doug bowen, mba, cmrp vice president supply chain, banner health dorance dillon director of supply...
TRANSCRIPT
Panel Discussion: Physician Preference Contracting in Arizona
February 1,2011Doug Bowen, MBA, CMRP
Vice President Supply Chain, Banner Health
Dorance DillonDirector of Supply Chain Management, Yavapai Regional Medical Center
Les Feka, MBA, CPM
Director of Supply Chain Operations, Tucson Medical Center
Mike Hildebrandt, CMRPAssociate Vice President of Supply Chain, Scottsdale Healthcare
Tam Tang B.S.E, MBAAnalyst, Catholic Healthcare West
Introductions
Facility Overview◦ Banner Health◦ Yavapai Regional Medical Center◦ Tucson Medical Center◦ Scottsdale Healthcare◦ Catholic Healthcare West
Panel Questions
Agenda
Banner Health•Non-profit Secular Multi-State Health System, formed in 1999•23 Acute Care Hospitals•Long Term Care Units, Surgery Centers, Home Health, Clinics, Hospice, Behavioral Health, Home Medical Equipment•3 Regions within Banner Health•4,520 Licensed Beds •35,300 Employees•>60 Physician Clinics•>550 Employed Physicians
“I realized that my role at Banner Health was not to try to tell a physician which products to use. My real role was to try to manage the cost of the products coming in to Banner. The benefit of capped pricing is that you can allow as much physician choice as you want, and the hospital is going to pay the same price for the same product no matter who the vendor is.”
Doug Bowen, Vice President, Material Management Banner Health
“A Team Approach to Cost Containment” HFM Magazine, April 2008
Capped Pricing at Banner
Banner is committed to an all-play physician-driven free market strategy
◦ Surgeons are assured professional independence to use the implant that best meets their patients’ needs
◦ All vendors will be asked to meet the fair price points in all implant sales to Banner Facilities (Non-contracted vendors will not be allowed to conduct business at Banner)
◦ Reasonable control of implant costs consistent with current market and reimbursement levels
Banner’s Contracting Strategy
2003 – Cardiology 2006 – Total Joints: Hips, Knees, Shoulders 2007 – Spinal Implants 2010 – Heart Valves
Capped Pricing at Banner
Surgeon resistance◦ Surgeons had to be trained on use of new implant
systems◦ Only 3 surgeons left BH hospitals due to not being able to
use their preferred total joint vendor “Special” circumstances at certain hospitals
◦ Small, rural hospitals often have only one specialty surgeon; don’t want to alienate them
Assurance that correct pricing was billed by the vendor◦ Built Lawson item numbers for capped pricing◦ Created charge sheets that contain capped price and
charge code info (we no longer accept vendor charge sheets on totals)
Hurdles that Banner encountered
Communication◦ Inform and engage surgeons and administration◦ Use multiple means to communicate
Conference call w/live meeting PowerPoint Letters Internal website
Data ◦ Know your data
◦ Research Vendors Benchmark pricing Contracting programs at other facilities
Banner’s Keys to Success
Formed in 1940 as not-for-profit, locally owned & locally operated, healthcare IDN.
2 Great Hospitals…One caring Spirit: Prescott & Prescott Valley – Totaling 206 beds. 1800 Employees
Women’s center, Wound Care, Home Health, Hospice, Imaging Centers, etc.
6 Physician clinics, with 17 physicians
Yavapai Regional Med Center
TMC HealthCare is Southern Arizona's regional nonprofit hospital system with 642 adult, pediatric and behavioral health beds. The hospital serves more than 30,000 inpatients and 122,000 outpatients yearly.
TMC's campus also serves as home to the Tucson Orthopedic Institute, the Cancer Care Center of Southern Arizona and the Children's Clinics for Rehabilitative Services.
Tucson Medical Center
Value Analysis Capped Pricing Data Mining
TMC’s Contracting Strategy
Scottsdale Healthcare is a not-for-profit organization led by a volunteer board of directors comprised of leading local citizens. That means we answer to our community, rather than stockholders.
A leader in medical innovation, talent and technology, Scottsdale Healthcare was founded in 1962. Today, we serve the entire Northeast Valley and beyond through two comprehensive medical centers and the first hospital north of the Loop 101.
Scottsdale Healthcare also offers outpatient surgery centers, home health services, and a wide range of community health education and outreach services. Not to mention clinical and research services not typically found in community healthcare systems.
Our compassionate staff members and expert physicians are dedicated to providing world-class patient care. Supporting Scottsdale Healthcare's staff in providing patient and family-centered care is a corps of 800 volunteers who donate more than 155,000 hours of service each year.
Scottsdale Healthcare
Capped Pricing whenever possible
Provide Physician Choice
2010 – Spinal Implant Capitated Program
2010 – Cardiology
2011 – Total Joint Capitated Program
2011 – Bone and Biologics
Partner with GPO to get Benchmark Pricing Data and Physician Utilization Information
SHC Contracting Strategy
Begins with senior administration, service line directors, supply chain, physician leaders and department managers
Develop physician compact agreements
Conduct physician surveys annually
Supply chain reports at medical staff and section meetings
Provide capital equipment support to physicians
Provide GPO physician practice purchasing cost savings and support
Work with physicians to improve quality process flows – (block times, start times, scheduling)
Gain physician support prior to any cost savings initiatives
Recognize physician's by name for success stories
Celebrate successes
SHC Physician Communication Process
• Fourth largest not-for-profit system in the U.S.
• Consistent year-over-year operating performance
• $10.9 billion in assets• Leader in quality and safety• Employing 53,000 people• Associated with more than
10,000 physicians• Offering care to a population of
more than 22 million people• Serving growing communities • Helping to shape healthcare
reform
Catholic Healthcare West
2000 - Cardiology ◦ Facility market share & volume
commitment for price tier◦ System market share aggregation to
leverage price with preferred vendors ◦ System aggregation and blended
commitment to 2 preferred vendors
2007 – Total Joints Implants◦ Cap pricing◦ Local and regional contracts
2010 – Spine Implants◦ Price parity
CHW Contracting Strategy
Gather spend data and analysis◦ Total spend by surgeon and device◦ Margin gaps◦ Practice pattern variations◦ Sourcing approach (formulary or discount) ◦ Savings and revenue opportunity
On-site observations / interviews ◦ Surgeon – sales representative relationships◦ Price compliance in the market with surgeon
consulting relationships
Phase 1Detailed Survey & Analysis
CHW Contracting Strategy
Established Cardiovascular Operations Council◦ Service line VPs, Directors, Medical Directors
Appoint task force committee for select contracting projects
Surgeon Involvement◦ Make a case for change and improvement◦ Jointly develop the constructs / discount tactics
Sourcing◦ Customized constructs with definitions understandable by
surgeons◦ Model price points with defined constructs
Coordinate with Board / Medical Executive Committee
Execute purchase agreements with vendors
Phase 2Cardiology & Total Joints Strategy
CHW Contracting Strategy
Manage the implant formulary ◦ 100% charge capture◦ 100% on contract ◦ 100% maintenance of the implant log (ie,
recalls, serial numbers)◦ 100% coding validation
Track contract compliance and utilization
Track/report implant cost per case and volume
Phase 3Manage Growth Reporting
CHW Contracting Strategy
By Facility Across all ContractsQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Facility Med/Surg Contracts Pharmacy Contracts Utilization CombinedBakersfield Memorial 94% 90% 95% 97% 92% 100% 100% 100% 57% 63% 75% 81% 91% 89% 94% 96%Dominican 93% 95% 93% 89% 67% 88% 75% 86% 50% 56% 56% 57% 85% 90% 87% 86%Mark Twain 81% 84% 88% 86% 92% 96% 92% 93% 71% 79% 93% 86% 82% 86% 89% 87%Mercy Folsom 93% 92% 94% 97% 81% 77% 88% 93% 88% 81% 100% 81% 90% 88% 94% 94%Mercy General 88% 89% 93% 86% 96% 92% 92% 93% 93% 88% 88% 88% 90% 90% 92% 88%Mercy Bakersfield 97% 96% 98% 95% 88% 82% 71% 87% 88% 64% 69% 75% 95% 91% 91% 91%Mercy Merced 96% 96% 93% 94% 85% 96% 100% 93% 92% 78% 81% 81% 94% 94% 93% 93%Mercy Mt. Shasta 93% 90% 92% 96% 82% 100% 100% 93% 88% 89% 93% 92% 91% 91% 93% 95%Mercy Redding 95% 92% 92% 92% 85% 100% 100% 100% 75% 88% 88% 94% 91% 93% 93% 94%Mercy San Juan 92% 92% 98% 95% 96% 85% 92% 80% 79% 69% 63% 75% 92% 89% 94% 90%Mercy Southwest 100% 94% 98% 98% 88% 81% 77% 77% 89% 88% 88% 88% 97% 91% 94% 93%Methodist 90% 92% 95% 97% 92% 100% 100% 97% 83% 88% 88% 88% 90% 93% 95% 96%Saint Francis 91% 94% 93% 95% 88% 96% 100% 100% 64% 93% 69% 71% 88% 94% 91% 94%Sequoia 92% 94% 91% 92% 73% 88% 96% 93% 93% 94% 94% 94% 89% 93% 92% 92%Sierra Nevada 92% 93% 88% 94% 96% 92% 96% 96% 81% 63% 81% 94% 91% 90% 89% 94%St. Elizabeth 93% 93% 94% 93% 92% 86% 100% 96% 100% 94% 94% 93% 93% 92% 95% 93%St. Joseph's - Stockton 93% 92% 94% 91% 81% 100% 92% 93% 83% 94% 78% 67% 90% 84% 92% 89%St. Mary's - S.F. 88% 82% 83% 90% 92% 100% 100% 100% 67% 70% 63% 81% 87% 96% 84% 91%Woodland 91% 96% 95% 94% 96% 92% 100% 100% 93% 86% 93% 100% 92% 95% 96% 96%Arroyo Grande 94% 95% 94% 98% 83% 96% 81% 85% 100% 93% 100% 81% 93% 93% 92% 94%California Hospital 97% 93% 93% 93% 96% 96% 100% 100% 92% 86% 71% 86% 97% 93% 93% 94%Chandler Regional 91% 93% 91% 87% 96% 96% 100% 93% 100% 88% 81% 81% 92% 93% 92% 87%Comm Hosp San Bernardino 94% 93% 93% 95% 92% 92% 88% 83% 89% 88% 88% 94% 93% 92% 92% 92%French 90% 91% 91% 95% 92% 92% 96% 93% 88% 94% 88% 86% 90% 92% 92% 94%Glendale 95% 95% 95% 94% 85% 92% 100% 93% 86% 69% 69% 79% 92% 96% 93% 93%Marian 100% 96% 95% 90% 92% 92% 92% 87% 83% 100% 100% 100% 97% 90% 95% 90%Mercy Gilbert 91% 92% 90% 89% 92% 92% 100% 100% 64% 69% 75% 69% 89% 91% 90% 89%Northridge Roscoe 92% 90% 91% 91% 85% 83% 92% 86% 93% 94% 72% 72% 91% 88% 89% 88%Saint Mary's Reno 88% 90% 95% 97% 83% 88% 83% 73% 64% 81% 81% 81% 85% 88% 92% 91%St. Bernardine 93% 88% 87% 88% 96% 77% 96% 90% 89% 83% 56% 56% 93% 88% 85% 85%St. John's Oxnard 91% 92% 93% 95% 73% 83% 81% 79% 58% 75% 81% 94% 85% 91% 90% 92%St. John's PV 91% 92% 92% 96% 73% 100% 92% 86% 94% 94% 100% 93% 88% 93% 93% 94%St. Joseph's - Phx 94% 96% 93% 91% 100% 96% 100% 93% 79% 67% 69% 75% 94% 93% 92% 90%St. Mary - Long Beach 97% 93% 96% 95% 92% 85% 92% 93% 88% 83% 81% 94% 96% 91% 94% 95%St. Rose Delima 93% 95% 92% 94% 96% 100% 96% 97% 100% 100% 94% 100% 94% 96% 93% 95%St. Rose San Martin 91% 91% 97% 90% 85% 96% 92% 90% 100% 100% 100% 88% 91% 93% 96% 90%St. Rose Siena 91% 93% 94% 95% 88% 96% 88% 90% 81% 100% 88% 88% 90% 94% 92% 93%
CHW System 93% 92% 93% 93% 88% 92% 93% 91% 83% 83% 82% 84% 91% 91% 92% 92%
Hu
nt
O'Q
uin
nCHW Contract Compliance Report
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000S
t. J
ohn
PV
St.
Joe
's P
hx
Com
m S
an B
erna
rdin
o
St.
Ros
e S
an M
artin
St.
Ros
e D
eLim
a
St.
Jos
eph
Sto
ckto
n
Mar
k T
wai
n
Sai
nt M
ary
Ren
o
Bak
ersf
ield
Mem
Mer
cy S
an J
uan
Woo
dlan
d
Met
hodi
st
Mer
cy R
eddi
ng
Dom
inic
an
Mer
cy M
erce
d
Mer
cy F
olso
m
Nor
thrid
ge
Mer
cy G
ener
al
St.
Ros
e S
iena
Sie
rra
Nev
ada
Mer
cy G
ilber
t
St.
Ber
nard
ine
Cha
ndle
r
Mer
cy M
t S
hast
a
St.
Fra
ncis
St.
Eliz
abet
h
St.
Mar
y LB
Mer
cy B
aker
sfie
ld
St.
Mar
y S
F
Arr
oyo
Gra
nde
Seq
uoia
Mar
ian
Fre
nch
Cal
iforn
ia
Gle
ndal
e
Avg
Im
pla
nt
Co
st/C
ase
0
20
40
60
80
100
120
Vo
lum
e
Significant Incremental Improvements
Hip Implants: Average Implant Cost and Volume by Hospital (Q4F09)
Focus on These
Facilities
CHW Hip chart
Knee Implants: Average Implant Cost and Volume by Hospital Q2FY09
From Worst Performance to Best New Facilities for Focus
CHW Knee chart
Stent Usage By Facility - FY08 Q2
14%
30% 32%38% 40% 42%
47% 47% 49%55%
60% 61% 64% 65%69% 69% 71%
75% 77%
70% 68%62% 60% 58%
53% 53% 51%45%
40% 39% 36% 35%31% 31% 29%
25% 23%
86%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Facility
Per
cen
tag
e
DES Stent Bare Stent DES Avg
Drug Eluting Stent UtilizationCHW Stent Utilization
In collecting data, what source do you utilize for◦ Internal benchmarks
Hospital to Hospital Budgetary goals Surgeons, volumes, cost per procedure Vendor contract variation
◦ External benchmarks GPO IMS Health Inc. ECRI AHRMM PPI Surveys when available
◦ Reimbursement DRG benchmarks Third party reimbursement
◦ Clinical evidence SHC uses GPO data for external benchmarking plus the MIDAS
system for internal clinical data
Panel Question
In your contracting process do you utilize a value analysis process and evidence based / peer reviewed data? ◦ Yes, value-analysis process◦ Clinical data requested as available◦ Level of clinical involvement◦ Evidence based / peer reviewed data
Panel Question
Do your agreements include key contract clauses that address the following and if so what do they say?◦ Product exclusions
Statement No-Product exclusions◦ New technology
FDA 510k non-predicated device◦ Premium technology ◦ Wasted products
Vendor waste Surgeon waste
◦ Lost Instruments ◦ Consignment inventory
Expect vendors to provide
Panel Question
Are off contract vendors allowed to conduct business at your hospital?◦ No
Is there a lock-out period for non-participation?◦ Yes – 1, 2, or 3 years◦ Mandates that all vendors must comply with the
contract terms. If the vendor is unable to comply, there is a lock-out period established
Panel Question
How do you address billing on capped agreements?◦ Price points for all components or one price
Single price for hips, knee, partial Knees by type of procedure Spine capped components
Ala-carte Per level
Break cap price up through all components to meet construct price
◦ Vendor vs. Hospital Charge Sheets Hospital
Panel Question
How have you addressed surgeon resistance to contracting physician preference items?◦ Put the pressure back to the vendor◦ SHC seeks to obtain physician input and support
prior to the implementation of capped programs. When surgeon resistance is established, SHC attempts to work collaboratively with the surgeon, service line leader, and chief medical officer.
Panel Question
Which items are considered outside of your cap?◦ Custom Cutting Blocks◦ Sawblades◦ Cement◦ Products or items that fall outside the caps are
dealt with by a small task force which includes the service line leader, service line medical director, and chief medical officer if necessary.
Panel Question
Once the contract is in place what do you do to ensure you are receiving the contracted price?◦ As soon as case is done◦ Purchase/invoice processing◦ Monthly audit reports◦ Manual
Panel Question
Thank you!