GHS harbored a bold plan for Supply Chain
re-engineering back in 2006 before Mateka arrived. At a time when few
healthcare organizations wanted "to get into the warehouse business" in
favor of outsourcing distribution and logistics to suppliers, GHS opted to
take the plunge as part of an overall building/expansion program that
included remodeling existing facilities and constructing new ones.
The organization wanted to consolidate
supply chain operations into a centrally located, consolidated service
center to free up expensive space Supply Chain occupied in four of its new
or remodeled inpatient hospitals for revenue-generating clinical
Mateka emphasized that the MDC was not
created to address or even solve service issues. "Actually, the move to the
warehouse initially caused service issues," he recalled. "Unfortunately,
building a comprehensive distribution operation is one thing; making it work
and deliver the improvements and service efficiencies is another."
In short, Mateka was recruited, hired and
handed a puzzle box of pieces to lead the charge, including defining and
implementing appropriate processes and programs that take advantage of the
space and technology available to forge a "responsive supply chain that
delivers value, savings and customer service and satisfaction." Tall order
right out of the gate.
The alternative, however, was a bit more
tense and troubling.
"Beyond providing clinicians what they
need, when they need it, Purchasing had not done a good job embracing [group
purchasing organization] contracts and improved pricing opportunities,"
Mateka found. "Doctor-preference items were out of control. We were paying
list price for many physician-requested products. Inventory levels were
elevated because of fill-rate and outage issues and there was just a general
dissatisfaction and frustration among our caregivers with the service over
the past years."
In fact, the overall fill rate at the new
warehouse was calculated at 65 percent to nursing units when Mateka arrived.
"OR docs were frustrated with the outages, not to mention occasional
cancellation of cases," he added.
Among the contributors to the problem were
manual requisitions for the warehouse and purchasing, a limited item master
file and a 20-year-old information system, Mateka remembered. "I virtually
had to invest millions — between $2 million and $3 million — to get us where
we are at today," he added.
Mateka estimates that any facility would
need to spend between $1 million and $2 million for a warehouse management
system (WMS), and another $1 million for a material requirements planning (MRP)
system, as well as routine transactional expenses to use an online exchange.
"Let’s face it: In order to manage you need
information," he asserted. "The better, more timely and accurate the
information, the better you can manage. A sound, reliable information system
is essential foundation to any responsive Supply Chain program."
Materials Specialists Sonia Grayson and Lolita Sullivan, Ron Wilson,
Materials Specialist Larry Koba restocks a supply cabinet
Wylie, Supply Chain Intern and Chuck Gormley, Manager of Supply Chain
Materials Specialist picks product in
GHS Carousel area
Materials Specialist picks supplies
using Pick-to-Light technology
Chain Supervisor John Tate
Supplies being wrapped to carts using
Automatic Stretch Wrap machine
Robotics delivery system within GHS’ largest
facility – Greenville Memorial Medical Campus
As a result, GHS invested in an ERP system
from Lawson (now Infor) that links Supply Chain to Finance, automated supply
storage systems from Omnicell and GHX for online exchange services, as well
as IBSS for "heavily customized, software-driven and technology-agnostic"
RFID/RTLS. More than 17 clinical specialty departments can access and use
Supply Chain’s asset tracking system to tag and track an item’s location
directly from his or her computer. "We can also write alerts and notices,
such as, ‘Alert me when my specialty bed leaves my unit.’ An alert will
notify by e-mail, alarm, etc. when the bed is rolled out of the unit’s
doorway," he added.
Overseeing a consolidated service center
that includes "complete warehouse automation" with carousels, conveyor belts
and automated guided vehicles represents a heavy investment in technology
typically found in the manufacturing and retail industries and not providers
in healthcare that may not have the resources to pull it off. But extracting
supply chain storage space from the hospitals for patient care produced some
funding, according to Mateka, as well as anticipated cost savings on the
back end to offset the initial fiscal hit.
Mateka understands the critics and cynics
who might attribute GHS’ success to the investment in manpower, space and
technology he received. "I have heard from some colleagues, ‘Yeah, give me
those resources and I could achieve similar results,’ and, ‘I can’t get any
new help.’ My response: This is not a game of ‘trust me.’ You need to
present your business case, identify the opportunity, show the plan,
identify the resources and ultimately, the net benefit. And in some cases,
bet your job that you can deliver," he asserted. "We are very fortunate in
the Value Analysis and Procurement side of the supply chain where we manage
millions of dollars. Savings is as good as revenue. If it cost us $1 to save
$3, and we can prove it and show it, we will typically get the $1."
In fact, job restructuring "created" a
number of "new" positions, more accurately labeled lateral or
forward-lateral moves. Other new positions actually slotted "all had a sound
business case behind the need for their addition and a [return on
investment]," Mateka indicated. "In the service area, benchmarked FTE ratios
helped flush out where you had deficiencies or opportunities to shift FTEs
and support. Would we be able to achieve the same results without these
changes? No. You need resources to initiate change and do things differently
that generate savings or efficiencies."
For example, Mel Redick became System
Director of Logistics from Director, Materials Management, to manage the
flow of goods and services between the MDC and the hospitals and clinics and
within the hospitals. Meanwhile, Mateka recruited Chad Richard to lead
Purchasing and Strategic Sourcing functions to shore up contracting, pricing
and vendor performance.
Once optimized, the AGV fleet may enable
about 67 FTEs to be "reassigned to more valuable product activities" in the
future, he added.
One side benefit: "We actually saved
construction dollars doing this, and removed semi-trailer traffic at each
hospital," he noted. "It turned out to be a good move."
Mateka also recognizes that a consolidated
service center model isn’t a universal solution. "The warehouse fits in our
long-range regional plan," he acknowledged. "It may not make sense for
everyone, especially with some of the fine medical distribution companies
that we have at our disposal. You need to crunch the numbers and see what
Furthermore, Mateka said they are exploring
how to expand MDC services beyond product distribution, not only for GHS but
potentially other facilities, too. But they need to master the process for
GHS facilities, he admitted. "We first need to get it right for our internal
customers before we expand," he confirmed.
For the record, Mateka’s Supply Chain team
has removed and documented an average in excess of $4 million annually
during the past six years. He stressed that that figure represents "new
unbudgeted savings and initiatives and not carry over" from prior years.
"Our supply cost as a percent of net
revenue has declined during that same period. Our performance has increased
steadily and our customer satisfaction is at an all-time high," he said. We
measure our savings (and increases). Our best gauge and target is last
year’s experience, essentially targeting continuous improvement. As a rule
of thumb, a good supply chain operation should minimally beat inflation with
saving initiatives. Volume and new programs will make this a challenge to
Yet he revealed his struggles with supply
chain metrics. "Supply Chain metrics is something I have wrestled with my
entire career," he said. "We set a stake in the ground some years ago in
AHRMM when we created our accounting outline of healthcare supplies.
Unfortunately, not many institutions have incorporated this standard in
their accounting systems so ‘supply expense’ varies greatly across systems
and even hospitals within systems. To set a target would only mean something
to the system setting the target."
He stressed that they are on track with
their administrative, financial and operational goals and targets for 2013.
Editor’s Note: For more details on GHS’ Supply Chain by the numbers, see
Unlike many facilities, Mateka acknowledged
Supply Chain enjoys strong C-suite support from the COO to the CFO and even
the CEO, who spent the early part of his career overseeing supply chain
operations for a prominent Atlanta healthcare organization before assuming
the CEO role at another in Chicago.
Of course, that can be a mixed blessing. On
one side you might think you’ve got your meal ticket punched; on the other,
you might be facing lofty expectations from someone who did what you do and
advanced up the ranks.
From a strategic perspective, a Supply
Chain-minded CEO provides an advantage, Mateka said. "Generally, I’ve found
that if Supply Chain is lacking and subpar the organization outsources much
of the responsibility — perhaps temporarily — to distributors and GPOs
rather than invest in warehouse space.
"Our CEO [Michael Riordan] remains our
strategic leader," he continued. "While his roots come from operations and
he understands Supply Chain, beyond supporting the introduction of modern
Supply Chain practices at GHS to supporting the growing organization, his
role typically is to support his operational team, led by the COO. Because
we share a similar background he was — and is — a good sounding board."
GHS pushes value analysis fundamentals
to the hilt
As the Manager of Value Analysis at
Greenville (SC) Health System, laboratory-trained Dylan Lawlor, MT
(ASCP), plays an essential role that straddles the supply chain
and clinical spaces. Here Lawlor shares some strategies and
tactics that worked for GHS.
"Five years ago the Value Analysis
department started with two bodies and just two goals. I was brand
new to VA but inherited a Masters-prepared R.N. who had been doing
this to some degree for 15 years. The goals were to save $5.5
million and to create an environment in the OR that encouraged
safe reviews of new technology without pressure from vendors and
while driving savings.
"So not knowing much about the OR, I
started by asking very novel questions.
1. Why are vendors allowed into the OR
when they are not invited? As I saw it this is the Physicians and
Nurses space to do their business; they did not need to be
2. What tools do I have to help in
product reviews? Coming from the world of the Laboratory, I knew
that if I could analyze the information in the OR and present it
to the Surgeons logically, they would see the same opportunities.
3. Are there any processes in place for
ordering and evaluating new products? As I saw it, there was a
process but not everyone used it consistently.
4. Who controlled these vendors? The
short answer was no one!
"Based on short answers to my questions,
we had a quick discussion with my boss. From this discussion came
the first control to be put in place: If a product is used without
prior approval, we are not paying the vendor for it. We controlled
this process by ensuring all products had internal product codes.
"It only took a few free hips and knees
to ensure this rule was being followed by the reps; the word
spread like wildfire.
"Prior to implementing this policy, we
took over the Products committee and therefore got to the front
end of the product review process. We did not want to slow down
the process and be seen as a hindrance to the process.
"The second control came into being with
data. Over the last five years the type of data and the degree
with which we could analyze it has progressed. It started with
having access to only purchase order (PO) history, and with time
has progressed to PO history, national benchmark price
comparisons, inventory levels, revenues, competing products and
which physicians are using the various products. By taking the
reviews to these next levels of analysis, the picture we now paint
for physicians is clearer and more detailed.
"With time and mentoring, the vendors
have been brought into balance. We have always seen the role that
they play in the OR, ensuing our teams are supported properly and
bringing new opportunities to the table. These discussions,
however, now occur at our discretion and not at theirs.
Physicians, managers and staff know that the OR is their house,
and we are there to help support their needs as are the vendors.
They are much more vocal in letting vendors know this.
"The final hurdle, in my opinion, came
in just the last 12 months. We converted the existing OR products
committee to a physician-led committee. While the process worked
with the existing committee, it did not directly tie the
physicians into the process. With a physician chair and physician
members the conversations held at the meeting are very different.
As part of the process, physicians are invited to the meeting to
share why they need the product and how it benefits the patient
and the hospital.
"Through all of these tools and
processes, we have created an OR Product Formulary. We know what
we have in the OR. When we convert, we do not get left with unused
products. We have upwards of 100 percent standardization in many
product categories and we drive some of the best pricing in the
GHS’ value analysis go-to guy
If Dylan Lawlor is Greenville (SC) Health System’s
Batman of Value Analysis then the other half of the Dynamic Duo is Warren
Buckley, R.N., MSN, Nursing Materials Coordinator.
Since Buckley’s been involved in Value Analysis at
GHS for more than two decades, he hardly can be considered Robin, the Boy
Wonder. More like Batman’s — and alter ego Bruce Wayne’s — resourceful and
British military-trained butler Alfred Pennyworth.
Here Buckley highlights his breadth of experience
and wide-ranging exposure to clinical issues as the physician’s clinical
supply chain consultant and overall product go-to guy.
"Having a clinically trained MSN on staff within
the Supply Chain arena gives us more insight into the true reason why we are
here."I chair the Clinical Products Review Committee. This committee looks
at new products and existing products for nursing and other clinical
departments. We make recommendations about more cost-effective options
(value analysis). We address issues related to problems with products, such
as defective products, recalls, changing needs.
"I act as an ‘in-house consultant’ so when someone has questions about how
we might do a procedure, or do it better or more cost effectively, or what
alternative products might be available, then they might call me to talk it
"I sit on several nursing committees — Procedure,
Falls, Restraint, Skin Care, VAP and CLBSI Committees — with the intent to
have two-way communication about how changes in products might change a
practice/procedure and how a change in practice might change what mix of
products we need (which may involve cost increases, changes in contracts,
changes in [Materials Distribution Center] stock)."
Editor’s Note: Riordan earned one of HPN’s "S.U.R.E." awards for "Supply
Chain-Focused CEOs" in 2010.
Balance of power
The hallmark of GHS’ Supply Chain
connection to physicians and surgeons is that it’s "physician-led" and
"supply chain-driven," which may seem anathema or an oxymoron, but works
Roughly 80 percent of GHS’ doctors are
employed by the organization and incented like executive and department
leadership on its financial bottom line. "This provides a setting different
than many hospitals, and frankly, one that has been very advantageous for us
in our supply chain programs," Mateka acknowledged. Yet this "balance of
power" undergirds a solid foundational relationship.
"Because of our structure we have
incorporated our physicians in our medical/surgical decision-making
process," he said. "They chair and sit on the committees. Our Value Analysis
and procurement/sourcing teams present opportunities or commitment
requirements, and the clinicians decide based on outcomes, performance and
costs, not preference. The question is not, ‘Will you use this?’ But, ‘Why
can’t you use it?’"
But Mateka doesn’t need to leverage the
physician employment angle or the CEO’s supply chain background when
physicians may be at loggerheads with his department to influence decisions
or accomplish aims and goals.
"Rarely does any supply chain ‘debate’ ever
get to the ‘Os,’" he told HPN. "However, there are occasions when there is a
bigger strategic consideration that might ‘trump’ price/costs. Those are
considered, and then we do what’s in the best interest of the organization."
A hospital doesn’t need to employ its
physicians for everyone to cooperate and collaborate, "but it sure makes it
easier," he added.
Cynical supply chain professionals might
scoff that it’s arguably easier to work with employed physicians than if
they were herding cats with privileges, but Mateka dismisses the critics
with a blunt assessment.
"You still have to have an organized
structure to lead the physicians to decision making, operational programs to
implement those decisions, tracking mechanisms to document progress and
outcome follow-up to ensure value and contribution of the decisions made,"
Mateka said. "Docs are still docs. They practice medicine. Someone still has
to manage the supply chain. It may be a little easier if they are employed,
but without a sound and responsive infrastructure to support the physician
involvement, you’re right back where you started."
Supply Chain’s efforts aren’t lost on
"While cost efficiency is important in
supply chain management, we have seen those who are responsible for this in
our organization come to the table and collaborate with clinical leaders to
make decisions that are best for our patients," stated Connie Steed, MSN,
R.N., CIC. "Those decisions are not always the cheapest product available."
Physicians understand and appreciate the
"Pressures to reduce healthcare costs and
drive operational efficiency have never been greater," said Erwin Stainback,
FACHE, Senior Administrator, GHS’ Perioperative & GI Services. "Periop
represents one of the largest supply spends within the hospital. I have
found working collaboratively with our GHS Material Management Team to be
both rewarding and enjoyable versus what can oftentimes be an adversarial
relationship. They are truly partners that view success only when everyone —
Periop, Physicians and Material Management — achieves a common set of
objectives. These results speak to the importance of maintaining this
Jerry R. Youkey, M.D., GHS’ Executive Vice
President for Medical and Academic Services, and Dean, University of South
Carolina’s School of Medicine, concurred.
"The ability of our supply teams to work in
partnership with clinical leadership — a significant step beyond
collaboration — has been integral to improving value-based healthcare at GHS,"
he noted. "We define improvement in value-based healthcare as enhancing
access, increasing demonstrable quality, and/or decreasing cost of care, all
of which have been positively impacted by these partnership supply chain
Open-minded supply chain pros who work with
physicians not on the hospital payroll can adapt GHS’ structure, Mateka
"It’s all about relationship purchasing and
selling," he said. "Physician preference, in many cases, is based on the
value-add they receive when they use a particular product. This can come in
many forms, such as, trips, educational programs, comfort level with a
product or a rep, etc. And you won’t get them to admit to many of these so
let’s just call them value-adds.
"So what you do is set up a decision-making
process that considers cost, outcomes and value-adds — if they’re offered,"
he continued. "You do need senior leadership support for this. The key
involves a physician-led committee and structure. For example, the
Orthopedics Committee includes orthopedic surgeons on staff. Supply Chain
provides the facilitation, analysis and product info; the docs decide, based
on cost, quality and outcome. You will still have those that challenge you
and/or the process by saying they won’t come to your hospital if they can’t
use what they want. But if they don’t have a sound case on value, cost or
outcome and you crunch the numbers and report to your appropriate ‘O’ then
you have support to respond that perhaps they need to go elsewhere."
Value analysis vroom
To beef up GHS’ Value Analysis process
about two years into his term, Mateka recruited someone with a laboratory
background to join a 15-year veteran of the process who functioned more as a
clinical liaison. Dylan Lawlor, MT (ASCP), Manager, Value Analysis, and
Warren Buckley, R.N., MSN, Nursing Materials Coordinator, respectively,
provided the one-two punch that hooked Supply Chain into the clinical realm.
"Dylan is your typical bulldog go-getter,"
Mateka said. "Military Captain and extremely organized and politically
astute. These are all traits desirable in your lead VA person. [Warren] is
extremely knowledgeable about nursing practices and techniques, and in a
good role that suits his capabilities and abilities. Both are uniquely
suited for what we are looking for in a Value Analysis team." Editor’s Note:
For a glimpse into the mindsets of this dynamic duo, read their profiles on
Neither shies away from playing diplomatic
hardball when it comes to dealing with physician preference products,
essentially bringing more order to the Products Committee.
"The key to playing hardball is being armed
with good information," Mateka noted. "As long as you have good, correct and
compelling information to fall back on, there is usually not an issue with
challenging a physician’s preference. At the end of the day the physicians
learned that Dylan was not trying to deny them of their product; he just
wanted the decision to be sound and for the physicians to get the best price
available. Being in charge of a products committee is not as important as
playing an active role in the process of product review. Dylan sits on
various committees but is not the chair for all of them. As long as he can
be engaged and question product choices, he plays an important role in VA."
Obviously, Supply Chain required
information technology horsepower to buttress and reinforce this process.
"For the first few years, data were very hard to come by for Supply Chain,"
Mateka recalled. "With the addition of a Value Analyst and a can-do IT
Manager, we figured out how to get the data to make proper decisions."
Adding tools from such companies as GHX, Lawson (now Infor) and MedApproved
along the way helped, "but without the proper staff in place the data sits
Clinical conversations are "different" now,
according to Mateka. The OR Products Committee serves as a prime example as
it started with Nursing (including management and staff) and a contract
specialist. "While it served a purpose, it was not as effective as needed to
drive true product review and internal discussion," he said. "With the
addition of [Dylan], this review started occurring more effectively.
However, it still lacked a true product debate piece.
"As Dylan identified the need to separate
out Orthopedics, we took that opportunity to start a physician-led process,"
he continued. "With the physicians on board we were able to utilize their
expertise to challenge one another and drive a better review process. It
took us another two years to get this perfected before we converted the OR
Products Committee. Now with a Physician Chair and sitting physician
members, we can ask surgeons to come present their cases around new product
and have an open dialogue that includes clinical preference around product."
Mentoring the vendors about the process
added a new dimension. "From the start of our VA process, it was obvious
that vendors did not understand and/or follow the rules that [Supply Chain]
had in place for new products," Mateka said. "With a firm hand guiding them
and reasonable expectations in writing, our vendors have started to
understand what we want from a partner. Being clear and direct in our
approach has made it easy for a vendor to know when they may have an
opportunity. Sticking to our contracts and driving product compliance has
ensured vendors that we are playing fair. In the end, we both need each
Left to right: Chad Richard,
Director, Procurement and Strategic Sourcing; John Mateka,
Executive Director, Supply Chain Management; Terri Newsom, Vice
President & Chief Financial Officer; Mel Redick, Director of
Logistics; Mike Riordan, President & CEO
Making a difference
Mateka also likes to shine a spotlight on
Supply Chain’s recycling and sustainability efforts, its supplier diversity
emphasis and its new intern program.
"Our recycling program with Stryker medical
products are saving hundreds of thousands of dollars," he enthuses. "Paper
is beginning to become a positive return, and we are looking more into
reusables versus disposables because of high waste costs, and of course, the
environmental impact. If sustainability is not part of your overall supply
chain strategy, you are missing the boat!"
Mateka extolled Supply Chain’s
five-year-old Supplier Diversity program under Manager Sonya Cunningham. "A
diverse supply chain, focused on the highest standards of quality, helps us
connect with our patients, physicians and communities as we work to improve
lives," he stated. "When GHS purchases from diverse businesses, benefits are
full circle. More diverse companies broaden business relationships,
stimulating economic growth within the community."
But he cautioned against implementing a
Supplier Diversity Program to save money because you’d be off track.
"Supplier Diversity is an investment in people, the community and our
mission of serving," he stressed. "Don’t get me wrong: Our program is not an
entitlement. It is an opportunity to get a foot in the door and provide
opportunities for women-, minority- and disabled veterans-owned businesses a
fair shot at earning our business."
Supply Chain’s new intern program is
gaining some traction as it starts. "We intend to recruit and support a
training program for seniors in business or related study," he said. "We
provide a working experience, oversight of healthcare supply chain and get
some project work out of them. We will pay a small stipend and hope to
provide a potential future feed or recruitment opportunity for the good
Editor’s Note: Full disclosure – John
Mateka serves on HPN’s Editorial Advisory Board but this played no part in
GHS’ selection, which was based solely on his team’s accomplishments and
achievements outlined in their nomination.
An exclusive Q&A can be found online at