supply chain transformation - becker's asc reviewrecognized leader in healthcare supply chain...
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© 2015, Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
Supply chain transformation:Setting the stage to improve your bottom line
Heather O’Sullivan Steve Thompson
VP, Clinical Operations VP, Supply Chain Innovation
Cardinal Health™ Inventory Management Solutions
October 1, 2015
© 2015 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
Welcome
2
• Healthcare trends impacting the supply chain
• Why traditional approaches to the supply chain are
no longer working
• Alternative ways to manage inventory and clinical
efficiency
© 2015 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
About Cardinal Health
Recognized leader in healthcare supply chain transformation
• Ranked #1 by Gartner 2011-2013 for transforming the
healthcare value chain to meet new challenges around costs,
revenue and outcomes
Unparalleled understanding of healthcare value chain
• Nearly 100 years of experience serving hospitals
• 40+ years of leading supply chain solutions
3
© 2015 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
Shift from pay for volume to pay for value
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Source: CMS.gov
20% 15% 10%
60% 55%40%
20% 30% 50%
2014 2016 2018
Alternate Payment Models (e.g.,bundled payments, ACOs)
Fee-for Service (FFS) Linked toQuality or Value
Traditional FFS Payment
Health and Human services has set explicit goals for alternative
payment models and value based payments
© 2015 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
Impact on providers
5
What does value-based care mean to
providers?
• Pressure to reduce spending while improving
quality of outcomes
• Financial risk and costs shifting from payor to
provider
• Pressure for providers to demonstrate
differentiated outcomes
• Increase in the need for better care
coordination and patient care
Source: Deloitte Center for Health Solutions. “The road to value-based care.” 2015
© 2015 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
© 2015 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
A changing landscape
Affordable Care Act (ACA)
Regulatory requirements
• Unique Device Identification (UDI)
• Joint Commission audits
Census and demographics
• 10,000 people turning 65 every day
• 10M Americans over 80
• 20 percent population >65 by 2030
Pressure to reduce costs
• Reimbursements are declining
• Products are being commoditized
Source: The Centers for Disease Control and Prevention (CDC), The State of Aging and Health in America, 2013
55 percent
labor
35 percent
materials
10 percent
other
Expenses
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© 2015 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
Immense waste in the supply chain
Does not include
indirect costs of:
• Excess time spent by
nurses searching for
inventory
• Time spent (or patient
risk) during product
recalls
• Risk of non-compliance
to regulations set by
Joint Commission
10%-30%1
Waste in PPI supply chain
$5,000,000,0002
Estimated loss per year
Mil
lio
ns
1- Modern Healthcare “Losing preferential treatment” (February 2013)
2- PNC Healthcare; GHX quantitative research study (August 2011)
• Source also applies to chart
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CARE are trademarks or registered trademarks of Cardinal Health.
Managing costs within the supply chain
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Rising product costsManual/multiple
inventory systems
Barriers to data sharing
Nature
of product stocking
© 2015 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
How do things work in retail?
Manufacturer Distributor Distributor Supermarket Consumer
9
© 2015 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
…and for a hip prosthesis in the OR
Manufacturer Hospital Patient
? ? ?
10
© 2015 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
10 barriers to effectively managing inventory
Difficulty with charge/cost
capture
Physician preferences
Diversity of procedures
and service lines
Expiration/Obsolescence
Limited data
Consignment
D Duplications
Lack of automated inventory
systems
Multiple supply categories
Consignment
1
2
3
4
510
9
8
7
6
11
Source: Gagliardi, A., Supply Chain Management Inventory Control: The Basics, ASCs Conference, 2010
© 2015 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
What are the priorities?
12
Supply ChainEliminating
product waste
Charge/cost capture
Optimized par levels
Having the right
product when
needed
Documenting
implants
Regulatory
compliance
Visibility to
product
Patient care
DirectorBusiness
Manager
Clinician
© 2015 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
From 12 steps to two
Number of steps within the workflow:
*Process is repeated for each additional item opened during a case
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Current manual state:
Number of steps*
With automated
inventory management:
Number of steps*
© 2015 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
Where to begin
• Recognize there is a problem
• Agree on the vision
• Build alignment with key stakeholders
• Assess the current state
• Understand automation options and
impact on key areas including point of
use
14
© 2015 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
Inventory management best practices
15
Best practice Reason
Using an RFID-enabled
system
• Real-time visibility, accurate tracking and intuitive
• Unique Device Identification
Using 2-bin Kanban
methodology
• Used for commodity products
Point-of-care charge/cost
capture
• Eliminate manual processes
• Improve compliance and accuracy
Interface with systems • Integrate inventory management into data analysis system
No cycle counting • High compliance — because it’s a reliable, trusted process
• Clinicians not involved in PAR level reconciliation
Strong analytics platform • More predictable ordering patterns and ability to use data to
optimize purchasing
© 2015 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
An ideal inventory management solution
Integrated
advanced
analytics
Lowproduct cost
Highproduct cost
High-cost
physician
preference items
and implantables
RFID-enabled
Smart Cabinets
Surgical packs and
other mid- to
high-cost supplies
RFID-enabled
Smart Wand
Low-cost supplies
like gauze
and bandages
2-Bin Kanban
Low-cost supplies
that require
each-level tracking
Barcode
© 2015 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
Cost per case
© 2015 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
Cardinal Health™ Inventory Management
Solutions for the OR
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1. Receive producta. Add RFID-tag
b. Scan
2. Store inventory a. Central supply
b. Core
3. Pick for procedure
4. Use and documenta. Scan for charge capture and/or tracking
b. Return unused items
5. Manage inventory a. Advanced analytics
b. Smart order
c. Enterprise visibility
d. Expiration management
© 2015, Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
Q&AHeather O’Sullivan Steve Thompson
VP, Clinical Operations VP, Supply Chain Innovation
www.cardinalhealth.com/cims
614.553.5322