ridge Resort and Spa Phoenix, Ariz.

Spring IDN Summit & Reverse Expo April 12-14, 2021 Omni Orlando Resort at ChampionsGate Orlando, Fla.

GHX Supply Chain Summit April 27-29, 2020 Gaylord National National Harbor, Md.

Intalere Elevate 2020 May 11-13, 2020 Gaylord Opryland Resort & Convention Center Nashville, Tenn.

Health Connect Partners Spring ’20 Hospital Supply Chain Conference May 20 - 22, 2020 New Orleans, La.

Premier Breakthroughs Conference June 23-26, 2020 Gaylord Opryland Resort & Convention Center Nashville, Tenn.

Fall ’20 Hospital Supply Chain Conference September 30 - October 2, 2020 Kansas City, MO

Health Industry Distributor’s Association (HIDA) Supply Chain Visibility Conference February 5-6, 2020 Hyatt Regency Coral Gables, Fla.

Share Moving Media Association of National Account Executives April 8, 2020 Consolidated Service Center Forum Atlanta, Ga. August 11-13, 2020 ANAE Annual Conference San Diego, Ca.

SEND ALL UPCOMING EVENTS TO DANIEL BEAIRD, MANAGING EDITOR: DBEAIRD@SHAREMOVINGMEDIA.COM

The Journal of Healthcare Contracting | February 2020

45

NEWS

GPO NEWS Premier: Hospitals see 20% increase in childbirth costs from complications and common chronic conditions

Konica Minolta receives Innovative Technology designation from Vizient

U.S. hospitals could save upwards

Inc. announced its Order and Refer-

of 20% in costs for complicated

ral Management Solutions, provided by

childbirths, according to a nationally

All Covered, the company’s IT Services

representative analysis by Premier

Division, have received a 2019 Innovative

Premier releases statement on Next Generation ACO model results

Inc. (Charlotte, NC). The organiza-

Technology designation from Vizient, Inc.

Premier Inc. (Charlotte, NC) congratu-

tion says that increased costs associ-

(Irving, TX). The designation was based

lated all of the Next Generation Account-

ated with childbirth are in part due to

on the recommendations of healthcare

able Care Organizations (NGACOs) for

potentially preventable complications

experts serving on a member-led council

reducing Medicare spending by more than

and pre-existing chronic conditions.

who interacted with the product shown

$123 million during the program’s first two

In aggregate, complications, includ-

at the Vizient Innovative Technology

years. The company also announce that,

ing severe maternal morbidity factors

Exchange. All Covered’s Order and Refer-

in performance year 2018, all six NGACO

and chronic conditions, add on aver-

ral Management Solutions help improve

participants in Premier’s Population Health

age 20% to the cost to hospitals to

organizations’ ability to more securely

Management Collaborative generated more

perform a vaginal delivery and 25%

and efficiently capture, manage, and share

than $70 million in savings to Medicare, re-

to the cost to perform a cesarean

patient information, as well as transform

sulting in shared savings payments in excess

delivery. The Premier analysis shines

workflow, creating more optimum clinical

of $63 million back to their organizations.

light on the opportunity to improve

and administrative experiences.

see the bipartisan legislation included in the larger spending deal that the president is expected to sign into law.

Konica Minolta Business Solutions U.S.A.,

outcomes and avoid excess costs and longer lengths of stay by working appropriate care prior to childbirth,

Vizient praises Congressional action on the CREATES Act

and standardizing processes to iden-

Vizient, Inc. (Irving, TX) praised the

new cybersecurity resources for mem-

tify and prevent labor and delivery

work of the House and Senate in ap-

bers within its Operational Continuity

complications. Other findings include:

proving year-end spending legislation

and Emergency Management Program.

that includes the Creating and Restor-

Earlier this year, Intalere convened a

maternal morbidity costs hospitals

ing Equal Access to Equivalent Samples

Cybersecurity Advisory Board, comprised

88% more compared to an

(CREATES) Act. Vizient says that the

of Intalere members with distinguished

uncomplicated vaginal delivery

bipartisan legislation will encourage new

industry experience and expertise, to iden-

ʯ A cesarean with severe maternal

generic drug competition and help lower

tify cybersecurity needs, best practices and

morbidity costs hospitals 111%

prescription drug costs for hospitals and

resources. Through the leadership of this

more than an uncomplicated

patients. The CREATES Act prevents

group, Intalere’s Operational Continuity

cesarean delivery, on average

brand name drug manufacturers from us-

and Emergency Management Program

across provider networks to ensure

ʯ A vaginal delivery with severe

46

Intalere expands cybersecurity resources for members Intalere (St. Louis, MO) announced

ing tactics that slow the development and

has been enhanced with the addition of a

These serious, lifelong complica-

entry of new, lower cost generic drugs

new cybersecurity offering that includes:

tions are often preventable, and women

into the marketplace, such as blocking

who experience these factors stay in the

access to samples. Vizient has strongly

hospital 70% to 75% longer than those

supported passage of the CREATES Act

with uncomplicated deliveries.

since its introduction, and is pleased to

ʯ Educational Resources ʯ Cyber insurance ʯ Access to strength and vulnerabilities assessments

February 2020 | The Journal of Healthcare Contracting

develop a one-stop shopping experience,

has earned the Fellow designation from the

a new contract portfolio that will provide [its]

which launched in December 2018 as

American College of Healthcare Execu-

members with a spectrum of cybersecurity

Kroger Express in 13 Walgreens stores in

tives (ACHE). Kiewiet has a strategic and

products and services.” The company said it

Northern Kentucky. They announced an

diverse perspective of the healthcare

would announce new contracts in 2020.

expansion of the pilot in August 2019 at

industry supported by more than 12 years

35 Walgreens locations in Knoxville, TN,

of direct patient care combined with over

and introduced a curated assortment of

18 years in product management, business

Walgreens health and beauty products at

development, medical products/devices

17 Kroger stores in the same area.

distribution, strategic sourcing and large

Intalere said that “work continues to build

New GPO formed

by Walgreens, Kroger The Kroger Company (Cincinnati, OH)

academic healthcare system/IDN supply

and Walgreens Boots Alliance (Deer-

chain management. He is a nationally-recognized leader and innovator in healthcare

costs and combined resources. Kroger

Intalere’s Steve Kiewiet earns prestigious Fellow designation from American College of Healthcare Executives

and Walgreens initially announced an

Intalere (St. Louis, MO) announced Steve

Contracting as one of the “Top 10 People

exploratory pilot in October 2018 to

Kiewiet, Intalere chief commercial officer,

to Watch in Healthcare Contracting.”

field, IL) have formed a new GPO called Retail Procurement Alliance, aimed at delivering purchasing efficiencies, lower

supply chain management, leadership development and operational efficiency, and was featured in The Journal of Healthcare

HOSPITAL AND IDN NEWS Georgia's largest safety-net hospital, busiest ER to operate at reduced capacity for much of 2020

Sutter hospitals honored for reducing C-section rates

three Virginia hospitals and their associ-

Sutter Health announced that 14 of its

Mercy Health, Inc. The hospitals were:

Grady Memorial Hospital (Atlanta, GA),

hospitals, which have among the lowest ce-

Georgia’s largest safety-net hospital and

sarean section (C-section) rates in California,

one of the busiest emergency rooms in

were recognized by the California Health

the country, will operate at a reduced

and Human Services Agency (CHHS)

capacity for much of 2020. A water pipe

for reducing cesarean births for first-time

burst in early December 2019 flooded

moms with low-risk pregnancies. Of the 14

three floors and hospital officials origi-

Sutter hospitals named to the state’s 2019

nally expected repair work to take a few

Maternity Care Honor Roll, nine have been

months. Now they say it won’t be done

recognized on this honor roll for four con-

is January 1, 2020. The three hospitals are

until October 2020. John Haupert, presi-

secutive years. The Sutter Hospital Quality

among the planned divestitures discussed

dent and CEO of Grady Health System,

Dashboard allows patients to learn more

on CHS’ third quarter 2019 earnings call.

says the revised timeline comes after a

about the care provided throughout Sutter’s

one-month long review of the damage

integrated network.

by the hospital and its insurer, Zurich, as well as the state fire marshal and the city

ated assets to subsidiaries of Bon Secours

ʯ 300-bed Southside Regional Medical Center (Petersburg)

ʯ 105-bed Southampton Memorial Hospital (Franklin)

ʯ 80-bed Southern Virginia Regional Medical Center (Emporia) The effective date of the transaction

Tenet announces agreement to divest Memphis-area hospitals and operations

damaged when the fourth, fifth and sixth

CHS completes divestiture of Virginia hospitals

floors were flooded in Grady’s A and B

Community Health Systems, Inc. (Nash-

entered into a definitive agreement with

wings. The cause of the water pipe burst

ville, TN) announced that subsidiaries of

Methodist Le Bonheur Healthcare to divest

is still being investigated.

the company have completed the sale of

Tenet’s hospitals and other operations in

of Atlanta. Approximately 220 beds were

The Journal of Healthcare Contracting | February 2020

Tenet Healthcare (Nashville, TN) has

47

NEWS

how the program has been adminis-

– Memphis and Saint Francis Hospital –

Audit finds problems in program that sent $60M to rural Georgia hospitals

Bartlett, the physician practices associated

A state audit of a program that has di-

the money has gone, according to the

with both hospitals, and six MedPost urgent

verted millions of Georgia state tax dol-

report. The state Legislature created the

care centers. The agreement provides that

lars to rural hospitals has found that it

program for rural hospital tax credits to

Tenet’s Conifer Health Solutions subsidiary

hasn’t always benefited the most needy

shore up the facilities after seven closed

will continue to provide revenue cycle man-

families. The audit was requested by the

for lack of funds. The audit raised the

agement services to the hospitals following

state House Appropriations Commit-

possibility of either creating a state-run

completion of the transaction. The transac-

tee, whose chairman, state Rep. Terry

nonprofit to administer the tax credit or

tion is expected to be completed in 2020.

England, has expressed concerns about

turning it into a state grant program.

spending, the study found. Health spend-

violates the First Amendment by provoking

ing grew overall 4.6% in 2018, accounting

compelled speech and reaches beyond the

for nearly 18% of the U.S. economy.

intended meaning of “standard charges”

the Memphis, Tenn., area. The agreement includes the sale of Saint Francis Hospital

tered. A vendor that administers the program won’t let the state see where

GOVERNMENT NEWS U.S. spent more than $1 trillion on hospitals in 2018, the largest percentage in health spending According to a new CMS analysis of

transparency in the Affordable Care Act.

health spending released this week, the

The groups filed the suit in the U.S. District Court in Washington, DC, and are ask-

or 33% of healthcare spending in 2018,

Hospital groups file lawsuit to stop the Trump administration's price transparency rule

was on hospitals. Total health spending

A lawsuit, filed by the American Hospital

rule if it is ultimately ruled unconstitutional.

reached $3.6 trillion. Retail prescription

Association, among other hospital groups,

The Wall Street Journal reported that the esti-

drug prices fell slightly last year for the

has been filed to stop the Trump admin-

mated cost to hospitals to follow the rule is

first time in 40 years but spending on

istration’s price transparency rule that re-

between $38.7 million to $39.4 million due

retail drugs grew 2.5% to $335 billion,

quires hospitals to disclose negotiated rates

to releasing data on negotiated drugs, sup-

which amounts to 9% of total health

with insurers. The suit argues that the rule

plies, facility and physician care prices.

U.S. spent more than $1 trillion on hospitals in 2018. CMS found that $1.2 trillion,

ing for an expedited decision to prevent hospitals from needing to prepare for the

TRENDS

48

ʯ Increasing complexity and growth

McKesson unveils insight into hospital pharmacy trends, what to expect in 2020

resulting in uncertainty and instability,

McKesson announced that its McKes-

to or elimination of the 340B Drug

son RxO team, a group of trusted

Pricing Program, the potential repeal

advisors helping hospital and health

or modification of the Affordable Care

system pharmacy operations, has

Act (ACA) and the continued expan-

addressed and analyzed challenges ex-

sion or contraction of government

pected to impact hospital pharmacies

programs. The McKesson RxO team

next year. Healthcare will be a major

anticipates these other challenges in

relying on data-informed decisions,

theme of the upcoming election cycle,

election year 2020:

not intuition

and hospital leaders will watch potential drug pricing legislation, changes

in IDNs

ʯ Hospitals expanding specialty pharmacy footprint, swiftly

ʯ 340B delivering clinical and economic benefits

ʯ Out-of-pocket costs impacting patients and revenue

ʯ Finance and pharmacy leadership

February 2020 | The Journal of Healthcare Contracting

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LUMCHECK™ The LumCheck™ is designed as an independent check on the cleaning performance of pulse-flow lumen washers. Embedded on the stainless steel plate is a specially formulated blood soil which includes the toughest components of blood to clean.

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