Boston Children’s servant leaders link supply chain to patient healing

Despite holding the top spot in U.S. News & World Report’s Best Children’s Hospitals for 2017-2018, being named a winner of ECRI Institute’s 2017 Healthcare Supply Chain Achievement Awards, earning accolades from Healthcare Purchasing News as a “Supply Chain Operation Worth Watching” in 2017, and receiving Intalere’s 2018 Healthcare Achievement Award for Financial and Operational Improvement, Boston Children’s Hospital’s Supply Chain Management department recognized that it must continue to find more innovative ways to better manage the multitude of complex and high-dollar contracts.

Departments across the hospital were circumventing the legacy contracting system and using spreadsheets to manage their agreements as a path of least resistance. This, in turn, left the organization without comprehensive methods to organize spend, collaborate, maximize negotiated savings and measure progress. Numerous complications resulted from this alarming trend, which cost millions of dollars in lost savings and risk to the organization. Examples included paying incorrect prices, missing expiration dates, unrealized rebate opportunities and over/under contracting.

Building a Strategic Team

Andrew Singer joined the team as the Director for Materials Management in 2008. The first thing he did was change the name of the department to Supply Chain Management. “I wanted to update the mindset,” Singer said. “When I arrived, Materials Management was viewed as a peripheral function, rather than a strategic one; the department was tolerated, but not celebrated. I knew it would take time to establish new patterns, so why not start with the department’s name and then focus on how we could improve in order to be regarded as an asset, rather than as neutral or a liability.”

Singer built competence and accountability within the department. He continued conversations with caregiver customers to help them concentrate on taking care of patients, rather than having to worry about supply availability and pricing. In addition to learning from internal customers, external sources were strategically utilized to help build a world-class department: Supply Chain Management staff visited other hospitals to identify best practices in supply chain; engaged the expertise of Healthcare IQ [then known as Deman Data Systems] to track and benchmark medical/surgical supplies; and sought the ECRI Institute for evidence-based research data on medical equipment testing and safety, patient safety, risk and quality support.

Singer recognized that inventory management would form the cornerstone of future improvements in the department. Understanding supply utilization at the point of care would enable better supply contracts and pricing, better distribution arrangements and better information in determining which products would provide the highest value to patients and staff. After a competitive RFP process, a hospital committee, led by Supply Chain Management that included nurses and department administrators, selected the automated PAR Excellence weighted bin system to order and track inventory.

As the transformation momentum began to take hold, so did customer trust in the department’s value. Singer, now the Senior Director of Supply Chain Management, set out to establish a world-class Supply Chain Management organization. After establishing baseline improvements and capabilities, the department added two seasoned Supply Chain professionals to lead this growing team. In 2015, David Walsh was hired as the Director of Supply Chain Administration, and in 2016, Bill Pyne joined the team as the Director of Supply Chain Operations.

Prior to 2016, Supply Chain Administration offices were located offsite in a standard office building with mostly individual offices, which contributed to an organization that operated in siloes of task-oriented functional teams. Consequently, many of their hospital-based customers didn’t know what they did or how Supply Chain Management could help them. The team moved into a different facility with a “workstation” layout concept, and the “walls” starting coming down. The open floor plan helped encourage more face-to-face conversations, created a more cohesive team, and unmasked synergies and opportunities to improve how they worked together for their customers.

With this shift, a growing number of informal meetings began taking place within the team and their participation in meetings with customers increased. Recognizing the value of dedicated, customer-facing resources, Walsh established a new function in Supply Chain Administration: Value Analysis.

Value Analysis staff work with nurses and physicians to identify and evaluate new products and technologies that can improve patient care. They serve as the eyes and ears of Supply Chain Administration on various Value Analysis Committees. These committees include multidisciplinary clinical groups, e.g., Nursing, Patient Care Services, Finance, Budgeting, Respiratory Therapy, Occupational Therapy, Infection Control, Pharmacy, Lab Medicine, Patient Service Administrators, Patient Safety/Risk Management, Environment Health and Safety and Health Technology Management. With the involvement of Value Analysis in several customer-centric committees, mutual exchanges of information and recommendations have surfaced and new ideas to improve the supply chain process have been implemented.

Collaborating with customers

Supply Chain Management identified a common process to standardize products, evaluate new technology, and reduce costs where appropriate. They brought together a centralized group of physicians, nurses, and department leaders to form a Value Analysis Steering Committee (VASC). The VASC reviews product research conducted and presented by Supply Chain Management’s individual, clinically-focused, Value Analysis Teams (VATs). The Steering Committee can endorse VAT recommendations and adjudicates situations when VAT has not be able to reach agreement on an initiative. Completed and in-process initiatives are summarized by VASC and communicated to senior hospital leadership.

Multi-disciplinary Value Analysis Teams (VAT) review specific initiatives by thoroughly defining an initiative’s objectives and requirements, and follow through with training and deployment for successfully completed projects.

Supply Chain Management’s Value Analysis staff provides the primary support for the VATs. Value Analysis staff conduct product research, communicate findings and coordinate supplier presentations. Products under consideration are then further researched and sometimes trialed by the VAT before a final recommendation is made. This initial level of due diligence has saved nurses and clinicians valuable time, allowing them to focus on patient care.

Primarily supporting Clinical Services and Ambulatory Care, the Value Analysis process at BCH benefits from the unique perspective of one of its members, Hasan Bailey, a nurse leading Supply Chain’s Value Analysis staff. Bailey’s input represents both the perspective of the patient care community and supply management objectives. The collaborative work of the VASC has contributed to several strategies that ensure the timely procurement of the best, low-cost, high-quality products, equipment and supplies for patient care.

Supply Chain Management utilizes value analysis tracking software provided by third-party technology partner, Prodigo Solutions Inc. Based on the needs of the BCH’s value analysis process, Supply Chain Management worked directly with Prodigo to enhance and develop the software to provide a feature-rich package.

Internally, collaboration was critical to help ensure an in-depth understanding of the underlying pain points of existing new product evaluation processes, as well as defining new requirements, supplier selection, training and rollout. Innovation was achieved by Supply Chain Management working together with both customers and technology partners, leveraging BCH’s requirements and their knowledge of healthcare contracting and workflow design, to build unique and exacting standards for supply chain management.

Linking with the research community

The Research enterprise at Boston Children’s Hospital, comprising more than 3,000 researchers, is the world’s largest at a pediatric center, BCH promotes. Being such a significant part of a large clinical institution presents unique challenges for supply chain management. Jack Buchanan supports the BCH Research Community (scientists and researchers) as Supply Chain Management’s Research Liaison. The Research Community’s Lab Support Group (LSG) meetings often center on laboratory safety concerns and risks. Buchanan provides insights on products and equipment that mitigate these risks and arranges for suppliers to address safety options directly to LSG.

Unlike clinical services, Research funding has hard end dates that can generate a lot of grant-related turnover. This turnover causes researchers to be very sensitive to the amount of time they are required to spend in training unrelated to their research. In particular, training classes for the eProcurement system historically required a four hour commitment. Buchanan was able to represent these concerns with Purchasing and MMIS and together the team reformatted the original session to a one-hour session, focused only on functionality relevant to Research. As a result of this customer-centric solution, compliance with hospital purchasing policies has soared within the Research Community.

Another difference between Research and Clinical: Researchers tend to require more items not normally in-stock. To systematically support this procurement requirement, Supply Chain introduced the Prodigo Marketplace. The Marketplace allows researchers to search directly for the suppliers and supplies they need via embedded catalogs and “punch-out” capabilities (linking to live supplier websites) in Prodigo. This option is consistent with the Supply Chain departmental objectives to reduce costs, support clean invoicing, and decrease turnaround times. Today, Supply Chain is considered the main resource for laboratory sourcing and procurement needs.

Purchasing/Accounts Payable Task Force

Supply Chain Management teamed up with the Accounts Payable department to improve the procurement to pay process. The task force was formalized with a documented charter and an assignment of leads from each area to empower individuals and drive accountability. The group has improved communications and has identified and addressed disruptions in the payment process, which contributed to an 80 percent decrease in the match exception rate. This, in turn, has increased morale, understanding and the relationship between departments as well as reduced payment turnaround times and improved customer and supplier relationships.

The Green Belt Project

Value Analysis, Contracts and MMIS staff worked with the Finance Department to create an interdepartmental Standard Operation Process (SOP) for creating new items in the Item Master File and linking each item to its correct billing codes. Prior to implementing this process, departments were submitting requests directly to Purchasing by emails, paper or phone. In turn, Purchasing then would forward paperwork to Finance. This manual process often took up to 90 days to complete from the time a request was initiated to when it was finally entered into the system. The output of this Green Belt project was the creation of a new Procedural Workflow and new Product Request Form. The Request Form is the starting point that initiates the workflow. It is easily accessible on the Supply Chain Intranet and has become the standard process for entry.

Today, the process is streamlined through a single portal directly to the Value Analysis staff. Requests are tracked and pass through all of the proper channels before an item is created and implemented in the Item Master File. The New Product Request form is linked to the appropriate billing charge codes, and a UNSPSC code is assigned on the front end, making product tracking and future data analysis opportunities easier. Turnaround times have decreased to two days or less, with increased accuracy. The efficiencies of the new product request process helps ensure that patients have the supplies they need, when they need them.

Eliminating chain of custody challenges

Tracking specimen pick-ups, deliveries and turn-around times was a challenge for Supply Chain Operations, especially when there was a change of custody from one department/location to the next. Partnering with the Laboratory Medicine and Technology Innovation departments, the team created and implemented an in-house solution: Every specimen is now assigned a unique bar-code label. Every time the specimen is handed off to another department, the bar code is scanned into Microsoft Excel and easily tracked with key logistics information, including party transferred-from, party transferred-to, date, time and location of the transfer.

Minimizing Out-of-Sequence Shipping Labels

Some suppliers may provide shipping/packing lists and invoices that are misaligned to purchase orders. In these circumstances, for example, a product ordered on the fourth line of the PO could be listed on the first line of the shipping document and/or the invoice. If not caught immediately, these discrepancies can lead to delays in payments to suppliers. Supply Chain Operations set up a biweekly review process with Accounts Payable to review out-of-sequence shipping labels and identify possible trends causing discrepancies between requestors and suppliers. This effort resulted in a 50 percent reduction in the number of lines that could not be paid.

Anticipating Backorders

Inventory Buyers, Contract Administration, Value Analysis staff and several clinicians worked together to identify a process that would address the problem of item backorders directly impacting patient care. Over a two-week period, Value Analysis reviewed items most at risk for backorder and researched suitable substitute products (sub-products) for consideration. A report listing the sub-products was presented to Clinicians for approval. Approved sub-products can be ordered through Intalere, which BCH’s group purchasing organization, from BCH inventory directly, or from the manufacturers. This process, while being refined and always expanding, has introduced life-saving alternatives that stand to benefit patients in times of product shortages.

Creating a Data-Driven Environment

Supply Chain Management understands the tremendous benefits of transforming data into useful and reliable information to enhance decision-making. Formulated and spearheaded by Gennady Beyzarov, Manager of Supply Chain Business Systems and Analytics, the department is using data and innovative analytical methods to develop and monitor key performance indicators (KPIs) that track, measure and improve productivity and effectiveness.

The KPIs are numerous and comprehensive, and the dashboard tool allows macro- and micro-views (via drill down functionality) into a wide range of productivity measures. One example of the many measurements is a breakdown by buyer of purchase order activity (e.g., lines, category, spend, etc.) by PO type and order transmission modality, along with the quantity and classification of match exceptions. All of these data elements can be analyzed in a workload tracker developed by the Purchasing department. The tracker uses a proprietary algorithm to quantify buyer effort to better balance and optimize workload among the buyers. Regular review and analysis of departmental KPIs has also led to improved internal workflow and a 21 percent reduction in the number of POs that require manual intervention by the buyers.

Continuing the journey

BCH’s Supply Chain Management Department isn’t finished transforming and improving. In fact, they’re hard at work on two specific projects.

First, Supply Chain has partnered with the hospital’s Data Warehousing team to incorporate granular purchase history detail with the existing patient diagnostic and charge-level detail that already exists within Microstrategy, the BCH data visualization tool. For the first time, this will allow a comprehensive view of all of the inputs to patient care (e.g., surgical procedures, lab tests, supply utilization, etc.) to facilitate a view of how supply chain data correlates to cost, quality and outcomes.

Second, BCH is also planning to open an off-site distribution center. Supply Chain Management has long been concerned about the stability and security of the healthcare medical/surgical supply chain. Due to circumstances beyond the hospital’s control, the team believes the availability of the supplies needed to take care of its patients remains more precarious than ever, and traditional just-in-time distribution models are becoming less reliable. By managing their own facility with their own inventory, BCH Supply Chain will be able to mitigate many of the short-term supply shortages that are being seen on a near-regular basis. Establishing closer relationships with manufacturers will also allow the BCH Supply Chain to be more nimble when product substitutions become necessary.

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