Post on 14-Dec-2015
transcript
New England Society for Healthcare Materials Management
Ken Peterson,
Vice President
System Logistics Management
Aurora Health Care
April 16, 2004
Committed to Finding a Better Way
Making Health Care a Competitive Advantage for Wisconsin Companies and Citizens
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Using Web Based Technology& the Internet as a Driver
AgendaAurora at a Glance
Focus on Operating Margin
Materials Goals to Support Aurora Strategy
Aurora’s Use of the Web & Internet
Improvements & Successes
Lessons Learned4
Aurora Health Care
Largest community owned, not for profit, integrated network in Wisconsin
Largest private employer in State of Wisconsin: Employees: 27,162
Hospitals: 13 Acute Care and 1 Psych hospital
Clinics: 113 Retail Pharmacies: 143
Revenue: $2.4 billion Supply Expense: $571MM
Total Certified Beds: 2,598 Adult Inpatient Days: 430,973
at a glance
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The Three Part CommitmentTo the People of Eastern Wisconsin
• Whatever the national benchmarks are for price increases for 2003 through 2005, Aurora Health Care will be below
• Aurora Health Care will initiate actions to moderate total community health costs while demonstrating improved community health
• Aurora Health Care will be accountable to the community and transparent in its success in meeting its commitments
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Moderate Total Community Health Costs
Maintain Growth to meet needs of Community
Replace Aging Capital
Support New Technology (Speed/Cost of Change from an IS as well as from a Clinical stand point)
Focus on Improving Operating Margin
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Increase/Enhance Customer Service(s)
1. Web Based Requisitioning ToolImprove Productivity
1. Transmitting Transactions via Internet
2. Automating the Capital Process
Effectively make use of Web-enabled technology and the Internet
Reduce Costs/Improve Productivity
1. Contract Management Program (Premier’s e-Sourcing Program)
• See and Identify Opportunities to Reduce Costs
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Increase/Enhance Customer Service(s)
Automated Single User Interface for procurement Vs use of multiple (proprietary) platforms
(Aurora’s tool is IREQ -Intranet Requisitioning)(Global Healthcare Exchange (GHX)’s tool is “Catalyst” )
Centralized all transactions through MMIS
• Means to support Outlying Users• From 200 Users to 2700 Users (Began Implementation 2001)
Lock Down/Approval features to assist departments’ control costs
Web Based Technology & the Internet
1. Web Based Requisitioning Tool
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Web Based Technology & the Internet
1. Processing Transactions via the Internet: Aurora: Using XML (Extensible Markup Language) to process the 3 major ordering sets over the Internet via GHX to suppliers or direct to Cardinal Health --- (PO (850), Confirmation (855), Invoice (810) (Began Implementation Oct 2001)
Improve Productivity
Consolidates transactions through single intermediary vs. using numerous EDI systems
Facilitates accurate transmission of electronic purchase transactions by comparing data (catalog format: description, units of measure) that provider transmits with supplier data and flags discrepancies) (GHX “Content Intelligence)
GHX… more than an Internet Intermediary!
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Web Based Capital Approval Tool (completed and fully deployed)
• Increase the processing speed for submission/approval• Improve accuracy of data & capturing full project costs• Track processing times and data for bundling
Web Based Capital Request Tool (under development -- estimated completion Fall 2004)
Quote/RFP Tool (GHX) (working development with GHX)
Web Based Transactions via Internet (GHX) (working development with GHX & shopping for supplier to pilot program)
Web Based Technology & the Internet
2. Automating the Capital Process
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Web Based Technology & the Internet Reduce Costs & Improve Productivity
1. Contract Management Program (Premier’s e-Sourcing Program)
Initiate Rapid Contract Implementation and Establish Accurate Pricing• Act as central repository for all contracts• Ensure accurate and timely contract pricing from day 1 • Contract/Pricing Activation on line with Suppliers & Distributors (Active)
Facilitates Accurate Data Transmission • Transmission of accurate nomenclature and pricing from Premier Contract File to users’ MMIS via GHX (Under Development)
• Pricing Confirmation via GHX during confirmation and invoicing (Under Development)
Reduce Healthcare Costs by Increasing Visibility/Availability of Data• Enabling higher levels of contract compliance: Analytics: Contract Utilization- By Supplier, by Contract, by Product, by facility, by department… (Under Development)
Verify Purchase/Contract Volumes: Rebate Calculator (Under Development)
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3. Automation Requires/Be Prepared for Process Change:
• Change for Customers
• Change for your Staff & other Departments
• Change for Suppliers
Lessons Learned
1. Establish a Vision:
• Why/what benefit am I trying to accomplish• Involve your IS Dept Early• Involve users as part of development process
2. Establish Current State Basis for Benchmark/Metrics Early
• Capability to prove value of Systems and Processes
• Credit for increases in productivity
4. Be Prepared to Commit Your Time and Resources
• Hold your staff, suppliers & intermediary accountable to meet agreed upon expectations
• Participate in User Groups
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Improvements/SuccessesPurchasing Transactions via Web Based Technology & Internet
1. Intra/Internet Requisitioning Tool (IREQ): Productivity Gains From Manual to Web Based: (Estimated)
• From 200 to 2700 users connected to MMIS• Buyers: 17 Min per PO processed = 54,085 hr/yr equates to 26 FTE’s Savings• Users: 19 Min per Req processed = 66,262 hr/yr equates to 31.8 FTE’s Savings
From FY 2000 to FY 2003 Expanded Central Purchasing Function with minimal staff increase FY 2000- 3 Hospitals FY 2003- 14 Hospitals FY 2000- 0 Clinics FY 2003- 42 Clinics
2. Productivity gains for Users and Staff increase as Aurora uses more Web Technology & continues to connect with more suppliers via GHX Connected with 25 Suppliers on 850/855’s through GHX or direct with Distributor-Cardinal Health & Live with 3 Suppliers on 810’s and growing: (Volume = 43,750 PO’s/yr = $50MM/yr) Reduction of pricing errors (Reduced 50% of open invoices w/Cardinal Health from $1.7M in Mar 02 to $26K today -- Continuous Pricing Verification)
3. Productivity gains with Automated Capital Request Process Decrease processing (approval/coordination/negotiations/order from 11 weeks to 7
weeks)
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Improve Order EfficiencyPurchasing Staffing Levels
95,320
287,376
131,494
381,295
195,235
547,646
208,058
564,792
232,962
625,778
2000 2001 2002 2003 2004 Projected
Total PO's
Total Lines
11 Buyers27.5 Staff
13 Buyers27.5 Staff
14 Buyers29.5 Staff
16 Buyers28 Staff
16 Buyers29 Staff
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Cost to Implement Aurora’s Web-Based Requisitioning Tool
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Hardware $ 60,000
Software $147,000
Consulting $400,000
Staff Time $ 30,000
1 FTE Full-Time Trainer
Note: The hardware and software were purchased for this project but were then the foundation for all Web-based projects that followed.