Title: Leveraging Competitive Healthcare Providers Supply Chain Efforts June 22, 2006
1Leveraging Competitive Healthcare Providers
Supply Chain EffortsJune 22, 2006
2(No Transcript)
3Western New York Purchasing Alliance
- Brooks Memorial Hospital
- Catholic Health System
- Kaleida Health
- Niagara Falls Memorial Medical Center
- Olean General Hospital
- TLC Health Network
- Wyoming County Community Health System
- United Way of Erie County
4Market Dynamics
- Shrinking population, too many beds
- New York State Closure Commission
- Payer Monopoly
- Medicare is best payer
- For-Profit providers Illegal
- Brain-Drain
- Primarily Blue Collar
5- For the most part, our respective organizations
have exhausted individual initiatives to create
additional efficiencies in supply chain
management. Further value can only be realized
through collaboration of all constituents. - Bob Glenning, EVP/CFO, Kaleida Health
6The Case for Change
- Competing providers
- Multiple GPOs
- Physicians threatening defection
- Suppliers leveraging margins
- Disparate value analysis functions
- Smaller providers with bigger prices
7Response to the Call
- Assembled competing providers in the region
- Formulated a Limited Liability Corporation
- Selected a National GPO
- Recruited a dedicated staff
- Designed and staffed committees / work groups
- Prioritized opportunities
8Western New York Purchasing Alliance - Mission
- The mission of the WNYPA is to improve and
sustain the economic health of Western New York
healthcare constituents through collaboration,
partnerships and quality focused initiatives.
9WNYPA Vision
- Assist in improving the financial margins,
operational goals and clinical efficiencies of
our members. - Serve as a neutral third party in the collection
and analysis of financial and clinical
information for the purposes of benchmarking and
performance improvement. - Development of regional programs and services
that advance the interest of our members and the
Western New York community at large.
10WNYPA Strategic Objectives
- Create cost avoidance, price protection and
savings - Improve revenue for the Alliance hospitals
- Ensure expense management
- Grow the Alliance
- Customer satisfaction
- Provide value added programming
11Contracting Hierarchy
- Adopt National GPO Portfolio
- Work with GNYHA Members to Maximize Tiers and
Standardize Suppliers - Adopt State-Wide contracts where applicable
- Create Local contracts
- Develop provider specific contracts if needed
12Sourcing / Contracting Process
- Maximize the use of the Premier contract
portfolio by - Achieving best tier pricing
- Encouraging compliance
- Standardization among ALL members
- Develop unique local and regional contracts by
- Achieving best practice contract coverage
- Supplementing with non traditional product and
commodity contracts - Exploring non supply initiatives
13Contracting Process
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5
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Identify Initiative
Select Sourcing Strategy
Generate Supplier Portfolio
Select Implementation Path
Negotiate And Select Suppliers
Successful Suppliers
Benchmark And Manage Performance
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5
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16
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Determine Options Premier, GNYHA
Determine Options Premier, GNYHA
Assure all eligible suppliers are included
Implement-ation Path and Plan
Sourcing Group Frame Agreement
Internal Performance Scorecard
Supplier/ Implementation
Review Existing Contracts
Review Existing Contracts
Supplier Conference
Negotiation Strategy
RFI Request for Information/Proposal Premier
revisit check Second Sourcing Event
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Supplier Performance Scorecard
- Capitated
- Competitive Bid
Identify Work Group Members
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STRATEGY Review Gate
Invoice to Invoice Validation
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Create Data Request
4
TACTICS Review Gate
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COMMIT-MENT Review Gate
15
14WNYPA Ortho Project
15WNYPA Ortho Project Challenges
- Disparate Cultures and Contracting Philosophies
- Obtaining Physician Buy In
- Obtaining Real Pricing
- Obtaining Supplier Buy In
- Overcoming Hospital Defensiveness
- Achieving Price Parity
- Avoiding One Off Deals
- Understanding Supplier Up-Charge / Model Mix
Strategies - Project Timeline Management
16WNYPA Ortho Project Objectives
- Maintaining physician choice
- Providing the right product for each of our
patients - Reducing annual expense to a level that will
equal 35 of hospital reimbursement - Achieve price parity for all Alliance hospitals
17The Process
18Contracting Strategy
- Physicians, Physicians and Physicians
- Assure Buy-in or Radio Silence with suppliers
- Segment Products in Buckets
- Cemented, Non-Cemented, Hard Surface, etc.
- Assign Price Points
- All Suppliers the Same
- All Hospitals the Same
- Allow Suppliers to determine if they want to
participate
19Utilization Comparison-Hip Liner
20Savings Summary
21WNYPA Ortho Project Outcome
- Maintaining physician choice
- Providing the right product for each of our
patients - Reducing annual expense to a level that will
equal 35 of hospital reimbursement - Achieve price parity for all Alliance hospitals
22WNYPA Technology Assessment Center (TAC)
23How Do We Currently Assess and Acquire Technology?
- By careful review of value and other criteria?
- By comparison against competing and existing
technology? - By buying what clinicians want?
- By buying what the manufacturers tell them?
- By listening to CNN?
- By reading tea leaves and tarot cards?
24Past Practices
- What has been tried?
- Informal assessment Value Analysis
- Capitated pricing agreements Buckets
- Market Share Agreements
- Gain Sharing
- Promises of capital equipment
- What havent we tried?
- Alignment of health plans, providers, physicians
and suppliers.
25The Issues
- We are awash in amazing new technology, but
- Information ABOUT technology diffuses faster than
information about the VALUE of technology. - How do we empower the rational use of technology?
- After all, we cant have everything.
26Overall Supplier Issues / Drivers
- ASP (Average selling price)
- Market share
- Physician is the customer, not the Hospital
- Selling marginal improvements as major
breakthroughs - Deep rooted highly profitable consulting
engagements - New York Times Articles Most Recently
- Seducing the Medical Profession
- February 2, 2006
27 Change Happens
Thompson Medstat
28New Technology arrives
- Salk Vaccine
- Elimination of Polio
- Iron Lung Obsolete
29Our Vision
- A Technology Assessment Center to
- Assess current technology
- Forecast impact of future technology
- Promote agreement between Health Systems, Health
Plans, Physicians other Healthcare
Professionals, and Suppliers
30Universe of New Products
Manufacturers Device Rx
WNYPA Center for Technology Assessment
Results Outcomes
Core ADHOC Teams
- Create Analysis model tools
- Review Outcomes
- Device Rx Formularies
- Contract with Suppliers
- Preferred Suppliers
- Monitor Compliance
- WNYPA
- Health Plans
- Physicians
- Wall Street
- Other Health Care Professionals
Evaluation Model
- Safety
- Quality
- Clinical Effectiveness
- Financial
31Center For Medical Technology Assessment - Goals
-
- Ensure that the WNY community has access to the
appropriate technology available at nationally
competitive prices - Serve as Switzerland to ALL WNY Hospitals,
Health Plans Suppliers - Serve as neutral entry point for new product
evaluations facilitate the evaluation process - Utilize local and regional expertise from
multiple facilities - Develop appropriate models to determine clinical
and financial viability
32Goals Continued
- Assure that WNY accesses best practice strategies
product pricing - Premier Inc.
- National Sources
- ECRI
- Assist in a collaborative decision making process
for the reimbursement of new technology - Provide technology horizon scanning services to
assess future technology trends
33Benefits
- Hospitals
- Assure quality products are used
- Streamline assessment process
- Contain costs
- Collaborative decisions on reimbursement
- Health Plans
- Quality products for patients
- Product standardization
- Contain costs
- Collaborative decisions on reimbursement
- Physicians
- Consistent product formularies
- Assure quality products are used
- Supplier competition
- Uniform process for new technology assessment
- Suppliers
- One point of entry
- Assurance of a comprehensive evaluation
- Market share improvements
34What will be the next rapidly adopted technology?
Neuro modulators
Smart Scalpel
Implantable Eye Telescope
Diabetes Management
Smart Vest
35Technology Assessment A Collaborative Venture
-
- There are so many reasons for payers and
providers to be at odds. Perhaps managing device
costs, an area in which payer and provider
interests are perfectly aligned, is an
opportunity for collaboration. - The Sg2 Letter, September 2005
36Some Current Initiatives
- Regional Laundry
- Community Blood Bank
- Spine and Bone Products
- Radiopharmaceuticals
- Trauma
37WNYPA Competitive Advantages
- National, statewide and local contract portfolios
- Local resources committed to your organization
- Amalgamation of volume to leverage best practice
pricing - Create strategic relationships within the
community - Create local forums to facilitate knowledge
transfer
38Savings SummaryWNYPA Contracts Only
- Total Spend 68,307,448
- Total Savings 9,633,212
- Savings 14.10
39ROI
402006 Customer Satisfaction SurveyCriteria
- Overall satisfaction with WNYPA's service
- The staff is knowledgeable and professional
- I feel like I have a good professional
relationship with the staff - WNYPA is making a positive contribution to my
business - The staff responds to my inquiries in a timely
manner - In your opinion, how important is WNYPA to your
organization - Development of priorities and timelines
- Contracts are activated in a timely manner
412006 Customer Satisfaction Survey Results 8
Criteria
42WNYPA lets the constituents focus on their
respective businesses while we watch out for the
Gorillas !!