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         Clinical intelligence for supply chain leadership

 
 

INSIDE THE CURRENT ISSUE

August 2013

Special Focus

Greenville (SC) Health System by the numbers


Five-year Supply Chain performance since 2008


2008
2013

Supply Expense as a percent of net revenue

16.1 percent
14.9 percent

Supply Expense as a percent of total operating expense

16.58 percent
15.3 percent

Purchases:

Supplies – $250 million

Services/Equipment –$256 million

Average fill rate: 99.47 percent

Average monthly lines picked: 80,989

Average monthly lines picked accuracy rate: 99.982 percent

Average monthly pieces picked: 623,054

Average POs received: 5,338

Average monthly pieces received: 111,233

Average monthly inventory turns: 17.42

Material Distribution Center (MDC) facts

Services: Courier, Distribution, Linen, Mail Center, Print Shop, Purchasing, Receiving, Surplus Storage, Warehouse

The Automated Guided Vehicle System provides more than 1,900 cart transports on an average day. These transports include supplies, clean and soiled linens, hot patient food, retail goods, case carts, wastes and other materials. The supplies and linens sent from the MDC have their final destinations pre-programmed while they are still at the MDC. Attendants offload carts from the delivery truck and then stage them in the local pickup stations. They are then automatically picked up and delivered to their intended destinations by the automated vehicles without further attention.

Asset Tracking

Greenville Memorial Hospital tracks more than 3,400 assets using various technologies.

GMH features five "Loss Prevention Portals," including:

  • Loading Docks: Monitors assets leaving GMH to go to other facilities

  • Ambulance Bays: Assets coming and going with patients and emergency personnel

  • Decontamination: Assets thrown into trash

  • Patient Discharge: Assets taken home by discharged patients

More than 17 "specialty" departments use asset tracking, including:

  • OR (e.g., WOWs, Neoprobes, Various ESUs)

  • Anesthesiology (e.g., Probes, Carts, Scopes)

  • Respiratory Care (e.g., Ventilators, Respirators, CPAPs)

  • Radiology (e.g., Mobile X-ray units, C-Arms)

  • Women’s Hospital (e.g., Specialty Beds, Ultrasounds, IPADS)

  • Bed Management (e.g., Specialty Beds)

  • Pharmacy (e.g., Drug Trays)

  • Dietary (e.g., Warming Plates)

GHS uses GHX Contract Center, an online tool to manage and store GPO and local contracts, validate pricing, and manage contract updates. GHS has 483 GPO and 352 local contracts in the system.

Savings milestones

FY 2009 – Budgeted $4.0 million – Actual savings $5.6 million

  • Custom OR Packs – $577,549

  • Endomechanical Standardization – $583,590

  • Drug Eluting Stents/Bare Metal Stents (Capitation Program) – $473,755

FY 2010 – Budgeted $3.0 million – Actual Savings $6.9 million

  • GPO Conversion – $758,456

  • Cath Lab EP Contract (Capitation Program) – $557,850

  • Ortho-Trauma Conversion/Standardization – $500,000

  • Duke Power - Meter Consolidation – $486,988

  • Contrast Media – $278,752

FY 2011 – Budgeted $4.3 million – Actual Savings $7.6 million

  • Reference Lab Negotiation – $584,117

  • Distributor Standardization – $250,000

  • Sevoflurane & Desflurane change to Isoflurane – $211,692

  • Cath Lab EP Contract (Capitation Program) – $280,400

  • Ascent Reprocessing – $237,378

FY 2012 – Budgeted $4.4 million – Actual Savings $5.6 million

  • Spine Negotiation (Pay to Play program) – $1,162,483

  • Sealant Conversion Baxter to Ethicon – $858,868

  • Cardiac Rhythm Management Devices – $738,026

  • Drug Eluting Stents/Bare Metal Stents (Capitation Program) – $429,446

FY 2013 – Budgeted $4.3 million – Actual Savings $4.5 million projected

  • Partners Regional GPO – $1.7 Million

  • Radio pharmaceuticals – $521,000

  • Exam Glove Conversion – $240,000

  • Hill-Rom Rental Bed Reduction – $200,000

  • Endomechanical Renegotiation – $167,000

Managed Print – $500,000

Document Management – $475,000

Online Auction for Surplus Equipment – $350,000

Purchasing Collaboration with Palmetto Health – $1.2 million

Direct Distribution – $2.1 million

New Regional Purchasing Affiliation with Partners Atlanta/UHC/Novation – $10 million, five-year projection

2013 goals

People: Achieve Work Force commitment index – 4.29; increase supplier diversity spend over previous year’s volume $10,000,000

Service: Complete RFID asset tracking implementation; achieve interdepartmental satisfaction mean score of 3.75

Quality: Achieve MDC metric: On-time deliveries – 98 percent, orders shipped complete 95 percent, inventory accuracy 97 percent, inventory days on hand – 30, fill rate 99 percent

Growth: Support physician practice supply distribution requirements via MDC; expand recycling program to physicians practices; integrate Laurens Hospital upon acquisition – contracts, supply portfolio, etc.

Finance: Supply expense savings target $5,500,000 for FY 2013; complete self-distribution model for MDC; achieve within budget status all departments

Academics: Produce/publish technical article about GHS in a major publication; create Supply Chain intern program/educational experience.

  This Month's Advertisers

Puzzle power:
GHS paves pathway to prominence

Supply Chain assembles key pieces for overall success

by Rick Dana Barlow

Deep in the breadbasket of America’s Bible Belt, the C-suite at the five-hospital Greenville (SC) Health System clearly viewed Supply Chain as a critical piece of a larger puzzle that when completed would display a panoramic vista for patients on what a successful multi-hospital system looks like.

Back in 2006, however, Supply Chain struggled to stitch itself together as a mini puzzle within the larger one.

What a difference seven years makes. In fact, what started as a package of pieces with only a plan to move forward has evolved into a progressive, carefully crafted, technology-centric cog in GHS’ wheel today.

Under the leadership of John Mateka, MBA, MHA, Executive Director, Supply Chain, and Chief Procurement Officer, the Supply Chain team at GHS rallied around a simple request from the Executive Vice President and Chief Operating Officer to create a "modern-day, responsive" supply chain, blessed and strongly supported by Vice President and Chief Financial Officer Terri Newsom.

They’ve delivered so far.

Supply Chain’s crown jewel may be the 125,000-square-foot Materials Distribution Center (MDC), which is staffed by more than 84 full-time equivalents, and fortified with a fleet of automated guided vehicles (AGV), carousels and conveyor belts, linked electronically through an enterprise-resource planning system that includes warehouse management and low-unit of measure replenishment, as well as a radiofrequency identification/real-time location system for asset tracking.

But other not-so-hidden gems abound, such as Supply Chain’s commitment to patient care as demonstrated by a comprehensive Value Analysis process that includes "supplier mentoring," an interactive clinical decision support program for medical/surgical products that impresses surgeons, physicians, nurses and infection prevention professionals alike because it’s "physician-led" but "supply chain-driven," a successful recycling and sustainability program, an opportunity-minded supplier diversity initiative and a developing supply chain intern program debuting this year.

Consequently, GHS’ supply chain operates at least $30 million less a year today than it did seven years ago.

Moreover, GHS’ president and CEO is a former supply chain executive-turned CEO with supply chain and chief executive experience at two nationally recognized healthcare systems in Atlanta and Chicago, respectively.

No pressure to perform though.

For all of these reasons Healthcare Purchasing News chose GHS’ Supply Chain Department as its 2013 Supply Chain Management Department of the Year.

Supply Chain Team 2013

Front Left to Right
Vanessa Hamby
– Manager Materials Services; Shanye Hagood – Materials Coordinator; Donna Perla – Materials Supervisor; Carol Tyson – Clinical Director OR/Sterile Processing; Charlene Hooper – Administrative Assistant; Carolyn Thompson – Business Operations Coordinator; Sonya Cunningham – Manager Supplier Diversity

Middle Left to Right
Debbie Gregory
– Manager Materials Services; Rob Miller – Materials Supervisor; Eugene Wilkes – Materials Coordinator Transportation; Harold Thomas – Materials Systems Specialist; Skip Schwirian – Manager Perioperative Material Services; John Mateka – Executive Director, Supply Chain Management; Ross Adair – Materials Systems Coordinator; Jack Massengill – Materials Supervisor; Leslie Thomas – Materials Systems Coordinator; Dylan Lawlor – Manager Value Analysis; Mel Redick – Director Logistics

Back Left to Right
Syl Oliver
– Materials Supervisor; John Tate – Materials Supervisor; Cory Turner – Materials Supervisor; Curtis Duckett – Materials Supervisor; Terry Foxx – Tracking System Coordinator; Mike Nix – Manager Support Services; Chad Richard – Director, Procurement and Strategic Sourcing; Vickie Greene – Manager Materials Services; Chuck Gormley – Manager Supply Chain Information Systems

Progressive pursuits

Fast Facts on Greenville Health System

Headquarters: Greenville, SC

2012

2013

Facilities: 4 acute care hospitals, three specialty hospitals, six outpatient care facilities, two long-term care facilities, two wellness centers and a host of affiliated practice sites and related programs.

Beds (licensed and average operating):
1,268 + 91 = 1,359

Outpatient Visits (2012 vs. 2013):

2,434,453

2,802,570

Surgical cases (2012 vs. 2013):

42,366

41,847

Total net revenue (2012 vs. 2013):

$1,173,163,000

$1,354,111,500

CEO: Michael Riordan

CFO: Terri Newsom

COO: Greg Rusnak

Supply Chain Management

Executive Director, Chief Procurement Officer:
John Mateka, MBA, MHA

Joined organization: 2006

Employees/FTEs (at GHS): 186.5

Conduit to CEO: COO

GPO affiliation: UHC/Novation

Annual purchasing volume/supply expense
                                                (FY2012 vs. FY2013):

 

$114,592,983

$120,186,744

Annual purchase order volume (FY2012 vs. FY2013):

 

$299,715,123

$332,981,519

Percentage of purchase orders transmitted electronically: 91 percent

Percentage of requisitions processed electronically: 90 percent electronic; 10 paper, but converted to electronic by Purchasing

Purchasing and contract management: Centralized

Total annual operating expenses: $16,668,716

Management Team (at GHS):

Mel Redick – System Director, Supply Chain Logistics

Chad Richard – System Director, Procurement and Strategic Sourcing

Chuck Gormley – Manager, SCIS and Purchasing

Dylan Lawlor – Manager, Value Analysis

Sonya Cunningham – Manager, Supplier Diversity

Mike Nix – Manager, Support Services

Cory Turner – Manager, Materials Distribution Center

Vanessa Hamby – Materials Manager, Greenville Memorial Medical Campus

Skip Schwirian – Materials Manager, Perioperative Services, Greenville Memorial Medical Campus

Vicki Green – Materials Manager, Patewood Medical Campus

Debbie Gregory – Materials Manager, Greer Memorial Medical Campus

Donna Perla – Supervisor, North Greenville Hospital

Jack Massengill – Supervisor, Hillcrest Hospital

Division functions: Materials Management, Mail Room, Print Shop, Supplier Diversity, Value Analysis, Purchasing, Contracts, Warehouse – Shipping and Receiving, Couriers, Disposition

Source: Greenville (SC) Health System, July 2013

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 applications.

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, Courier (center)

Materials Specialist Larry Koba restocks a supply cabinet

Pierce Wylie, Supply Chain Intern and Chuck Gormley, Manager of Supply Chain Information Systems

Materials Specialist picks product in
GHS Carousel area

GHS Materials Specialist picks supplies
using Pick-to-Light technology

Supply 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 works best."

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 track."

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 above.

C-suiteness

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 harassed.

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 country."

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 over.

"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 rather well.

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 Infection Prevention.

"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 support, too.

"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 relationship."

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 initiatives."

Open-minded supply chain pros who work with physicians not on the hospital payroll can adapt GHS’ structure, Mateka insisted.

"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 page 18.

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 idle."

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 other."

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 ones."

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 www.hpnonline.com/inside/2013-08/1308-SCM-extras.html