leadership imperatives for a volatile healthcare environment · leadership imperatives for a...
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A Future Model for the Affordable Care Act: u u e ode o e o dab e a e cHow Do We Prepare and What Role Does Materials Management Play?
Leadership Imperatives for a Volatile Healthcare Environment
Leadership ParadoxLeadership Paradox
You can’t predict the f t b t tfuture, but you must make sense of it in order to thrive.
Bob Johnson – Get There Early
Getting toMedicare BreakevenGetting to Medicare Breakeven
Hospital Costs Physician Practice Costs
Medical supplies Medical
liDrugs
Labor
supplies
Other
L bOther
Labor
Sources: AHA, MGMA, NSCHBC, and HIDA research
15 000
Healthcare Employment
5 000
10,000
15,000
0
5,000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Inpatient Admissions
Source: Bureau of Labor Statistics
Inpatient Admissions
Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2010
Agendag
1. VUCA and Healthcare
2. Innovation
3. Opportunity
4 New Approaches4. New Approaches
Volatile Uncertain Complex Ambiguous (VUCA)
VUCAVUCA
VolatileVolatile Deeper, Faster CyclesDeeper, Faster Cycles
UncertainUncertain Less PredictableLess Predictable
ComplexComplex Multi‐faceted and InterconnectedMulti‐faceted and InterconnectedComplexComplex Multi‐faceted and InterconnectedMulti‐faceted and Interconnected
AmbiguousAmbiguous AmbiguousAmbiguous
Beyond Cycles
More than LinearMore than Linear
Permanent State of C t t ChConstant Change
Healthcare’s VUCAWorldHealthcare s VUCAWorld
What is Healthcare Reform, Anyway?What is Healthcare Reform, Anyway?
1,000 Pages of VUCA
2010
hi2050
id hDemographic Provider Shortages
Quality MeasuresFunding Cuts
Patients Pay More
$2137 $4316
d
Premiums
Demand Transparency
InnovationInnovation
Efficiency Innovations
i iSustaining Innovations
25 MPG 50 MPG
Disruptive InnovationsDisruptive Innovations
Simple Different
Affordable ConvenientAffordable Convenient
Quality Is RelativeQuality Is Relative“The Best”
Opportunity
GoodEnough
Healthcare “Supply Chain”
Other IndustriesOther Industries
Manufacturer Distributor Customer
OpportunityOpportunity
The Old Tools Aren’t Enough
Change or Transform?Change or Transform?
COOPERATIONCOOPERATION COLLABORATIONCOLLABORATION
“Ha e to”“Ha e to”
COO OCOO O
“W t t ”“W t t ”
COLLABORATIONCOLLABORATION
“Have to”“Have to” “Want to”“Want to”
Protects Your PieceProtects Your Piece Grows the PieGrows the Pie
Based on ScarcityBased on Scarcity Based on AbundanceBased on Abundance
AccommodateAccommodate Co‐CreateCo‐Create
A New Kind of VUCA
• Vision
• Understanding
• Clarity
• Agilityg y
Instead of: Focus on:Perfect solutions Fast prototyping
Control
Operational
Risk
VisionOperational problem solving
Vision
Era of InnovationEra of Innovation
Billings ClinicZ St k t t B d idZero Stock‐out at Bedside
BEFORE• 96% fill rate• BUT: other 4% could be critical items• Fill rate math suspect: stocked &
t k dnon‐stocked
AFTER• Distributor anticipates item usage• Daily in‐house presence; direct y pinteraction with clinical staff
• Result: zero stock‐outs at bedside for 4 years
Alegent/Creighton ClinicConsolidating the Non‐Acute Spend
CHALLENGE• IDN included 250 non‐acute providers across 70 sites (+ recent acquisition of 220 providers across 30 sites)
• How to herd all those cats?
WINS• Consolidated to single distributor who supports standardization, data analytics, pp yon‐boarding
• Standardized 400 supply items + point‐of‐care testing + diagnostic an illariesancillaries
Carolinas HealthCare SystemK i E t ith It Di t ib tKaizen Event with Its Distributor
DIVERSE TEAM FROM IDN & DISTRIBUTOR
KAIZEN EVENT RESULTS DISTRIBUTOR
• Identified items with sufficient volume to order in pallet quantities
• Needed to add pallet quantity info to item master to facilitate ordering
AFTER• Labor planning simplified • Order in full pallet quantities
152
121Monday
26% DECREASE IN NUMBER OF LINES ORDERED EACH DAY
• Distributor: less time preparing to ship• CHS: less time receiving & put away
152
178
180
119
115
124
Wednesday
Tuesday
TodayOriginal
160
147
119
119
0 20 40 60 80 100 120 140 160 180 200
Friday
Thursday
Kaiser PermanenteOpening New Facilities Faster
KAISER NEEDED
• To open facilities quickly after construction is complete
• Fewer touch points; fewer POs• Ease of issue resolution
EVALUATED PRICE VS. COST
• Lower price direct from manufacturer• Lower price direct from manufacturer• Lower total cost to stage products with distributor for fast move‐in
Supply Chain Control StrategiesModels Vary in Capital, Staff Intensity
Take‐AwaysTake Aways
Pounding HarderWon’t Do ItPounding Harder Won t Do It
How Will We Reinvent Healthcare?
Whole New BallgameWhole New Ballgame
More = BetterVolume More = BetterVolume
Value Better = BetterValue Better = Better
Matthew J. RowanPresident & CEO
Health Industry Distributors Association310 Montgomery St.
Alexandria, Virginia 22314703 838 6118703‐838‐6118
Acknowledgements:U.S. Army War College
Brentwood Management GroupBob JohansenDaniel Burris
This slide deck ©copyright 2013 Health Industry Distributors Assn.