WellStar’s supply chain climb actually predated the economic plunge in late 2008 by about six months. In April 2008, WellStar tapped consulting firm Deloitte to evaluate and reorganize its supply chain operations.

"I think there was recognition that WellStar had an opportunity to make significant improvement in its supply chain processes," Trupiano said. "The system had a number of new leaders join the organization, and the Deloitte engagement was seen as a way to jump-start needed improvements. For example, value analysis was not hardwired in the organization and departments made a number of decisions independently."

Deloitte had framed any process improvement opportunities on a solid foundation of value analysis, recommending that a vice president of supply chain and a director of value analysis be hired to anchor the process, as well as a director of purchasing and contracting and a director of operations.

The consulting firm’s initial efforts generated $12 million in savings that first year, but more work had to be completed to reconnect what WellStar viewed as a "highly fragmented" supply chain. For example, the value analysis framework may have been laid but recommended processes had yet to be formalized, and standardization progress had been minimal, according to Separk.

The purchasing department, for the most part, relied exclusively on GPO relationships for contracting," Separk stated, "and the item master, contracts built in the McKesson [materials management information system], and contract repository were in disarray. Much of the negotiation for supplies, capital, and purchased services had been delegated to clinical and enterprise support department managers, who were very anxious to be assisted by the supply chain team."

Trupiano graciously credited Deloitte’s involvement and recommendations as a catalyst for change.

"The Deloitte engagement was valuable in completing a thorough supply chain ‘as is’ assessment, putting a plan together for improvement, and gaining some quick wins," he said. "Frankly, WellStar was in need of wide and deep systemic changes in supply chain that would take considerable time to implement and required structural change. Supply chain was very good at getting supplies to the end users, but we lacked strategic direction and were not meeting the needs of our internal customers.

"In my experience consultants such as Deloitte are engaged to assist in finding savings opportunities and providing quick bottom line results," he continued. "They are typically not engaged in implementing foundational process changes to assure the changes will ‘stick.’"

Trupiano lauded his team for taking the plan, adding some depth and running with it.

"I was very fortunate to have a director of value analysis position that had been approved prior to my arrival, and filled that position with a strong individual, Michael O’Toole, who had previously worked at [University HealthSystem Consortium] implementing value analysis programs across the country," he said. "I received approval to add a director of purchasing and contracts position, and Ken Tifft joined us from Kettering, adding 30 years of purchasing experience. Then, 90 days after I arrived, my director of laundry resigned, and I transformed that position to a director of operations position with oversight of the laundry plant, as well as logistics at our five hospitals. That position was filled by Walter Grueninger, who joined me from SSM-St. Louis, where he had held a similar position. Walter is a 16-year supply chain operations professional, with a [healthcare] finance background, and is exceptional at running supply chain logistic operations.

"There is no way we would apply for this award, much less be fortunate enough to be selected as a winner, if not for the exceptional talent of this team," Trupiano added. "We transformed the organization farther and faster than I could have imagined when I first came on board."

As a VHA member, WellStar uses Novation as its primary GPO for base contracts that Purchasing uses to negotiate final pricing, according to Tifft. Although VHA/Novation offered tools to help manage the item file and contract repository, he indicated WellStar chose to manage these areas internally through its MMIS, which was McKesson PMM, because they wanted greater flexibility to design a customized approach to manage more than 22,000 items in the item file and more than 1,000 GPO and local contracts.

"Prior to 2008, many contracts were built in [McKesson] PMM based on verbal quotes, e-mails, etc., which led to confusion regarding correct contract pricing resulting in invoice discrepancies and a significant amount of re-work, Tifft noted. "Today’s contracting strategy for local agreements is to negotiate three-year fixed pricing with specific item information attached to the signed and counter-signed contract as an exhibit. GPO contracts are seen as a starting point, and purchasing negotiates additional discounts where possible based on external pricing benchmarks and additional commitments or product conversions WellStar is able to accomplish."

Although Trupiano has been relatively satisfied with the dashboard measures developed through the McKesson PMM, WellStar recently signed an agreement with Lawson Software to implement during the next 18 months its human resource, finance and supply chain modules, according to Trupiano for more in-depth dashboard measures.

WellStar’s clinicians operate eight different service lines – cardiovascular, medicine, musculoskeletal, oncology, pediatrics, pulmonary, surgical and women and infants – to which supply chain is plugged in through value analysis initiatives.

"The clinical service line structures consist of an employed chief medical officer and an administrative leader who are jointly responsible for clinical quality, marketing and service line financial performance, utilizing a cabinet structure to develop strategies for key functions of the service," Trupiano noted. "Supply Chain is integrated into the service lines through the cabinet structure, with variation as to where we fit within the structure. In cardiology, for example, value analysis falls under the clinical integration team, and in surgical services, a cabinet-level surgical equipment technology and supplies (SETS) team was created to address standardization and technology decisions. The service lines are a mix of employed and private practice physicians, and the participation we experience in value analysis is phenomenal. Physician attendance at meetings is high, and they are truly engaged in working with us to improve quality and reduce cost."

As many as six to seven physicians may attend any of the various monthly value analysis committee meetings, according to Separk. In fact, "the process is so integrated that supply chain is consulted to project supply cost savings as part of the pro-forma used in specialty practice acquisition decisions," he stated.

Nurses participate through product trials where they can earn points toward a financial incentive bonus under WellStar’s Clinical Advancement Program (CAP) from their evaluation reports and presentations.

Clinical value analysis teams and the Chief Safety Officer review all new technology requests that includes clinical research, revenue and profitability and cost impact analyses. Physicians requesting new technology present to their peers within the service line before the committees approve or deny a request. Those committees may also develop appropriate usage criteria for approved products.

Kenneth Kunze, M.D., senior vice president and chief medical officer, reinforced the supply chain team’s relevance to the clinical staff and patients.

“The award speaks to the impact supply chain has on our health system, from a fiscal perspective to patient safety,” Kunze said. “Building a culture of collaboration between our physicians, nurses and other team members in the value-analysis process has been an added value for our system.”

In January, the value analysis program debuted an online product request system to streamline the process and an online survey tool to facilitate clinical evaluations and speed up product standardization decisions.

"During the development of our new value analysis (VA) process, WellStar was in the process of implementing a new physician-led Service Line structure," said Michael O’Toole, director, value analysis. "Thus, it was somewhat challenging to design a VA decision hierarchy and workflow that aligned with this new service line structure, particularly when some service lines were not fully implemented yet. However, the VA team engaged physician service line leaders as well as other key physicians and administrative leaders to assist in developing the new VA process, which proved to be a powerful tool in designing a process that met the needs of our physicians, clinicians and administrative leaders. By using a collaborative approach to designing the new VA process, we were able to quickly create buy-in and acceptance of a new process that would ultimately transform our culture from ‘purchase whatever you want’ to only purchasing efficacious supplies that provide the most value in terms of quality and cost."

In fact, for fiscal year 2011, annual supply and pharmacy expenses compared to the budget are nearing levels last seen in fiscal 2007.

"We have had steady decreases in real supply dollars over the past few years and are $9.5 million under plan for fiscal year 2011 with one month left," Trupiano said in late June. "The low-hanging fruit is gone, and for fiscal year 2012 we hope to cover inflation with reductions. We have begun to expand focus to work with our medical management team on utilization opportunities using the Clinical Advisor data. Once again our service line structure will be incredibly valuable in this work."

Prior to 2008, WellStar’s medical product recall process was manual and highly fragmented with little accountability for all parties involved, according to Tifft.

"There was no standard notification process, no process owner and no confirmation that the affected product was removed from the shelf and returned to the manufacturer," he said. "Purchasing was responsible for managing the recall process in regards to notifying departments and completing the required forms. Product recalls could come from many sources, such as FDA, ECRI Institute or a vendor, etc., and while purchasing was supposed to be notified first, many times this would not happen which created confusion around response to the recall and no one could say for sure whether or not the proper steps had been taken."

In 2009, supply chain assumed ownership of the product recall process for all WellStar facilities, led by one of the buyers in the purchasing and contracting department. Even though the recall process remains somewhat manual, Tifft noted, it’s more efficient. Basically, Class I and II recalls require that affected product be quarantined within four hours of notification. When Purchasing receives such a recall it searches the MMIS to locate the product and who acquired it to notify them of the recall and to make sure the proper steps are taken to remove the product from the shelves.

WellStar’s Chief Safety Officer is the C-Suite’s executive sponsor of the new process.

"This oversight promotes accountability, and since this new process has been implemented WellStar has had zero serious patient safety events related to product recalls," Tifft said.

WellStar Supply Chain anticipates automating the recall process within the next year, according to Tifft as they requested capital funds for fiscal 2012 to purchase ECRI Institute’s Alerts Tracker system. The team chose this system because they already maintain an extensive relationship with ECRI for price benchmarking and equipment analyses and because they also want to manage recalls for blood products, pharmaceuticals, equipment and food, as well as medical products.

One of Supply Chain’s crown jewels of improvement at WellStar is its Laundry Production and Distribution facility, which handles more than 10 million pounds of laundry per year for WellStar customers and a number of other external healthcare retail accounts.

Before its transfer to supply chain from environmental services, the laundry operation earned a spot in the lowest quartile in customer service surveys in 2009. Within the first year of the change, the scores flipped, according to Walter Grueninger, director, operations.

"We achieved these high results by implementing daily rounding with team members, providing team members input opportunities, providing reward and recognition programs, implementing safety practices, and investing in equipment and supplies," Grueninger noted, acknowledging that laundry represented one of those low-hanging fruit success stories.

In fact, supply chain decreased laundry’s cost per pound by 7 percent, which equates to about $400,000 in annual savings based on 10,050,000 pounds per year, according to Grueninger. Laundry also increased productivity to 98 pounds per productive hour from 93 pounds, he added.

The laundry operation participates in environmental conservation efforts by using a system that cleans and recycles rinse water and wastewater, which also allows them to save 50 percent on water, sewer and energy costs.

Supply Chain also plans to promote its laundry operation as a revenue-generating service and a cost-cutting opportunity for WellStar.

"We have a three-year capital plan to invest $3.7 million in the Laundry," Grueninger indicated. "After adding the depreciation expense from the three-year capital plan, our total cost per pound will still be significantly less than the current benchmark outsource cost per pound. The investment will allow an increase of 50 percent production capacity – or 5,000,000 pounds. WellStar will be able to market this excess capacity to other hospitals at a rate less than a commercial laundry. The retail revenue will be used to reduce internal rates to the WellStar facilities and fund operations."