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How an efficient supply chain can support better health care
John Enright, Supply Chain Strategy Manager
National Hospital Procurement Conference30th October 2015
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At Health Purchasing Victoria (HPV) we help public health care services deliver high quality patient care by ensuring they have a reliable and agile supply chain.
We do this by:ü Partnering with them to organise collective contracts for the things they buy.ü Providing advice and education on how to get their supply chain working at its best.ü Ensuring Victorian Government health purchasing policies are complied with.
Health Purchasing Victoria – what is our role?
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About HPV
Health Purchasing Victoria was established in 2001 as an independent statutory authority under section 129 of the Health Services Act 1988.
HPV Core Functionsü To supply and facilitate the supply of goods and services
ü To establish policies and practices to promote best value and probity
ü To provide advice, staff training and consultancy services
ü To monitor compliance to HPV policies and directions
ü Foster Improvement in use of systems and e-commerce
ü To maintain useful data and share with health services
ü To ensure probity is maintained in the purchasing, tendering and contracting of public hospitals
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes
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What is a supply chain?
A supply chain in a system of organisations, people, activities, information, and resources involved in moving a product or service
from supplier to customer.
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes
Plan Source Contract Buy Deliver Receive & Pay Store Use Replace
TechnologySupplier management,
eSourcingContract management
CatalogueseProcurement / EDI /
Finance / Accounts Payable
Warehouse ManagementDemand ManagementImprest Systems
Information
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What is a healthy supply chain?
A healthy supply chain ensures the end user gets:• the right product• at the right price• to the right place• at the right time
And it should be invisible!
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes
Sourcing Distribution Hospital Point of Care
Suppliers Point of Care
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Why does supply chain matter?
Retail Pharmacy
Wellness and Fitness Center
Diagnostic/ Imaging Center
Urgent Care Center
HospitalAcuity
Community-Based Care Acute Care
Post-Acute Care
Clinician/GP Sites
Ambulatory Procedure Center
Outpatient Rehab
Inpatient Rehab
GP
Home
Home Care
Free-Standing ED
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Why it matters…
Healthcare spending in Australia is growing (in billions)
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes7
~30% of healthcare spending is non-labour and can be influenced by improved supply chain decision making
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Some impacts of an unhealthy supply chain
Visible impacts:• Procedures get cancelled because the right item isn't there• Frequent out of stocks, backorders• Clinical staff investing too much time in ordering, chasing stock, that could be better used in patient care
• Expired and/or recalled product remains on the shelf, or unidentified
Other less visible impacts:• Suppliers bearing increased cost• Price rather than value (and outcomes) drives decision making• Short term, reactionary focus – little time to focus on real improvement• Expired contracts, frequent price increases• Poor visibility of alternatives
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes
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The health supply chain of today and tomorrow
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes
Clinician experience today: What it should be:§ Lots of “hunting and gathering”§ Too much inventory or no inventory§ Constant vigilance for expired product§ Very manual recall process§ Total value of product not evident/known
§ Complete focus on the patient§ Supplies always there when needed§ No risk of expired product§ No risk of recalled product§ Standard, high quality products
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THE VICTORIAN LANDSCAPE
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes
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Current supply chain challenges in VictoriaThe environment:• Independent health services (own boards, etc.), decentralised decision making• Low system standardisation• Inconsistent and unaligned information
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes
Resulting in:• Independent supply chains (some consolidation has occurred)
• Local optimisation, not system optimisation• Limited visibility across the sector (inventory, purchases, etc.) • Duplication of effort, e.g. catalogues (e.g. ~28,000 changes driven by HPV contracts per year)
• Technology and information are a barrier to collaboration• Costly and difficult to standardise as a system• Difficult to justify investment
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The challenge in Victoria
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How do we ‘act as a system’ in an environment that
funds, rewards and measures activity as individual
hospitals?
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THE VICTORIAN JOURNEY
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Logistics collaboration• Localised collaboration between health services on logistics
• Driving improved efficiency• better purchasing, more forward planning
• Using scale and technology to drive efficiency• common (local) catalogues• common imprest systems• EDI with over 30 suppliers
• But technology is a barrier to sector-wide collaboration
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Strategic approach to sourcing - aligns with ‘best practice’ • Elevation of procurement to C-level, with CPO’s in place
• Better engagement with the market (i.e. suppliers) improves quality of responses
• Improve efficiency in sourcing activities by matching the sourcing approach to the market, the need and capability.
• Better use of procurement resources
• Improvement in procurement capability
But it is highlighting challenges in• Resources for smaller health services
• Spend data analysis and categorisation
Procurement Reform is starting to deliver
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Empowered health servicesRegional CPO Steering Committee
• Representatives from all 15+ health agencies in the region.
• All Chief Procurement Officers represented
• Working Groups established to address: ü Policy & Procedures ü Spend Data Analysis ü Contract Management Strategy ü Supplier Engagement Strategy ü Capability Analysis
• Established central repository and forum to share information.
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes
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Continued statewide sourcing by HPVü Supply chain now a key consideration in HPV’s category management planning
ü New process considers benefits of rationalising products/services/suppliers part of sourcing process
ü Currently testing commercial models which incentivise more efficient practices
ü Improved supplier relationship management process driving benefits
ü Group buys for equipment purchases
ü ~$700m spend under collective state-wide contract
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes
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Technology as an enablerVictorian Product Catalogue System
• A central repository of product and pricing information• 294,000+ contracted and non-contracted products• Consistent, GS1 compliant product data – GTIN’s, GLN’s• A key asset as we move towards information standardisation and removal of duplication
Strategic Sourcing Technology• E-Sourcing portal• Contract management• Increased efficiency in sourcing process for HPV and health services
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Technology as an enabler -‐‑ Recallnet
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• Driving improvements in end-to-end recall time • From 4-6 weeks to less than 24 hours* in some cases* GS1 Estimate
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THE FUTURE – GLOBAL INITIATIVES
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A supply chain vision
Point of Use Capture
Actual Cost of Products/
Procedures
Supply Chain Management
Patient Record
Comparative EffectivenessOutcomes-‐Based Analyses
(e.g., Registries)
SourcingBeyond Price
Reporting and Budgeting Cycle
Capturing usage at the point of care is the one of the central components of the vision
Recall Management/Product Quality Surveillance
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Global Examples
Health Purchasing Victoria | Achieving best-value supply chain outcomes for Victoria’s health sector
Robert Ballenger hospital, France• Engraving data matrix on all surgical instruments
Leuven hospital, Belgium• Developed their own software for drug prescribing with:• Interactions (drug-drug, drug-food, drug-patient allergy)• Clinical rules• Artificial intelligence to predict riskiest patients• Data warehouse for analytics
FDA Unique Device Identifier (UDI), United States• A device identifier (DI), a mandatory, fixed portion of a UDI
that identifies the labeller and the specific version or model of a device, and
• Fully implemented by 2020
• Item-level ID for reusable devices
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WHAT’S NEXT FOR VICTORIA?
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Victoria’s Supply Chain Reform vision
• Strategic sourcing of all non-salary goods and services: state-wide, regional or local
• State-wide view of collective sourcing opportunities, enabled by common technology, visibility of spend, and data standards (including a common catalogue)
• Seamless flow of information through the supply chain – to reduce manual data entry, error and processing costs
• Technology to enable health services to improve efficiency, accuracy and effectiveness in sourcing, purchasing, logistics (receipt, storage & distribution) and payments
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The road ahead…
• Discussions underway with the Victorian Department of Health and Human Services
• Consultation with sector leaders• Governance model being developed• High level scoping has commenced
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes
Understand the opportunity
Map the current state
Develop actions & engage
Begin the journey
ü Plot the journey
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Closing thoughts…
• We all know someone who has been (or will be) in hospital• Funding is constrained – we need to do more with less• Making smart supply chain decisions ultimately frees up resources and funds
• Smart supply chain decisions need accurate information, enabled by technology and collaboration
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes
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