Translating Your Hospitals Data into SCMetrix Format Vicki SmithDaniels, Ph'D' Department of Supply

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Translating Your Hospitals Data into SCMetrix
FormatVicki Smith-Daniels, Ph.D. Department of
Supply Chain ManagementContact Us
scmetrix_at_asu.edu
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Agenda

• How to translate data into the required SCMetrix
  format
• Strategies for making informed decisions on which
  level of benchmarking is most appropriate for
  your hospital
• How to make an informed decision on whether to
  estimate a data field or insert a missing value
  indicator.
• Specific procedures for estimations common
  conversion problems will be covered through
  illustrative examples
• Suggestions on how to collect additional data in
  the future

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Benchmarking Participation
Total Supply Expense Total Purchased
Services Revenue Total Non-Labor Expense Adj
Operating Exp Rebates
Surgical Pharmacy Diagnostic Radiology Outpatient
Oncology Clinical Laboratory Emergency Obstetrics
Dietary Orthopedic Cardiac Cath Interventional
Radiology
Surgical Joints, Implants, Stents, etc.
Medical Respiratory, Infections, etc.
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SCMetrixTM Data Collection Toolkit
Data Definitions Provided in Spreadsheet
Review all tabs from left to right Record data
in spreadsheet Online submission of hospital
profile Online submission of financial,
operational, and supply chain structure
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Guidelines

• Follow AHRMM-HFMA supply expense definition
• Include all supply expenses for which your
  hospital receives revenues
• Inpatient, Outpatient, and Emergency
• Allocate supply expenses in the department in
  which they were used
• If actual data is not collected for a specific
  department /service line
• Estimate data fields when departments/services
  lines are either significant revenue drivers
  and/or high supply expenses areas.
• Input missing value when some department/service
  line data is not available and/or cannot be
  estimated

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Adoption of the Industry Standard
Standard Supply Expense Definition The net cost
of all tangible items that are expensed including
freight, standard distribution cost, and sales
and use tax minus rebates. This would exclude
labor, labor related expenses, and services as
well as some tangible items that are frequently
provided as part of service costs.
SCMetrix benchmarks Total Delivered Cost
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Customizing Your Hospital

• Every hospital has these departments in SCMetrix
• Clinical Laboratory
• Housekeeping
• Inpatient Pharmaceutical
• Inpatient Surgical

Identify only departments/service lines for which
you will be providing data
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Questions
Continue to send your questions through the chat
feature Questions will be answered throughout
the webinar or Responses sent after the webinar
session
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Case Studies

• Community Hospital of Spartanland
• Valley of the Sun Hospital
• Napa Valley Medical Center

• Hypothetical Case Studies
• General Ledger Codes
• Different Data Types
• Frequently Asked Questions

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Case StudyCommunity Hospital of Spartanland
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Hospital Profile

• 63 Bed General Medical-Surgical Hospital
• Top 5 Service Lines By Revenue
• Obstetrics
• Cardiovascular
• General Medicine
• Orthopedics
• Respiratory
• Departments/Services Offered at the Hospital
• Emergency
• Obstetrics
• Orthopedic
• Outpatient Services
• In-house Dietary

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Thoughts and Questions
Im entering a maze with no end in sight
Can I benchmark with SCMetrix? My hospital does
not Allocate rebates to the actual spend
Allocate freight to departments Collect
inventory data in all departments
Level 1 Appears to be the Right Level of
Participation
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Spartanlands Information Sources
Product Category Supply Expense
Reports Financial Statements DRG
Reports Procedure Data AHA Annual
Survey Rebate Reports Department Managers SCM
Manager Distributor Representative
Hospital Profile
Financial
Operational
Supply Chain Structure
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Total Facility Supply Expense Components
Goal

• Components
• Surgical Supplies
• General Medical
• Drugs/Pharmaceutical
• Lab Supplies
• Oxygen and Related Medical Gases
• Radiologic Films and Chemicals
• Dialysis Supplies and Fluids
• Linens, Patient Apparel, and Hospital-Acquired
  Scrubs and Uniforms
• Dietary Products
• Housekeeping/Cleaning Supplies
• Office Supplies
• Freight Associated with Any Supply Item
• Standard Distribution Fees
• Supply Component of Outsourced Contracts
• Supply Component of any Equipment Rental or Lease
• Sales Tax
• MINUS Rebates

• Make Total Facility Supply Expense as accurate as
  possible
• Exclude specific supply expenses
• Input Actual or Estimate for each component
• SCMetrix automatically calculates total supply
  expense based on the data fields

Total Facility Supply Expense
Supply Definition from AHRMM/HFMA
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Translating Into Supply Components

• Guidelines
• All product supply/price data should be allocated
  into a supply expense category
• If appropriate category cannot be identified,
  assign to General Medical Supplies
• If product supply data includes acquisition
  price, freight, and distribution fees, then
  record total amount in category

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Computing Total Delivered Cost

• Guidelines
• Provide total freight and distribution fees if
  not included in product supply/price data.
• Include sales tax based on state policies for
  goods and service purchases.
• Include rebates for all purchases made during the
  benchmark period.

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Calculating Rebates
Rebate Received
Rebate Received
Rebate Received
Goods Purchased
1/1/07
7/1/07
1/1/08
Guideline Report rebates associated with the
spend during the benchmarking period Estimation
Sum actual rebates received during the
benchmarking period plus pending/projected
rebates or Estimate total rebates using actual
average rebate rate of your total spend on
contract for 2007
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Department Supply Expense Data Collection
Total Delivered Cost For Dept Supply
Usage Including Dept Specific Supplies General
Medical Supplies Office Supplies Freight Standard
Distribution Fees Supply Component of
Rentals/Leases Sales Tax Rebates
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Department Freight Example Clinical Lab

• Available Data
• Spartanland does not collect freight at the
  department /service line level
• All other clinical lab supply expense data
  available
• Estimating Freight Expense
• Estimate facility freight as a percentage of
  total supply expense Freight/Total Supply
  Expense 1.2
• Clinical Lab Supply Expense Without Freight
  200,460
• Compute Freight Using the Following Equation
• Total Clinical Lab Supply Expense Freight
  200,460
• Clinical Lab Freight .012Total Clinical Lab
  Supply Expense
• Total Clinical Lab Supply Expense 202,895
• Clinical Lab Freight 2,435

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Product Delivery Data

• Insert missing value 99999999999 (11-9s)
• Cannot benchmark these metrics

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Revisiting Level of Participation
Benchmark Obstetrics
Top 5 Service Lines By Revenue Obstetrics Cardiova
scular General Medicine Orthopedics Respiratory De
partments/Services Offered at the
Hospital Emergency Obstetrics Orthopedic Outpatien
t Services In-house Dietary

• Service line supply expenses available for
• Surgical supplies
• General medical supplies
• Drug/ Pharmaceuticals?

Yes, Include in the Hospital Profile
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Questions
Continue to send your questions through the chat
feature Questions will be answered throughout
the webinar or Responses sent after the webinar
session
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Case Study

• Valley of the Sun Hospital

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Two Critical Estimation Issues
Valley of the Sun Hospital provides
extensive outpatient services Problem Supply
expenses for inpatient and outpatient services
combined together in supply reports
Valley of the Sun Hospital receives
sizeable rebates Problem Rebates tracked at
facility level and needs to be allocated to
strategic department/services lines
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Estimating Outpatient Supply Expense

• Estimation Procedure
• Estimate the outpatient adjustment factor as the
  of revenue from outpatient services
• Outpatient Revenue/Total Revenue
• Compute the adjusted supply expense facility
• Remove oxygen, linens, dietary, and housekeeping
  supply expenses
• Calculate Outpatient Supply Expense
• Adjusted Supply Expense Outpatient Adjustment
  Factor

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Other Methods Inpatient and Outpatient

• Facility Metrics
• Supply Expense Per Adjusted Patient Day
• Supply Expense Per Adjusted Discharge

Estimate outpatient if greater than 40 of
revenue
Facility Revenue Metrics Net Inpatient Revenue
Per Inpatient Days Outpatient Revenue as a of
Patient Revenue Outpatient Revenue per Total
Outpatient Visits
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Allocating Rebates Across Departments Inpatient
Surgical Example

• Available Data
• Facility rebates 146,000
• Product category acquisition prices
• Supply expenses minus freight, distribution,
  sales tax, and rebates
• Estimation Procedure
• Compute total facility acquisition spend for all
  categories
• Sum of surgical, general med, pharmaceuticals,
  lab, oxygen, radiological films, dialysis,
  dietary, linens, housekeeping and office supplies
  
• Estimate inpatient surgical acquisition spend
  available for rebates
• Calculations same as (1) but only for
  rebate-eligible inpatient surgical spend
• Calculate inpatient surgical rebate estimation
  factor as of inpatient surgical acquisition
  spend/total facility acquisition spend
• Inpatient surgical acquisition spend/total
  facility acquisition spend 13.6
• Estimate inpatient surgical rebates
• Facility Rebates Inpatient Surgical Rebate
  Estimation Factor
• 146,000 .136 19,856

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Questions
Continue to send your questions through the chat
feature Questions will be answered throughout
the webinar or Responses sent after the webinar
session
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Case Study

• Napa Valley Medical Center

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Thoughts and Issues
Full Implementation of Level 2

• Issues
• Products used in multiple depts.
• General Medical products not allocated to all
  depts.

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Issue 1 Assign Based on Where It Is Used
Example Pacemaker Implants

• Departmental/Service Line Expenses
• Put specific device cost in one place
• Cardiac Cath Lab Supply Expense (with
  Intervention), or
• Inpatient Surgery Supply Expense
• Total Cardiac Implant Supply Expense
• Sum all implants used in Cardiac w/ Intervention
  and Surgery
• INCLUDES implant purchase cost, freight, standard
  distribution fees, sales tax MINUS rebates

Assign to location used
Hospital 3
Hospital 2
Hospital 1
Surgery
Cardiac w/out Inter
Surgery
Cardiac w/ Inter
Surgery
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Issue 2 Allocate unassigned supply expenses as
a percentage of the directly traceable
departmental supply costs
Facility Level Unallocated Acquisition
Spend Allocation Rate Total Facility
Acquisition Spend

Example Assume that the cost of unassigned
general medical supplies is 200,000 and that
800,000 in total facility acquisition spend was
directly traceable to the following four
departments/service areas. General/Medical
Supplies Rate 200,000 / 800,000 25 of
Direct Supply Cost
Include only acquisition spend in the assignable
supply expenses. Exclude freight, distribution
fees, sales tax, and rebates in the assignable
calculations.
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Questions
Continue to send your questions through the chat
feature Questions will be answered throughout
the webinar or Responses sent after the webinar
session
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Take Aways and Going Forward
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Learning Curve Data Collection
1st Half 2007 Significant Upfront Investment in
Identifying Data Sources
2nd Half 2007 Incorporate Data Validation
Feedback
1st Half 2008 Anticipate Greater Dept/SL
participation
2nd Half 2008 Processes In Place
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Take Away 1 Multiple Information Sources
Product Category Supply Expense
Reports Financial Statements DRG
Reports Procedure Data AHA Annual
Survey Rebate Reports Department Managers SCM
Manager Distributor Representative
Hospital Profile
Financial
Operational
Supply Chain Structure
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Take Away 2 Use Missing Values

• If you want to benchmark some departments but do
  not have all data available
• Financial
• Volumes
• Inventory
• Use the missing value data field
• 11 9s
• If you do not have department procedure data,
  there is little value in benchmarking that
  department/service line
• Do not select the department/service line in the
  Hospital Profile
• If you are benchmarking at Level 1 and do not
  have the required department data
• Insert the missing value data field

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Take Away 3 Use Estimation Procedures

• Allocating facility total delivered cost
  components to departments/service lines
• Freight
• Standard distribution fees
• Sales Tax

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Take Away 4 Not Included Expenses

• Review supply expenses not included in the
  AHRMM-HFMA definition

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Going Forward

• Send unanswered questions to
• scmetrix_at_asu.edu
• Record estimation procedures in toolkit and
  submit to scmetrix_at_asu.edu

Good to Go
1st Half 2007 2nd Half 2007