AHRMM UpdateWSHMMA, April 2014

Agenda

CQO: The Next Phase Educational Offerings Resources Career Planning Industry Initiatives and Advocacy Comments, Questions, Feedback

CQO: a recap

In 2013, AHRMM launched the CQO Movement, a new way of approachingsupply chain.

Under the CQO movement, the supply chain can no longer focus exclusively on price, but rather the combination of product cost, the quality of care delivered, and the reimbursement outcomes to support healthcare’s new value-based models.

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CQO: a new way of decision-making…

Cost: expenditures as they relate to supplies, services, and other areas in supply chain control

Quality: patient-centered care aimed at achieving the best possible clinical outcomes

Outcomes: financial reimbursement driven by outstanding clinician care at the appropriate cost

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…has become healthcare’s new “buzzword”

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So is CQO the most important supply chain issue? No.

CQO teaches us that “supply chain issues” no longer exist.

In the new world of healthcare, supply chain ties to:• Patient care• Profit margins• Quality control

CQO isn’t a supply chain issue. It’s a healthcare issue.

CQO Methodology

Define Current State

Implementation

Evaluate and Measure Results

CQO Methodologies, Stages 1 & 2

•Define the objectives and breadth of the initiative, e.g., • Reducing complications or infection rates• Improving employee safety, e.g., needlestick injuries• Improving process and efficiencies

•Who are the stakeholders and what are their roles?   • Direct users• Indirectly affected cohorts

Stage 1 Define

Current State:

Stakeholders

• Utilization and cost of the current products or category

• Frequency and cost of adverse events

• Cost of inefficiencies

• Cost of change

Stage 2 Define

Current State: Cost

(any expenditure)

CQO Methodologies, Stages 3 & 4

• Process or Product direct and indirect impacts• Short and long term• Organization wide

• Cost avoidance

Stage 3 Define

Current State:

Outcomes (revenue

lost or gained)

• Review of patient satisfaction data

• Define quality indicators around product or process

• Quality indicators must be unaffected or improved to proceed

Stage 4 Define

Current State: Quality

(patient experience)

CQO Methodologies, Stage 5

• Provide peer reviewed evidence, avoid vendor marketing and self-funded studies

• Empower the CQO intersection group to make the strategy decisions about product utilization or process improvement considering all the information about cost, quality and outcomes provided in current state

• Remind stakeholders of mission to improve value (improved financial performance with better or similar quality and patient satisfaction

• Reach strategic consensus with all stakeholders

• Use strategy formation to guide next stages of implementation

Implementation: Strategy

Formation

New Metrics

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CQO requires new metrics to transition from cost-based measurement to value-based measurement…

“Supply cost” per limited revenue categories are too narrow.

CQO Metrics: Managing to Value

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Value Determines Reimbursement, e.g., Value-based Purchasing Score

Core Measures (70%)HCAHPS (30%)

Your VBP Performance Score

Core Measures becoming more supply dependent• Pressure ulcers stages III and IV• Vascular catheter-associated infections• Catheter-associated urinary tract infects

When Supply Chain Owns the CQO Intersection: Case Study 1

• >800,000/yr in US• Risk of blood borne pathogens• Education only means of addressing

CQO Asks: How Do We Reduce Needlestick

Injuries in Healthcare?

• New syringes with improved safety mechanisms

CQO Asks: How Do We Reduce Needlestick

Injuries in Healthcare?

CQO Asks:What is Unique About its Clinical Performance to Justify its Cost?

Safety Syringes

• 1 Needlestick injury/6,000 injections

• Average cost of testing/treatment after injury equals $3,000

• Additional costs of treatment can add up to hundreds of thousands

Case Costs: Conventional Safety Syringes

Note: * Negotiate minimum reduction of $3,500 mesh per unit cost

Actual Historical Spend Needlestick Injury BenchmarkTotal Cost of

Needlesticks/Needles

Average purchase price $ 0 .2207 Needlestick Injuries 37

Units 158,700 Per Needlestick Cost $ 3000.00

Purchase Cost $ 35, 027.00 Total Needlestick Cost $111.000.00Total Cost of

Needlesticks/Needles $146,027.00

Average purchase price $ 0.1876 Needlestick Injuries 37

Units 158,700 Per Needlestick Cost $ 3,000.00

Purchase Cost $ 29,772.95 Total Needlestick Cost $ 111,000.00 Total Cost of

Needlesticks/Needles $140,772.95

Total Savings -15% 0% -3.60%

SUPPLY CHAIN INTERVENTION: DECREASE SAFETY SYRINGE PRICE BY 15%

Case Costs: New vs. Conventional Safety Syringes

Note: * Negotiate minimum reduction of $3,500 mesh per unit cost

Actual Historical Spend Needlestick Injury BenchmarkTotal Cost of

Needlesticks/Needles

Average purchase price $ 0 .2207 Needlestick Injuries 37

Units 158,700 Per Needlestick Cost $ 3000.00

Purchase Cost $ 35, 027.00 Total Needlestick Cost $111.000.00Total Cost of

Needlesticks/Needles $146,027.00

Average purchase price $ 0.3112 Needlestick Injuries 27

Units 158,700 Per Needlestick Cost $ 3,000.00

Purchase Cost $ 49,387.44 Total Needlestick Cost $ 81,000.00 Total Cost of

Needlesticks/Needles $130,387.44

Total Savings 41% -27% -10.71%

SUPPLY CHAIN INTERVENTION: CONVERT TO IMPROVED SAFETY SYRINGES

Case Costs: Conventional vs. New Safety Syringes

Note: * Negotiate minimum reduction of $3,500 mesh per unit cost

Actual Historical Spend Needlestick Injury BenchmarkTotal Cost of

Needlesticks/Needles

Average purchase price $ 0 .2207 Needlestick Injuries 37

Units 158,700 Per Needlestick Cost $ 3000.00

Purchase Cost $ 35, 027.00 Total Needlestick Cost $111.000.00Total Cost of

Needlesticks/Needles $146,027.00

Average purchase price $ 0.3112 Needlestick Injuries 18

Units 158,700 Per Needlestick Cost $ 3,000.00

Purchase Cost $ 49,387.44 Total Needlestick Cost $ 54,000.00 Total Cost of

Needlesticks/Needles $130,387.44

Total Savings 41% -51% -29.2%

SUPPLY CHAIN INTERVENTION: OBTAIN PERFORMANCE GUARANTEE

Substantiating Evidence

Tuma SJ, Sepkowitz KA. Efficacy of safety-engineered device implementation in the prevention of percutaneous injuries: a review of published studies. Clin Infect Dis 2006;42:1159–1170.

Elder A, Paterson C. Sharps injuries in UK health care: a review of injury rates, viral transmission and potential efficacy of safety devices. Occup Med (Lond) 2006;56:566–574.

Adams D, Elliott TSJ. Impact of safety needle devices on occupationally acquired needlestick injuries a four-year prospective study. J Hosp Infect 2006;64:50–55.

Whitby M, McLaws ML, Slater K. Needlestick injuries in a major teaching hospital: the worthwhile effect of hospital-wide replacement of conventional hollow-bore needles. Am J Infect Control 2008;36:180–186.

Jagger J, Perry J, Gomaa A, Kornblatt Phillips E. The impact of US policies to protect healthcare workers from bloodborne pathogens: the critical role of safety-engineered devices. J Infect Public Health 2008;1:62–67.

Lamontagne F, Abiteboul D, Lolom I, et al. Role of safety-engineered devices in preventing needlestick injuries in 32 French hospitals. Infect Control Hosp Epidemiol 2007;28:18:23.

When Supply Chain Owns the CQO Intersection: DES rate reduction to national average

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Physician Data

Physicia

n F

Physicia

n E

Physicia

n D

Physicia

n C

Physicia

n B

Physicia

n A0

0.51

1.52

2.53

3.5

Physician Average

Physician Average

National Stent Rate per PCI = 1.54

(Medicare 2012)

Example: DES Rate Reduction to National Average

Physician Stent Rate

National Average

Stent Variance

Cost of Stent

Savings per PCI Cases Total Savings

Physician A 2.4 1.54 0.86 1,450$ 1,247$ 150 187,050$

Physician B 1.4 1.54 -0.14 1,450$ (203)$ 35 Less than National Average

Physician C 3.3 1.54 1.76 1,450$ 2,552$ 250 638,000$ Physician D 2.8 1.54 1.26 1,450$ 1,827$ 75 137,025$

Physician E 1.25 1.54 -0.29 1,450$ (421)$ 115 Less than National Average

Physician F 1.2 1.54 -0.34 1,450$ (493)$ 99 Less than National Average

Totals 724 962,075$

Example: DES Rate Reduction to National Average• Assumptions

– Simulated data is risk adjusted– Procedure is PCI– MS DRG is 247– Average stent rates per physician over 6 months– National stent average per PCI is 1.54 (Medicare 2012)– Cost per DES is $1,450 – Fully loaded room cost per hour = $1,500– Average case time = 1 hour

DES rate reduction to National Average STAGE I – Current State - Stakeholders• Direct stakeholders – Interventional

Cardiologists• Indirect stakeholders – Inventory Control Staff,

Chairman of Medicine, Risk Management• $1450 cost of DES stent• $962,075 excess spend on stents based on

variance against national average• Costs greater when other factors considered,

e.g., cardiac cath pack, manifold, staffing, fluoroscopy, documentation system, contrast, and medications

DES rate reduction to National Average STAGE II – Current State - Cost• Cost of adverse event – readmission for chest

pain within 30 days• Opportunity cost – reduction in case time based

on $1500/hr cath lab rate

STAGE III – Current State – Outcomes• Same DRG reimbursement using fewer hospital

resources, decreased number of stents, and increased case load

• Direct impact – increased case volume with same capacity at reimbursement rate $11,836 for MS DRG 247

• Indirect impact – cancellation rates

DES rate reduction to National Average STAGE IV – Current State – Quality• Review of practice guidelines: --ACCF, AHA, SCAI Practice Guidelines --2011 Guidelines for PCI: Executive Summary• Review patient satisfaction data incl. HCAHPS• Quality indicator – FDA approved product• Quality indicator – monitor 30 day post PCI

mortality rate from state registry • Stage V - X as per methodology• Evaluation – stents used/patient/MD

CQO Principles• Supply chain contributes greatly to patient

care.

• Supply chain is a critical part of hospital management strategy.

• Under the “new healthcare,” supply chain performance requires new metrics.

• All hospital stakeholders need to be educated about the role of supply chain in daily care delivery.

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Lots of people are talking “CQO.” What’s next?

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• Vanderbilt University Medical Center• Scottsdale Healthcare• Wellmont Health System• Ochsner Health System• University of Virginia Health SystemRead more in Supply Chain Strategies and Solutions

CQO requires outreach.

CQO requires supply chain leaders to build new and different types of relationships with:

o Clinicianso Finance/reimbursement teamso Medical leadershipo Manufacturerso Distributorso GPOs

Monday, August 4

AHRMM will host the 1st Industry Engagement Group to pull together all of the supply chain touch points to address CQO.

Supply chain is perfectly positioned at the intersection of cost, quality, and outcomes to take the lead on responding to the demands of health reform.

Join the CQO movement and help transform healthcare.

The Future of Healthcare is Now.

The Future of Healthcare is CQO.

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Educational Offerings

Education: Live Webinars

Upcoming live webinars include: May 1

Detecting Product Equivalency to Drive Lower PPI June 19

Harnessing Data Normalization to Drive Product Savings August 21

Understand How Predictive Tools Help Expedite Value Analysis October 16

Controlling Costly Physician Preference Items

Education: On Demand WebinarsRecently recorded webinars include:

WHY, WHAT, and HOW of Strategic Planning (3 part series) Managing Supply Chain in Healthcare Reform Decoding Supply Chain Analytics for Improved Cost,

Quality, and Outcomes Suppliers – Partners or Pariahs? Capital Equipment Procurement, Contracting, and

Management CMRP Examination Overview Knowing When to Outsource – Making Purchased Services

Work for You A Value-Analysis Perspective on Infection Prevention and

Control: The Role of Contaminated Hands, Environmental Surfaces, and Skin in Transmission

Education: Online Courses

Online Courses Embracing the Cost, Quality, and Outcomes Movement – the Future of

Healthcare Supply Chain Supply Chain: Owning the Intersection of Cost Quality, and Outcomes Patient Protection and Affordable Care Act – Goals and Components,

Provider Reimbursement, and Health System Changes Application of Six Sigma to Inventory Management Challenges and Opportunities in Healthcare Provider Adoption of GS1

Standards Clinical Department Supply Management Creating and Sustaining a Lean-Cost Conscious Culture Giving Powerful Presentations Healthcare Supply Chain Considerations in Emergency Management MMIS Systems Evaluation Selection

More available at www.ahrmm.org/learning_center

Education: Highlights Leading a Systematic and Integrated Change Initiative

In this environment of continuous change it’s critical to know how to not only manage change, but lead it. Change Management 101: Preparing to Be a Change Agent Change Management 201: How to Be a Change Agent

The Why, What, and How of Strategic Planning Demonstrate how you and your department can contribute to the

hospital’s bottom line with a well thought out and expertly implemented strategic plan. Strategic Planning 101: Why is a Strategic Plan Important Strategic Planning 201: How to Develop a Strategic Plan Strategic Planning 301: Implementing a Strategic Plan

Education: Face to Face

AHRMM Annual Conference & Exhibition Interactive educational sessions led by

industry leaders Largest exhibition of its kind Face-to-face networking opportunities

with peers, vendors, and association leaders

ResourcesAHRMM provides print and electronic resources and tools to the

membership to keep members informed and engaged in the CQO Movement.

ResourcesNews and information

Magazine and Special Reports Supply Chain Strategies & Solutions - Bi-monthly member magazine AHRMM eNews - Weekly e-newsletter with latest on the industry and

association

Publications Numerous publications specific to the healthcare supply chain both

published by AHRMM and other standards from the industry

Online Resources Complimentary access to online resources such as CQO Headquarters,

RFP Library, Lexicon, Sustainability Roadmap, Knowledge Center, etc.

Networking Resources ListServs, social networking platforms, mentor program, and affiliated

chapters provide an opportunity for members to connect with their peers.

Career Planning Tools

Career Planning Tools

Career Center Open position listings, resume posting,

apply online, recruit for a position

AHRMM Mentor Program Connect with seasoned veterans in the field to address

issues, solve problems, and plan your career path

Career Advancement Guide Career milestones, education, experience, tools, and

skill-sets Compensation Survey

Current industry trends and demographics

Career Planning Tools: Development

Certified Materials & Resource Professional (CMRP) Certification Nationally Recognized

Established and managed by AHA Certification Center (AHA-CC)

Independent body affiliated with the AHA Convenient and Affordable

Two-hour exam Available online at your local H&R Block

location Administrations available at the AHRMM

Annual Conference Study and review materials available

through AHRMM

Champion Industry Initiatives

Industry Initiatives Hospital Environmental Sustainability

Collaboration with ASHE and AHE Sustainability roadmap – an implementation guide for

performance improvement measures to save organizations money, improve facility environmental performance, and respond to community concerns.

www.sustainabilityroadmap.org

UDI and Industry Data Standards AHA Engagement

A Diamond for You

Congratulations on your achievements!

Questions & Answers