Members of Geisinger Supply Chain Services with Geisinger Medical Center in the background. Front row (seated): Lori Kearney (Director Clinical Use Evaluation); Rose Ernest (Manager Linen and Transport Services); Debbie Harris (Project Manager). Second row: Joel Meckley (Senior Director, Purchasing and Contracting); Larry Wolfgang (Director, Supply Chain Information Systems); Joe Goyne (Regional Manager Logistics, Geisinger Northeast); Brooks Saunders (Supervisor, Purchasing); Deb Petretich Templeton (Associate Vice President, Supply Chain Services). Back row: Eric Nowak (Regional Manager Logistics, Central and West), Jay Bohn (Supervisor, Logistics Geisinger Wyoming Valley)

Geisinger steels itself for supply chain progress

Centralized operations, data management leads to structural integrity

by Rick Dana Barlow

Sometimes a fresh perspective, unfettered by history and conventional thinking, is enough to kick-start a germinating supply chain improvement project necessitated by a recent merger with another organization.

Geisinger Health System, Danville, PA, needed such a jolt to propel its efforts to the next level even as supply chain management’s scope expanded as the organization increased in size.

Led by a former pharmacy director with extensive project management experience, along with a dedicated team of professionals from inside healthcare and outside – such as from the retail and rollercoaster markets – rolled up their sleeves to centralize contracting and purchasing, implement the supply chain component of a new enterprise resource planning (ERP) system, clean up the item master, develop partnerships with clinicians and other departments and pave the way for standards adoption and implementation.

The efforts and achievements-to-date of Geisinger’s Supply Chain Services division motivated Healthcare Purchasing News to name it the 2008 Materials Management Department of the Year.

Over a longer period of time, Geisinger’s supply chain improvement goals may seem like standard operating procedure. But when Deborah Petretich Templeton R.Ph., MHA, joined the team as associate vice president in early 2000, she faced an accelerated timeframe to make changes happen with no additional resources. At the time, Supply Chain Services was in the midst of two major consulting engagements. One focused on a basic supply chain reorganization following the merger; the second involved a non-labor cost-reduction initiative for the entire system.

"Essentially, it was a total makeover of existing processes," Templeton said. "We had a laundry list of recommendations on what should be done and had to decide what we truly could implement with the resources we had. So we phased in changes. We developed a strong plan and vision for where supply chain needed to go."

Geisinger's pharmacy operations developed a new inventory control system with Supply Chain Services. From left is Larry Wolfgang (Director, Supply Chain Information Systems); Greg Hetrick (Program Director, Clinical Support Systems); Jack Payne, RPh (Pharmacy System and Technical Coordinator); Barb Szoke (sourcing specialist); John Jones, RPh (Vice-President for Geisinger system therapeutics).

Although supply chain management was "somewhat foreign" to her, Templeton was intrigued by the challenge and wanted the opportunity to gain management experience outside of pharmacy after earning her Master’s degree in health administration. She initially served as an internal consultant and facilitator for a variety of system-wide projects where she gained exposure to a number of departments, operations and employees. While representing hospital operations on the supply chain reorganization steering team, she learned about the available position to lead the Supply Chain Service department and welcomed the turnaround opportunity.

Robert Davies, vice president of support services, called her a "natural fit." Templeton, who reports to Davies, "was recognized as having intimate knowledge of the inner workings of the Geisinger Health System through her experience in pharmacy and as an internal consultant/facilitator on various system-wide projects, including the merger with PSU Hershey Medical Center," Davies noted. "Her proven credibility was important to setting priorities and taking action in the shortest possible time frame. As director of the pharmacy department, she had regular interaction with vendors and [supply chain management] personnel so [she] was already very familiar with many of the existing processes."

Templeton admitted she really didn’t understand "the nuances between requisitions and purchase orders," but that limited experience freed her to make process change decisions more quickly, she noted. Furthermore, she indicated that her clinical background "comes in handy every day," and recognizes how the drug formulary system readily can be applied to supplies.

On the IT list

Templeton’s first major test to determine how well she and her new team clicked came in June 2000. It involved implementing the supply chain management component of the organization’s new ERP system from Lawson Software. Amid the disruptive internal restructuring she was spearheading, she had four months to install the system and have it running successfully as finance and human resources did theirs concurrently.

But she credits her team for making it work in a very short period of time.

"With a great team of employees, we forged into the planning and had a successful go-live," she recalled. "Our journey of improvement has not stopped since. This only happens with good planning and a dedicated workforce who embraces change and does not shy away from challenges."

Since that first year of implementation, performance and productivity has more than doubled across the board. In fact, the number of purchase orders grew by 171 percent, employee production of POs has improved by 106 percent and total PO dollar volume has increased by 114 percent as more purchases were funneled through the system. They also track such matrices as lines per FTE, dollars per FTE, percentage of electronic versus manual POs per FTE, deliveries and PAR location values in an effort to balance workload more evenly, justify additional positions and improve cash flow. Total PO dollar volume in that first year amounted to nearly $126.9 million; the most recent fiscal year totaled nearly $340.8 million.

Inventory management assistants Greg Lynn (left) and Terry Keefer review products in the warehouse on the Geisinger Medical Center campus, Danville, Pa.

Templeton attributes the growth to the organization’s expansion, pulling more users, such as pharmacy, into the system and gaining credibility with users to drive purchases through the Supply Chain Services division rather than around it.

Plus, the new supply chain ERP module offered a better tracking tool and more user-friendly electronic ordering, according to Templeton. "We are using custom templates for the online process that allows us to ask a department for what they need, as opposed to choosing what they may want from a general catalog, and it also gives us the opportunity to check requested product against our ‘standard formulary of products," she said.

Their efforts helped to build trust over time among key clinical departments. Templeton recalled that her division had quite a few customers dissatisfied with the system back in 2000. So they focused on slashing problems with a double-edged sword: Cleaning up existing issues and setting new standards for customer service. Based on "form follows function" principles, the restructuring allowed them to hire sourcing specialists with requisite expertise. For example, the laboratory, in particular, expressed its dissatisfaction with Supply Chain Services so as part of the restructuring, Templeton assigned a lab specialist to work with them.

"Little by little we had small successes, such as demonstrated cost savings, quicker processing turnaround time, etc., which led to more positive perceptions and acceptance of processes," she said. "We used the philosophy of ‘sell, don’t tell.’" And her team continued to develop new skills, which keeps Templeton on her toes. "I always say, ‘if you are doing the same job in the same way a year from now, then I am not doing my job,’" she noted. "Staff also needs to never forget why they exist: That is to support our clinicians and to serve our patients."

The goal she sets is curious: "Our work will be minimally perfect," she said, laughing.

CUEing up teamwork

One of Geisinger’s system-wide strategies for ensuring patient care quality and safety was starting multidisciplinary Clinical Use Evaluation (CUE) teams for several key service lines, including Surgical, Medical Surgical (Nursing), Clinical Laboratories, Cardiovascular and Thoracic, Radiology and Cardiology. Led by clinicians and supported by Supply Chain Services, CUE teams make clinically relevant product and equipment decisions with an emphasis on efficiency, standardization and cost savings.

From left: Joel Meckley (Senior Director, Purchasing and Contracting), Joseph Hardisky (Vice-President Clinical Engineering and Geisinger Services for ISS); Kate Fleetwood (Project Manager, administration); Christopher Massaro (Clinical Technology Manager ISS Solutions, an affiliated Geisinger company which partners with Supply Chain Services) review the plans for Geisinger's new 9 floor Hospital for Advanced Medicine.

The CUE process frequently ties Supply Chain Services to discussions of mapping the best clinical protocols first rather than focus just on supply cost, according to Templeton. Geisinger’s much-publicized ProvenCare guidelines, which is the system’s 90-day warranty for surgery, is an example. With ProvenCare, if a patient develops a post-operative complication, Geisinger provides corrective treatment at no cost to the patient. Another is a discussion on using contrast media versus preventing contrast-induced nephropathy. CUE teams work with end users for feedback on ideas and help with data collection and activity reporting.

The CUE teams, along with Templeton’s sourcing specialists and buyers, have helped generate tens of millions in actual cost savings and cost avoidance (a 95 percent-to-5-percent ratio), Templeton noted, as well as increase contract rebate capture levels throughout the system, facility-by-facility, department-by-department.

Supply Chain Services’ partnerships with other operational departments are making a difference, too.

For example, at Geisinger Wyoming Valley Medical Center, one of Templeton’s team members actively participates in a linen committee alongside staffers from nursing, infection control and environmental services. In fact, Jay Bohn learned how the laundry process worked, set up inventory control measures, including "reject linen" bags in all user areas, streamlined the linen adjustment process by reducing full adjustments to twice per week instead of daily, and conducted inservices. These efforts helped the hospital generate an 8 percent decrease in cost-per-adjusted-patient-day and helped make cost containment a permanent agenda item on the hospital’s Nurse Practice Council.

Supply Chain Services reached out to the Pharmacy department, which was struggling with developing a new inventory control system. It had been using a home-grown system that had outlived its usefulness to track inventory and had its own unique language, according to Templeton. Supply Chain Services advised the department to use its new system so that the buying team would no longer have to manage two different systems.

"Many pharmacies understand well the concepts of inventory management," Templeton noted, "but few have ‘owned’ systems that give real-time visibility into their inventory. Many are using distributor systems and rely on them to tell them if prices are accurate." This contributes to a drug pricing error rate, Templeton continued, which the industry quotes on average as being 0.75 percent. "For a $61 million drug spend this equates to a $450,000 loss potential," she added. Geisinger Medical Center’s error rate was at 0.11 percent, but required manual matching. Now they stress zero tolerance and automatching to contract, she noted. Drugs represent about 18 percent of Geisinger’s total PO dollars.

Geisinger has formed clinical use evaluation teams to improve purchasing and ordering of products by specific clinical teams. Meeting is (from left) Deb Petretich Templeton (Associate Vice President, Supply Chain Services); Lori Kearney (Director Clinical Use Evaluation); Debra Neal (sourcing specialist); Alfred Casale, MD (Director of Cardiothoracic Surgery, Geisinger Health System).

Templeton admitted that the partnership with pharmacy "required a lot of trust, patience and new learning" from finance to pharmacy to supply chain. "Pharmacy drug names can be intimidating," she said. "Common language is something we had to get over." Case in point was the word "frozen." It could mean either literally frozen or locked down in the item master, she noted. "You had to determine in which context you were using the term, which required paying a little more attention," she said.

In addition, start-up user errors caused finance to ask questions about the expensive unit costs of some drug items, which helped identify some internal processes needing improvement. "One keying error could yield wild swings in expenses," she added.

Supply Chain Services also entered into a new partnership with International Shared Services (ISS), a for-profit clinical engineering company owned by Geisinger, to oversee major building projects within the organization. The pilot project started this year for an addition to the Geisinger Wyoming Valley Hospital. Representatives from Supply Chain and ISS meet with the facilities and construction managers and the project administrator on a frequent basis. As the project began, the projected supply and equipment budget was $3 million over a tight budget target. Through the combined efforts of this partnership, the budget fell below the budgeted target. Because of the success demonstrated in this pilot, the partnership will continue with a new $100 million expansion to the main hospital facility.

ISS offers customized technology lifecycle management solutions that include healthcare technology assessment, management and maintenance services, information technology assessment, network design, management, acquisition and maintenance services and a round-the-clock technical contact center. Geisinger works with ISS on maintaining the total cost of ownership for equipment within the organization, including collaboration on negotiating purchasing contracts, developing service contracts, tracking product performance and collaborating on special projects, such as building projects.

Through the building project, Geisinger created a technology coordinator position that will assist the organization with Supply Chain Services, in standardization of capital and healthcare equipment planning. Templeton’s team meets with them quarterly to discuss vendor issues, new acquisitions and other topics, such as a new refurbishing/resale process in development.

Prior to the restructuring and ISS’ acquisition, Geisinger maintained individual biomedical engineering departments in its facilities that were subsequently consolidated within ISS, which now operates as both a vendor and an internal collaborator with the organization, according to Templeton.

Tugging on technology

Inventory management assistant Ann Marie Biniek checks medical supplies at Geisinger Wyoming Valley, Wilkes-Barre, Pa.

To offset the inability to add manpower to handle expanded services, Geisinger employed the use of supply robots in pharmacy and Supply Chain Services to help deliver products and equipment to the nursing units in the main hospital.

The hospital leases the TUG robots from Aethon Inc. to make routine deliveries for pharmacy and supply and support deliveries to the nursing floors. Supply Chain Services monitors and tracks the cost per trip of the TUG, compared to that of a human FTE.

In reviewing pharmacy data, Templeton indicated that the robot costs 50 percent less on average than a human FTE, depending on the amount of runs the robot makes and depending on the shift difference per pharmacy technician per hospital. Roughly, it’s about $4.50 per run for the TUG versus $7.85 to $8.90 per pharmacy tech, depending on the hospital, she noted.

But Templeton’s sold on them. "The robot works seven days per week, all shifts. They work 24/7. They don’t usually call in sick unless our wireless network is down," she said.

"And they don’t need vacations either," chimed in Joel Meckley, senior director of purchasing and contracting, who previously hailed from the rollercoaster market.

At one Geisinger hospital, Templeton’s group elevated the patient transport team into the 20-member transport department to handle patients and equipment, including working with the TUGs.

Because of the chronic shortage of equipment, such as wheelchairs and IV pumps, several departments formed a small subgroup to brainstorm ideas for improvement. The subgroup, consisting of supply chain, central sterile processing, nursing and clinical engineering, focused on identifying equipment needs, ordering relevant products and focusing on radiofrequency identification (RFID) as a potential tracking mechanism. Right now the team, including IT and ISS, are reviewing options, including vendors and systems. "We want to pick a system that will maximize the use of our existing IT infrastructure," Templeton said. "We want to use RFID for equipment tracking to start, but have a system flexible and robust enough to move into patient and supply tracking and other uses as the technology develops and costs drop."

Standard operating procedures

Geisinger’s Supply Chain Services division remains serious about adopting and implementing data standards for efficiency purposes as well as to support safety initiatives and provide the data necessary for clinical research and innovation efforts, according to Templeton.

Central sterile assistants Diane Ginley, Rose Tarutis and John Weaver review supplies at Geisinger South-Wilkes Barre.

Through its membership in the Healthcare Supply Chain Standards Coalition, Geisinger has been actively using the Global Location Number (GLN) in transactions and have registered all of its facilities in the Global Healthcare Registry. Geisinger also has been working with two major distributors and one major manufacturer, completing EDI test transactions using the GLN. In fact, Templeton said they plan to convert to exclusive use of the GLN in all transactions is 2009.

Geisinger also has active projects that use the Global Trade Item Number (GTIN standard) and is actively exploring the use of the GS1 Healthcare US Global Data Synchronization Network (GDSN).

Templeton admits the current standards push involving GLN and GS1 "seems different" than past efforts. "All of the right players were at the table discussing the issues," she said. "Anybody that had to touch a piece of data was there."

Templeton believes the 2009 target for complete GLN implementation is realistic. Working through the group purchasing organization (for Geisinger, that’s Premier Inc.) to determine their numbering strategy and set their GLNs is half the battle, she indicated. Encouraging vendors to do the same through EDI is the current goal. "The use of these standards can truly transform the way we do business," she said, "radically shifting the way healthcare business is transacted."

Centralized supply chain management operations makes something like GLN easier to start with, according to Templeton, but you don’t need a sophisticated computer system to make it work. "The GLN, even without an ERP, is valuable," she said. "It doesn’t matter if your system isn’t any good or you’re doing it manually with paper."

Said Meckley: "We have about 8,000 different vendors we do business with for three hospitals, two outpatient centers and more than 50 clinics throughout central Pennsylvania. Vendors all call their products something different, and we have different numbers for each location. GLN communicates all of the ship-tos. You’re notified of any changes across the board." Such tracking can vastly improve the product recall process, too, he added.

In the rollercoaster business, every piece of lumber had a bar code on it, according to Meckley. "But in healthcare, you’ve got some very expensive products without bar codes," he added. "A two-by-four is a catheter is a drug. No difference."

The only major difference between those products and ours is that ours can never be replaced, said Templeton.

It’s an operational philosophy that resonates well with patient-centric physicians, which Templeton’s team values highly. "Our organization is physician-led and physician-driven." She said. "There is mutual respect for the jobs that we need to get done; first and foremost, ensuring the safe, efficient and cost effective care given to patients. With this as a common mission, the partnership works well. We always have points of debate, but with data to enable discussions and common forums like CUE to discuss product value, our energies become directed to best serving our patients versus being on opposite sides of the table."

Templeton also counts on recognition and support from the C-suite where senior executives readily acknowledge supply chain’s contributions to the system’s fiscal health. What helps is that the CEO sits on the board of Geisinger’s GPO, she added.

"Having a management structure that is flexible enough to bend when it has to but resilient enough to snap back when needed makes all the difference," Templeton said. Physicians and administrators and department heads seem to have fewer issues about working together because they all are involved in making decisions for the organization, she added.

"All in all, I am very proud and humbled to be leading a team that has accomplished so much," Templeton noted. "The division has gained respect throughout the organization and continues to contribute to not only the organization’s fiscal success, as well as more importantly to the improvement of the care delivery to the patients it serves."

Editor's Note: Up Close in the August 2008 edition of HPN will feature Geisinger Health System’s Supply Chain Services team leader.