Health System Innovation: Opportunities to Achieve Value

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Health System Innovation: Opportunities to Achieve Value Join the conversation!

March 2, 2018


Dr. Anne Snowdon, BScN, MSc, PhD, FAAN Academic Chair, World Health Innovation Network 1

World Health Innovation Network (WIN) WIN Mission WIN partners with health system stakeholders to source innovation, create the evidence of value and develop models for scalability to embed innovative technologies, products and models of care into health systems to achieve value for Canadians, and drive economic growth for innovators.

About WIN The World Health Innovation Network is based at the University of Windsor’s Odette Business School, under the leadership of world-renowned researcher Dr. Anne Snowdon. WIN brokers partnerships between key stakeholders to source, embed and scale innovations in health systems. WIN develops the evidence of impact and scalability across health systems and disseminates this information to accelerate health system transformation, drive economic growth and improve patient outcomes. 2


Global Networks

Business Schools

Canada (5) USA(25) Netherlands (1) UK (3) Australia (1)

GS1 Global: 114 countries HIMMS, CIHI, AHRMM, Cdn Blood Serv., Infoway

Knowledge Mobilization Health Systems USA (6) Canada (7) UK (NHS) Netherlands (1) Australia (2)


Manufacturers - Pharma - Devices - Distributors - IT Solutions - Associations

3 3

H E A L TH SYSTE M C O NTE XT: TH E C H A L L E NGE O F SU STA INA BILITY Rising Global Healthcare Costs:

5.3% per year



17.4% 6.2% 8%

6.4% 6.6%

Highest global spending as a percentage of GDP is in North America

Deloitte, 2014


Trends driving Personalization and Precision • “Omics” technologies – make personalization possible – personalized to the unique genetic make-up of the individual • Information Technologies driving new expectations and demands among consumers 5

VALUE OF PRECISION MEDICINE Drive towards Precision Medicine vs. the cost of these therapies for health systems - the 10 highest grossing drugs in the USA, number of people that improve (blue) vs. number that fail to improve (red) Significant Pressure to find Value at the system level to achieve sustainability Personalized medicine: Time for one-person trials Nicholas J. Schork Nature 2015. Volume 520, Issue 7549 6

Medical Error is now the third leading cause of death in North America.

‌23,000 deaths that are preventable annually, 68 people/day (Baker, 2014) ‌251,454 deaths in U.S., 633 people/day (Makary, 2016)

Baker, 2004


The Impact of Product Failure

In the case of the metal-on-metal joint implants it took 4–5 years before evidence was accumulated and reported. We are left with more than 500,000 patients with metalon-metal prostheses in the U.S. and more than 40,000 in the U.K. who are at elevated risk of device failure, which will inevitably result in the burden of further surgical treatment as well as billions of dollars in costs to taxpayers (Lancet, 2015) 8

SHIFTING CONSUMER CULTURE MY CHILDREN Impatient Super Connected Loyalty to Value Health as a Right Researches, asks for data, negotiates


Patient, used to waiting Values Stable relationship Loyalty to Brand Health as a service

Defers to the expertise of the provider


Personalized Health Systems: From “Triple Aim” to “Triple Value” Convenience

Value Choice

System Focused


Consumer Focused 10

Building the evidence for innovation: Proof of concept, Proof of relevance, & Proof of value and reimbursement Rexall project


Personalization and Overcoming Medical Error will Require Creating Visibility Across the Journey of Care

Opportunity to improve patient outcomes and achieve value by rethinking our approach to supply chain

Supply Chain: tracking and traceability of Patients, Care processes, Products used in care, linked to patient outcomes.


Reframing the challenge of patient safety and care quality as a system infrastructure opportunity

“Adverse events and medical error are an outcome of a lack of well-developed supply chain infrastructure that would make it nearly impossible for errors to happen.� 13

Supply Chain Transformation Globally Case study research examined supply chain transformation as a strategy to strengthen health system performance in three global health systems: • Canada – Alberta Health Services • U.K. – National Health Service • U.S. - Mercy Health System Case studies released February 15, 2018 14


Framing the Research • System Level Measurement of patient outcomes linked to product use and care procedures does not exist; system infrastructure to support safety is under developed in the health sector. • Medical Error is now the third leading cause of death in USA, Canada and UK1. • Empirical Evidence of the Impact of Supply Chain Implementation in Health Systems is very limited. • Goal: To Create Empirical Evidence of the Health System Level Impact of Implementing Supply Chain Infrastructure in Health Settings. 1M

Makary (2016) BMJ2016;353doi: Published 03 May 2016)Cite this as:BMJ2016;353:i2139 15


Supply Chain Strategy • •

• •

• • •

Alberta Province-wide integration of supply chain processes into clinical programs and teams – creates evidence of product use and safety outcomes, minimizes waste of products, reduces high cost of inventory Online adverse event reporting province-wide NHS – Scan4Safety Digital tracking of every patient, product, care process, clinician, and location of care in six hospital trusts Creates transparency to reduce variation and waste, enables accurate case costing, releases provider time to care for patients Mercy Scaling supply chain infrastructure across 45 hospitals, traceability of every product linked to patient outcomes – Cardiology, Perioperative Revenues $1 billion since 2002 from supply chain 29% decrease in labour costs/case, 33% reduction in supplies costs in Perioperative program 16


Emerging Findings Globally Integration of Supply Chain in Clinical Programs Creates System Transparency

• Transparency of what care patients receive, by who, using what products linked to outcomes – cost, safety, quality in “real time” • Offers accurate case costing for every case linked to cliniciansurgeon, and product use • Transparency of variation: reduces variation in cost, care processes informed by patient outcomes • Significant labour savings: 16 FTE’s NHS, 30% reduction in labour cost/case at Mercy •

Significant supplies cost savings due to reduction of waste: 29% reduction supplies cost/case (Mercy) 17

Emerging Findings Globally Patient Safety is the Key Driver of Supply Chain Strategy in Health Systems

Enables automated product recall and traceability, expired or recalled products removed from clinical setting automatically

70% reduction in Never Events (Mercy)

Patient Safety savings are NOT measured to date, will likely increase the ROI over time.

Inventory Automation Yields Substantial Savings

Ranges from 4:1 to 7:1 ROI on inventory savings alone, savings occur within first 18 months

Potential to “self fund” the strategy as savings are recurrent, annually from inventory waste reduction 18

Return on Investment: Three Countries Country

Health System



Alberta Health System 7:1 to date from inventory savings only $301,438,786 in savings over 7 years Return on Investment Summary: Savings are from inventory only to date

England National Health Service 4:1 expected by year 3 from inventory savings, £1,034,000,000 savings projected by year 7 (£30M/mon. all Trusts) 16 FTE’s in labour savings/ Trust. United States

Mercy Health System $1 billion savings as a direct outcome of optimizing and transforming supply chain processes across Mercy. 29.5% decline in labour costs and 33% decline in supply costs. 19

Example: Impact of Supply Chain on Perioperative Program – Total Knee Arthroplasty (Mercy Health System)

Total CPI Adjusted Intraoperative Supply Cost Per Case, May 2012 Jan 2016 (n=11,834)

Vance Moore (2017). Scan Health Annual Networking Event, St. Louis, Missouri


Opportunity for Tracking and Traceability Infrastructure that Measures Value to Inform System Optimization Pathology “Supply Chain� Infrastructure (Banerjee, Ottawa Hospital) Traceability creates transparency of pathology processes and outcomes. Barcode scanning at each step of every process is automated, offers greater efficiency and productivity.


Real Time “Live� remote pathology diagnostics

Vision Tek digital microscope allows a surgeon to plan the extent of the procedure, A technologist prepares the frozen section slide on site and loads the microscope, pathologist can control the microscope from anywhere in the world.

One pathologist can provide remote interpretation for multiple surgeons in different locations. Immediate confirmation with other pathologists is used difficult cases.

Central Data base for all information, searchable, metadata use

Stream & Share Viewer


Real Time Dashboard: Pathology Dept. Performance


Next Steps (integrated automated scheduling systems) Ottawa Hospital (Drs. Banerjee, Halwani) • Workload Prediction analytics, Automated workload monitoring with complexity adjustments • More effective impact analysis of new hires in clinical programs • Better alignment of vacation and CME leaves • Currently testing real-time system for immediate frozen section interpretation and immediate cytology assessment • Whole slide imaging of batches of slides overnight can be used for access to pathologists anywhere in the world

Pathology Schedules

Radiology and Endoscopy Schedules

OR Schedules


THE SUPPLY CHAIN PATHWAY TO QUALITY AND SAFETY Traceability across the patient’s Journey of Care – what works, for who and under what conditions for accurate measure of value

Product Traceability enables automated recall, accurate case costing, safety surveillance

Global Standards Adoption: products, patients, location

Personalization of Care to Population Need Future= System Value Predictive Analytics, Proactive risk management Innovation of Products and Care Processes

Integration of supply chain tools into patient care to inform clinical decisions Quality and Safety (reduced Never Events, med. errors

Inventory Optimization: (4:1---- 8:1) Cost savings = self funding potential

Supply Chain Infrastructure as a Strategic Asset for Health Systems




What is Innovation Procurement? Attention to value in procurement Understood broadly, beyond financial/cost value Uses Outcomes Based Specifications (OBS) Desired future state (or outcomes) are defined, but functional/technical solution specifics are not Allows for innovation and creativity to meet outcomes Facilitates fair, accountable, transparent dialogue between vendors and purchasers Value-focused innovative procurement Improve patient outcomes while controlling costs through purchasing innovative solutions for the healthcare system. Value = Health outcomes / Cost of delivering these outcomes 27

Procuring Innovation: System Opportunity • Leverages Public “spend” to drive innovation, procures a Solution not a product(s) • Focus on value, using measurable outcomes, defined well beyond the cost parameters that are more common in traditional procurement practices (OECD, 2016) • Adheres to same principles: fair, accountable, transparent • Strategy for drive innovation adoption – innovation in vendor community customized for needs of the health organization 28



How Innovation Procurement Might Work

Comprehensive Stakeholder Survey of Key Desired Outcomes

Engages the region stakeholders to define features of a digital pathology network

Procurement Model Chosen and Developed - Partnership - Design competition Invite the Vendor Community to Share Solutions, identify what is possible. RFI – fair, open, transparent

Competitive Dialogue Process for Procuring Solution

Pre- Qualified Vendors put together an informal solution or design as a basis for the dialogue

Solution awarded, contracts Signed with Ongoing Vendor Accountability

Significant Value Generated (cost savings, system solution)

Dialogue phase(s) proceeds, solutions are refined, solution with best fit is selected by regional team


Innovation Procurement Case Examples Case1

Community: Coordinated e-referral platform





Hospital: Suite of cardiac solutions Community: Patient & caregiver support solution Hospital: Smart privacy solution University: Technology solution for library services platform


Lessons Learned and Key Considerations for Procurement Approaches

Case Study Research 32

What is the Goal and what does Success Look Like? Regional System Solution Outcomes Value: Patients, Clinicians, Pathologists, System Procure a Program Solution? Procure Network solution? 33

Decisions to Consider: Strategy Structure - Single Phase or Multi-Phase 1. Single phase = “winner take all,� more holistic program or regional outcome 2. Two or more phases = divide the awarded procurement into dimensions and procure one at a time to reduce risk of failure 3. Variation in what solutions in each phase = each phase offers different focus (ex. type of product is different in each phase must be clearly defined 4. Multi-phase reduces risk of single vendor but may be more time intensive 34

Program Procurement vs. Product Procurement Program Value

Specialized Value

ed to Evaluators requir at define outcomes l, the program leve define “Value”

value Overall program may override alty individual or speci preferences

ed Potential perceiv to diminished access hin best products wit each team

Case: Cardiac Program - Program level spend offers greater value potential - Program requires products are procured for the entire program - Product Procurement - select best product, achieve agreement on how “best is defined”, less value add - Cardiologist view: product procurement across provinces 35

Opportunity for Shared Risk Regional System Enables focus on for quality outcomes patients Outcomes focus defines vendor accountabilities m Shifts dialogue fro “sales” approach to negotiating value


Hesitancy amongst vendors must commit to achieve outcomes and accept responsibility beyond product performance

Sharing Risk Holds vendors accountable for achieving outcomes Vendor shares in risk of outcomes Examples: 25% improvement in efficiency, productivity – DI, Cath. Lab, OR; Key patient or utilization outcomes for new care models


The Importance of Clinician Engagement Physicians bring significant expertise to the dialogue with Vendors – unique knowledge of how products or technologies impact workflow, patient care and program outcomes Clinicians need to feel confident in solutions procured and readily evaluate the real world “Value”. Very skilled negotiators with vendors as they know what is real value clinically and what is just a sales campaign Considerations: (Cardiac Program Case) Physician champions were critical to the outcome, very effective in taking on colleagues to negotiate and make decisions on procurement outcomes Time constraints on schedules are a challenge, must engage MD’s just when needed in the process to optimize their time commitments



Engaging Vendors as Partners “Starting these dialogues way back at the beginning, this partnership starts there, and they’re actually building a partnership together with the submission, so I think that’s really what the dialogue does. It brings the two parties together to build that and start the partnership way, way earlier than just the paper exercise… So I think that’s the major, major difference that dialogue brings to the table for sure.” (Procurement Lead)

“I mean, how many have we seen provincially or regionally that they’ve gone well into the project and then just kind of, it doesn’t work because they’ve picked the wrong partner? And I think you are repaid tenfold anything you invest in getting the right people to work with.” (Health Organization Senior Manager) 38

Procurement Contract Timelines: Length Drives Value VENDORS Highly motivated to secure lengthy contracts at system level ex. Cardiac program contract 5 – 10 yrs

Enables vendors greater flexibility to offer value features

HEALTH SYSTEM Leverage contract length to achieve greater value (pricing, value add services, system investments) Need to consider strategies for access to innovative technologies that may emerge over contract period 39


Outcomes: “Can’t Manage What You Don’t Measure” GOAL: Fair and transparent evaluation of diverse vendor submissions a. Need strategies to measure highly varied vendor solutions Ex. value-added components translated into a dollar value using a common cost structure model. Submissions evaluated in terms of currency to quantify and equalize value; evaluated only in terms of dollar value b. Value measured over the life of the contract – value for patients, providers, quality, safety - Long term value not yet evident, need measurement frameworks that captures outcomes for patients, clinician teams, programs, health systems 40

Cost Savings is Substantial Program Level Procurement: ex. Cardiac Case Program cost (Pre-innovation procurement): (2014-15) - $22.8 million with additional “value add” (rebates, etc.) of $5 million Program cost using Innovation Procurement: (2016-17) - (same volume purchases) $14 million (savings of $8.8 million) - value add services = $7.1 million. - under the new contracts costs will be will 39% lower relative to the base year spend, savings of $44 million over the 5 year term.” 41

Teamwork and Engagement • Leadership Engagement Ensured that the goals of this procurement were aligned with the goals of the health system

• Clinician Engagement Shifted focus towards procuring value developed with, not for, the health systems

• Teamwork and Trust • •

Requires multi-stakeholder engagement and support Trust built between clinicians, procurement, leadership, functioned as a team

Vendor Engagement •

Engaging vendors as partners, rather than suppliers to co-create valuable services 42

Identifying Best Practices for Innovation Procurement

What we still don’t know

What we know matters

• Impact on innovation & value over time

• Early market engagement of vendor community

• Impact on vendors & health organizations, or health systems

• Flexibility, collaboration, risk sharing

• (long term) return on investment

• Organizational culture & leadership critically important



Health System Procurement

• Better understand health system priorities and challenges – may drive innovation • Shifts vendor focus from “sales” to achieving solutions that demonstrate value • Requires “skin in the game” - accountability to achieve outcomes with health systems through risk sharing

• System Leaders build collaboration to find solutions many regions are facing • May overcome challenge of small markets • Builds capacity for measurement frameworks that demonstrate outcomes, builds accountability in system with vendors

Evidence of System Capacity Building Procurement Teams Shifts Focus from Products and Pricing to Value and Outcomes Build system or regional capacity for broader stakeholder engagement, focused on solutions May incentivize innovation capacity, and frameworks

Clinicians • Brings needed expertise to defining value and outcomes for patients, evaluating solutions • Brings strengths and credibility to negotiation with Vendors (can’t play one against the other) • Enables collaboration across jurisdictions – potential for standardization


Questions & Discussion 45

Thank You Dr. Anne Snowdon, Academic Chair, WIN

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