proven methods for accelerating cost reduction objectives importance of cost reduction sources of...
TRANSCRIPT
Proven Methods for Accelerating Cost Reduction
Richard Peters, Sr. Director of Surgical Services, Provista
Presentation objectives
Importance of Cost Reduction
Sources of Supply Chain Inefficiency
Tips to Accelerate Cost Reduction
A Better Supply Chain Management System
The Storm is upon us!
Mergers & Acquisitions
Reimbursement Pressures Pharmaceutical Shortages
Payor Case Rates Healthcare reform
Staffing Challenges Physician Relationships
Reduced Volume of Surgeries
Adapting to Market Conditions
55%
42%
13% 10%
2% 2% 0%
10%
20%
30%
40%
50%
60%
What Surgery Centers Are Doing To Prepare for Healthcare Reform
Adapting to Market Conditions
14% 9% 9%
0%
66%
2%
0%
10%
20%
30%
40%
50%
60%
70%
Aggressivelycut costs
Aggressivelyexpand
services andrevenue
Improvemanaged
carecontractingpractices
Reduce staff A combinationof these
Other
Surgery Center Strategies for Success
Source: Provista ASC Market Survey – December 2011
Supply Chain Impact on an ASCs Expenses
Salary & benefits
36%
Medical supplies,
implants & RX 25%
Building lease &
depreciation 9%
Miscellaneous expenses
30%
Source: 2007 ASC Financial Benchmarking Survey
Every dollar you remove from supply cost increases your cash flow.
•Increase your profitability Or
•Invest in new service lines or specialties, upgrade equipment,
etc…
Sources of Inefficiency
Splitting up your supply volume
Suppliers
Distributors
Group Purchasing Organizations
Lack of dedicated supply chain expertise
Insufficient supply management processes and
controls
Minimal usage of information technology
Accelerating Cost Reduction
34%
24% 19%
6% 6% 2% 3%
27%
0%
10%
20%
30%
40%
50%
Supply Chain Initiatives – Next 12 Months
Source: Provista ASC Market Survey – December 2011
Tips to Accelerate Cost Reduction
Join a group purchasing organization and create a
work plan to address areas of concern
Product Standardization
Commitment Programs
Utilize Supply Chain Management Systems
Group Purchasing
Join / Select your primary Group Purchasing partner
Partner with the GPO to take full advantage of their offerings
Develop a joint supply savings plan
Articulate your supply savings goals
Identify and share your top spend items
Identify and share your top used items
Discuss capital expenditures or construction activity
Outline services you utilize
Set realistic goals for each quarter (or as frequently as needed)
Standardize
Use your supply volume as leverage to access better
pricing
Examine your ability to standardize
1. How many distributors are delivering product to your ASC?
2. How many GPO partners are you accessing?
3. Start with commodity items to get some quick wins
4. Identify the number of suppliers you use in each product
category (Are you using more than 2 suppliers?)
5. What is your ability to commit more volume to one or two
suppliers?
6. Engage your GPO representative and the distributor to find out
how standardizing impacts your savings
Commitment Programs
Commitment drives additional savings
Various forms of commitment programs
Formal standardization programs
Supply networks
Shared resources
Aggregation Networks
Understand your obligations
Connect with your group purchasing representative for
more information about their programs
Supply Chain Management Systems
53% 48%
23% 18%
5%
0%
10%
20%
30%
40%
50%
60%
How Surgery Centers Manage Their Supply Chain
76% use manual systems to
track & monitor supplies!
Source: Provista ASC Market Survey – December 2011
Evaluating your Supply Chain System
Evaluate your existing systems and ask yourself the following questions
Can you order all supplies from the system?
Does the system work with bar-coding technology?
How easy is it to pull reports from the system?
Can the system alert you when stock is low?
Does the existing system help you track back orders or open orders?
Do you know you are paying the right price?
If your answers above are “no”…consider a dedicated supply management technology for the best results and added efficiencies
A Better Supply Chain System
Supply Chain Management System
Supply Chain
Processes
Rewarding Performance
Internal Components of a New System
A Better Supply Chain System
Supply Chain Management
System
Supply Chain
Processes
Rewarding Performance Bar-coding
systems
Electronic P.O.s
& Receiving
Authority &
Control
Product
Formulary
Inventory
management
Single portal for all
orders
Par Levels
Internal Components of a New System
Reward Program
Award Certificates
Recognition Lunches
Gift Cards
Load Preferred
Vendors
Locally Negotiated
Contracts
Load your Group
Purchasing Contracts
A Better Supply Chain System
Group Purchasing
Organization
Distributors
Suppliers
External Components
A Better Supply Chain System
Group Purchasing
Organization
Distributors
Suppliers
External Components
Seek EDI connections
Negotiate and understand
payment terms and other
contracted value adds
Understand if the supplier works
with your other supply chain
partners
Seek EDI connections
Negotiate service levels and
understand your distributors
value added services
Set expectations around
product substitutions
Link up with your Group
Purchasing representative
Request reports and set
up your business reviews
Request/download
contract summaries
Identify any special
programs and/or pricing
discounts available
Sign up for web access
and notifications
A Better Supply Chain System
Group Purchasing
Organization
Distributors
Suppliers
Supply Chain Management System
Supply Chain
Processes
Rewarding Performance
Summary: Accelerating Cost Reduction
Consider implementing the suggestions below to create a model that accelerates your cost reduction initiatives
Explore using programs that drive additional value and price discounts (Standardization and commitment programs)
Invest in technology to provide visibility and transparency
Create & monitor inventory management policies and procedures
Continually improve operational efficiencies (EDI, automation, etc…)
Utilize supply chain experts
Work closely with your suppliers and distributors to create mutually beneficial partnership
Join and more importantly partner with a GPO partner to reduce costs
Questions?
Richard Peters, Senior Director of Surgical Services
Provista
Direct Line - 972-830-0547