Supply Chain’s newest Elite weaving through consolidations, standardizations

To be recognized and honored as an award-winning and “star-studded” supply chain organization doesn’t always necessitate accomplishing something stellar.

Sometimes, improving and mastering the fundamentals and functioning as a solid performer may be all that the community needs from the healthcare services it receives. A cake unadorned with frosting may not bedazzle your taste buds but be moist and filling, while frosting without cake infuses you with a sugar high that burns off too quickly.

If there are any themes or trends emerging in this year’s Elite group of newsworthy and noteworthy examples, it’s that all of them grapple with issues of scope and size — growing larger in terms of facility numbers, territory spans and services provided, but growing smaller in terms of product, service and supplier variety and process variability. Regardless of footprint and geography size, however, more organizations seem to be centralizing and standardizing processes and products as the way to control, if not cut, costs. While this trend may be an industry staple as much now as it’s been for the last three decades, it likely will continue being represented in this list — and others — for years to come.

More than size and span, however, the underlying theme among virtually all of them is diversity of process and product, the ensuing costs of which are crippling balance sheets, budgets and service options. Yet top-flight organizations on this list and the previous seven lists continue to slog through the challenges, keeping the end game, the end goal, in mind: Patients.

The December edition of Healthcare Purchasing News traditionally spotlights “Supply Chain Operations Worth Watching.” HPN solicits nominations from all sectors of the industry (providers, suppliers, group purchasing organizations and consulting firms) and conducts background research to pick those that seem atop the pecking order.

This year, 11 organizations, spanning 10 states from the East Coast to the West Coast, join 78 other ongoing healthcare supply chain superstars profiled by HPN since 2011. Visit our Hall of Fame to see who’s made the list to date.

Generally, once an organization’s Supply Chain department/team “makes the list” it remains “one to watch” going forward unless its absorbed via merger or acquisition, in which case it’s possible for the “new” crew to make the list (if nominated, of course) under the “new” name because they may be accomplishing more “new” things. Such is the case this year with two entries that have vied for HPN’s annual Supply Chain Department of the Year Award, typically granted in the summer.

As always, if your organization — or one you think should qualify — didn’t “make the list,” be sure to let us know and then plan how to showcase the deserving organization for consideration in the 2019 compilation.

Take a look at HPN’s latest Elite list in alphabetical order by name for highlights on what they’re doing and why they matter.

Centura Health, Centennial, CO
www.centura.org

Reaching a patient community that extends throughout Colorado and western Kansas, Centura Health recognized some inventory challenges within its trauma instrumentation and supplies category, due in part to complex manual ordering methods. Centura’s Supply Chain leaders tapped into the CareAdvantage program offered by Johnson & Johnson Medical Device Cos. to gain control of its trauma supply segment. After analyzing the health system’s trauma and implant inventory management process, they created and piloted a program across eight facilities to better predict demand. Through comparative gap analysis on order processing time compared to on-hand trauma inventory they were able to assess individual facility performance. Then they dissected every step in the workflow at each facility, starting from the surgical procedure through product order placement and receipt, mapping and analyzing where errors and gaps might surface. They compared process maps between facilities to design a single, standard, centralized process for each stock-keeping unit and set up controlled ordering parameters for needed items. Five months after launch, the pilot facilities reduced excess trauma inventory by $357,000 and order processing time across the organization by 38 hours per week.

Hackensack Meridian Health, Hackensack, NJ
www.hackensackmeridianhealth.org

Six years ago, this New Jersey health system was awash in a high volume of manual orders and discrepancies and during the next few years the Supply Chain team set out to achieve the “Perfect Purchase Order” in electronic transactions to replace standard clerical tasks with more strategic activities. Since that time Supply Chain has been able to drive down price discrepancies to below 1 percent and part number variances to less than 0.2 percent. Further, they corrected issues in 85 percent of paper invoices and in 92 percent of electronic invoices. Using paper and electronic data interchange (EDI) automation at a rate of 91 percent, the health system approaches touchless invoice processing maturity, all while adding two new facilities to the group that were new to EDI order automation. Hackensack also achieved a single item master, billing master and chargemaster for the health system, electronically closing the loop on costs, billing and revenue.

Indiana University Health, Indianapolis
iuhealth.org

Back in the summer, IU Health, formerly known as Clarian Health Partners, generated headlines when it became the latest IDN to venture out with a 300,000-square-foot high-tech integrated service center for its facilities. Equipped with a robotic picking system and conveyor belts, IU Health’s Supply Chain flagship will consolidate warehousing and shipping operations for its 16 hospitals and other healthcare facilities, serving as the logistics hub for the system in managing streamlined daily deliveries. From this hub, IU Health’s Supply Chain team launched a product standardization program, driven by value-analysis teams involving physicians and other clinicians. Through these efforts Supply Chain expects to generate up to $3 million in annual cost reductions. IU Health also ratcheted up its pursuit of process automation via an electronic contract management system that helped them reduce price exceptions to 0.8 percent, as well as generating four-way matching, from contract to purchase order to receipt to invoice. Next, they’re converting to Oracle’s cloud-based enterprise resource planning (ERP) system to reach their next cost-savings targets.

Mount Sinai Health System, New York
www.mountsinai.org

This New York-based health system started out as a large urban medical center that has experienced rampant growth through mergers and acquisitions within the last five years. Accompanying such rapid growth are disparate Supply Chain and Accounts Payable operations and related technologies, including four different materials management information systems. The disparity drove Supply Chain to concentrate heavily on price exceptions and manually correcting item master data. So they rolled up their sleeves, consolidated and modernized processes and technologies, reconciling discrepancies and improving their financial fluidity. Through these labor-and time-saving efforts they estimate savings in distributor volume alone at $387,000 annually. By aggregating contract management data and expanding electronic vendor transactions and content standardization they were able to increase contract compliance to 95 percent from below 60 percent, and reduce their exception rate to less than 1 percent monthly from an average of 12 percent. Supply Chain also is integrating inventory management into clinical practices throughout its system to track product consumption patterns and use data mining to advise clinicians on linking supply usage to clinical and patient outcomes. Tracking starts the moment supplies arrive at the dock to the moment they reach the patient within the patient room or surgical suite.

Parkview Health, Fort Wayne, IN
www.parkview.com

This 9-hospital IDN covering northeast Indiana and northwest Ohio embraced the concept of integrated supply chain workflows, emanating from the consolidated service center it launched in 2011 to help control and manage inventory and product usage throughout the system. Since then, Supply Chain has progressed beyond tracking charges and products throughout the hospitals and is concentrating on patient needs outside of the acute care arena. To wit, Parkview is exploring how to work with suppliers and service companies to support patient supply needs at home, with the aim to create a Parkview marketplace to capture the cost of care — even if it does not come from the hospital. Their goal? To compile a true “cost to deliver” value without having to house the necessary inventory. Supply Chain, which now is one component of a larger Support Division that also includes Facilities, Real Estate, Food & Nutrition, Environmental Services, Pharmacy, Laundry and Event Center, is focusing on enhancing the end user experience through more connected and technology-driven processes.

Providence St. Joseph Health, Renton, WA
www.psjhealth.org

Earlier this year the Supply Chain team at this northwestern-West Coast IDN decided to uproot the traditional model of their organization and send it packing. Out with the functional approach, in with the service-minded and oriented approach that is focused on improving performance and delivering value to patients locally — not centrally. To reinforce its new mindset, Supply Chain renamed itself the Resource Engineering and Hospitality Group. But this represents more than a cosmetic name change; it’s more of a philosophical and cultural change for the staff as they work to enhance the patient experience. They still analyze all spending and pursue more than $100 million in savings while at least maintaining quality and process efficiency. This group focuses on seven service segments (not necessarily functional areas) that include Clinical Resource Services, Food and Nutrition Services, Environmental Services, Clinical Technology Management Services, Facilities Engineering Services, Equipment Management and Planning Services and Caregiver Consumable Services, all of which represent $6 billion in volume for the system.

Tower Health, Reading, PA
www.towerhealth.org

While several on this year’s Elite list experienced rapid expansion, none could approach the blazing pace of what had been Reading Hospital and its medium-sized network of outpatient offices just 12 months ago. Within the last year, the small single teaching hospital system ballooned to a six-hospital system with two teaching hospitals and a large network of outpatient offices spanning several counties in southeastern Pennsylvania. Prior to the expansion, the Supply Chain team developed a reputation for implementing best practices and using data analytics to improve financial and operational performance as well as improving operating room inventory management and replenishment. As the system continues to coalesce and gel operationally and technologically, Supply Chain spotted one area needing immediate expertise: Performing product expiration audits via handheld technology. Because their inventory management system didn’t easily and accurately capture expiration date-code information, Supply Chain conducted field audits manually, reporting on clipboards at supply locations. By using existing hand-held computers, Supply Chain automated the entire process by linking into the IDN’s ERP system. Now they’re able to track line item detail by specific location to facilitate the removal of expired product and record the dollar value of product waste.

UNC Health Care, Chapel Hill, NC
www.unchealthcare.org

As a state-owned not-for-profit IDN of 11 affiliate hospitals anchored by a university, UNC strives to bridge the gulf between clinically integrated and industrial supply chains. UNC Health Care’s Supply Chain team implemented RFID-enabled inventory management technology at the system’s new Heart and Vascular hospital in Raleigh, NC, and plans on deploying the technology at additional heart and vascular locations. They’re using this data not only to improve patient care but also to help suppliers adjust their production schedules for changes in clinical demand. Internally, Supply Chain is making it easier for clinicians to participate in logistics and value analysis by reducing and simplifying the number of steps in the product and service decision-making process.

University of Chicago Medicine
www.uchicagomedicine.org

When HPN launched its Elite list in 2011 the magazine highlighted 18 Supply Chain departments making a difference with the intent that these 18 represented Supply Chain Operations to Watch going forward. In short, once you made the list you were on the list indefinitely because it was expected the Elite would continue innovating as industry leaders. The University of Chicago Hospital earned a spot on the 2012 list, becoming one of the Elite 11 recognized that year. Yet through operational and organizational transitions they made a compelling case for inclusion in an expanded list this year. UCM’s Supply Chain still excels in lean operations, RFID, Kanban, strategic sourcing and clinically driven value analysis to the extent that other organizations visit to gather best-practice ideas for introduction at their own facilities. Six years later, Supply Chain delivers 99.5 percent stock availability, less than 3 percent in supply losses and a 5 percent annual inventory reduction. They also are engaging UCM surgeons in a cost-per-case analysis and utilization management project that is driving towards at least $10 million in savings.

The University of Vermont Health Network, Burlington, VT
www.uvmhealth.org

Like University of Chicago Medicine, The University of Vermont Health Network represents the second of two early Elite listers that have changed identities through expansion all the while continuing to improve operations and innovate services. UVM initially made the inaugural Elite 18 list seven years ago as a smaller organization known as Fletcher Allen Health Care. Since then and under the same leadership with C-suite connections, UVM Supply Chain continues to deliver and excel in a variety of key areas through human and technological ingenuity. First, they concentrate on meaningful informatics with detailed category benchmarking to drive clinical contracting, standardization and value analysis programs as well as a clean item master, courtesy of such companies as BroadJump, ECRI Institute, SCWorx and Vizient. Second, they enhance business practices by cultivating talent that includes business, clinical and legal minds but also extends outside of healthcare. Supply Chain’s critical thinkers have created a “culture of constant improvement and education, with an obsession over savings and cost-avoidance measurement.” In fact, the team achieved nearly $14 million in cost reduction and cost avoidance in fiscal 2018, and during the last seven fiscal years their efforts resulted in nearly $65 million in savings. Third, they emphasize and focus on the concept of “one supply chain,” communicating consistently with one another and collaborating together to serve their clinical customers who ultimately serve the patients.