john enright - health purchasing victoria - how an efficient supply chain can support better health...

How an efficient supply chain can support better health care

John Enright, Supply Chain Strategy Manager

National Hospital Procurement Conference30th October 2015

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

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.


Plan Source Contract Buy Deliver Receive & Pay Store Use Replace

TechnologySupplier management,

eSourcingContract management

CatalogueseProcurement / EDI /

Finance / Accounts Payable

Warehouse ManagementDemand ManagementImprest Systems

Information

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!


Sourcing Distribution Hospital Point of Care

Suppliers Point of Care

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

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

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


The health supply chain of today and tomorrow


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

THE VICTORIAN LANDSCAPE


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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


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

The challenge in Victoria


How do we ‘act as a system’ in an environment that

funds, rewards and measures activity as individual

hospitals?

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

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.


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


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


Technology as an enabler -‐‑ Recallnet


• Driving improvements in end-to-end recall time • From 4-6 weeks to less than 24 hours* in some cases* GS1 Estimate

THE FUTURE – GLOBAL INITIATIVES


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

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

WHAT’S NEXT FOR VICTORIA?


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

3/8/15 Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes24

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


Understand the opportunity

Map the current state

Develop actions & engage

Begin the journey

ü Plot the journey

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
