GHX Presentation 5-5-2015_REV04292015

Resource Optimization & Innovation, LLC (ROi) all rights reserved

Confidential & Proprietary Information

Innovation and the Changing

Nature of Supply Chain GHX Supply Chain Summit | May 5, 2015

Mike Wentling, Chief Solutions Officer



Who We AreResource Optimization & Innovation



A Journey of TransformationWho We Are

3

2003 2005 2007 2009 2011 2013 2015

2002 2004 2006 2008 2010 2012 2014

Borne out of a provider

Opened Consolidated

Services Center

Launched Pharmacy

Repackaging Program

Created Strategic

Contracting & Sourcing Arm

1st provider-owned private label

Consolidated

transportation operations

1st provider-owned

custom procedure tray

manufacturing facility

1st provider-owned

alternative spine

distribution model

Today: Provider-

owned, integrated

supply chain

company serving

customers across

the U.S.

Equity

partnership with

Recognized by Gartner as a Top 10 global supply

chain company every year of the ranking



Our OwnersWho We Are

4

Nation’s Fifth Largest Catholic

Health Care System

Louisiana’s Largest Non-Profit

Health Care System




5

$4.6 BillionOperating Revenue

4,418Staffed Beds

40,000Co-workers

2,000Integrated Physicians

Arkansas, Kansas, Missouri

and Oklahoma

30 Acute Care

5 Managed/Affiliated Hospitals

4 Heart Hospitals

2 Children’s Hospitals

753 Physician Practices

294 Clinic Locations

Source: 2015 Mercy




6

$1.477 BillionOperating Revenue

1,799Licensed Beds

10,897Co-workers

2,095Medical Staff

Louisiana

5 Acute Care Hospitals

JV/Management Services

Source: 2014 Annual Report



Who We Are

Our Partners

Our Goal: Together with our partners, to

transform the health care industry through

supply chain collaboration, integration and

optimization

Providers we’ve consulted with

Collaborative Partners on the Journey



Our Integrated ModelWe believe in the power of a provider-owned supply chain



ENGAGE and COLLABORATE

CONTRACT and SOURCE

MANUFACTURE and PACKAGE

WAREHOUSE and TRANSPORT

MANAGE and USE

CONNECT and SHARE

A Collaborative, Provider-owned Supply Chain

Our Integrated Model

9

Accelerating Clinical, Operational and Financial Results



Solutions At-A-Glance


10

Accelerating Clinical,

Operational and Financial

Results


Supply Chain Assessment

Supply Chain Strategy

Development

Physician & Clinician Alignment

CONTRACT and SOURCE

Strategic Contracting & Sourcing

Commodity

PPI

Purchased Services

Service Line Management

Regard® Private Label Products

Formulary Development &

Management

MANUFACTURE and PACKAGE

Custom Pack Solutions

Regard® Medical Device

Reprocessing

Pharmaceutical Repackaging

IV Compounding

WAREHOUSE and TRANSPORT

Consolidated Services Center

(CSC) Design & Operations

Transportation Design &

Operations

Centralized Capital Depot

MANAGE and USE

Supply Chain Management

Utilization & Standardization

Programs, including PPI

Optimization

Centralized Shared Services

CONNECT and SHARE

Telemedicine Solutions

Technology Solutions

Laboratory Services



Our integrated model begins with patient care in mind.

We engage with providers to develop a clinically aligned

strategy that optimizes the supply chain and allows

caregivers to focus on what matters most – the patient.


Supply Chain Assessment

Supply Chain Strategy

Development

Physician & Clinician

Alignment



11





12

To support patient care, we help providers manage the

evaluation, selection, contracting, standardization and

utilization of branded and private label products and

services.

CONTRACT and SOURCE

Strategic Contracting &

Sourcing

Commodity

PPI

Purchased Services

Service Line Management

Regard® Private Label

Products

Formulary Development &

Management





13

We operate within a regulated environment to create high

quality products and solutions while driving significant cost

savings for providers.

MANUFACTURE and

PACKAGE


Regard® Medical Device

Reprocessing

Pharmaceutical

Repackaging

IV Compounding





14

We offer the capabilities of a commercial distributor and

operate one of the largest provider-owned transportation

fleets in the industry. We not only deliver products along the

continuum of care, we help providers begin their own

journey into self distribution.

WAREHOUSE and

TRANSPORT

Consolidated Services

Center (CSC) Design &

Operations

Transportation Design &

Operations






15

We bring a unique perspective to our customers as the

supply chain of a provider, managing supply chain activities

at all points of care.

MANAGE and USE

Supply Chain Management

Utilization &

Standardization Programs,

including PPI Optimization

Centralized Shared

Services





16

We help serve as a connector for our customers to

collaborate on health care services beyond supply chain.

CONNECT and SHARE

Telemedicine Solutions

Technology Solutions

Laboratory Services



Disruption – what’s it look like?…and can I see it coming?



Borders Had a Good Thing GoingDisruption example

18

In 2003, Borders

had 1,249 stores

using the Borders

and Waldenbooks

names.

In 2004, Borders reached an agreement with

Starbucks subsidiary Seattle's Best Coffee to

operate cafes in its domestic superstores

http://www.ask.com/wiki/Starbucks?qsrc=3044

http://www.ask.com/wiki/Seattle's_Best_Coffee?qsrc=3044



A Funny Thing Happened on the Way….Disruption example

19

2011 Borders filed

for bankruptcy

WHAT HAPPENED????



Disruption example

…But It Didn’t Stop There

No “brick and mortar” footprint, low cost and carried “everything”!

But evolved into other areas beyond books

And built DC’s across the land and mastered rapid order fulfillment

And drove other big retailers to try to combat to protect turf…walmart.com anyone?

20



Re-imagining How

Innovation Process



“The greater danger for most of us lies not in setting

our aim too high and falling short; but in setting our

aim too low, and achieving our mark.”― Michelangelo

22

Prepare for a different ride!

Normal metrics don’t apply

Flexibility in approach is necessary

Patience with the process is essential

You can’t fear the “strike out”; there will be

learning experiences, character building

opportunities…what conventionally would be

called “failures”

ROi Innovation Program

http://www.goodreads.com/author/show/182763.Michelangelo



What were the original offerings of these companies?

Digital cash for PDAsBASIC Interpreters Online activism

All four companies successfully pivoted from one business opportunity to another to ultimately achieve

great success.

Playing cards

A structured course correction designed to test a

new fundamental hypothesis about the product, strategy

and engine of growthPivot

=

Things are not always as they seem,

or The Art of The Pivot



24

Revamp the Process



25

Stages of Innovation



26

The Ideation Process is the Engine!



Blow up the Model……or an approach to Innovation



Our Integrated Model › CONTRACT and SOURCE


Overview

Broad catalog of 2,000+

SKUs

Domestic and international

manufacturers

Rigorous quality

assurance/regulatory

affairs audits

Over 100,000

products consumed since

inception

28





First provider-owned private label brand in the U.S.

Our team works directly with Original Equipment Manufacturers to

develop Regard® products under specifications of equal or higher

quality than name brand counterparts.

Benefits

Clinically validated

Ability to drive specifications

Elimination of unnecessary costs

Reduction in variation of SKUs

Greater control of products

29




Regard® Product Categories

Currently Available

Adult wipes

Baby wipes

Bags/can liners

Basic wound care

Blood pressure cuffs

Cadaver bags

Chart paper

Cold therapy, packs and wraps

Disposable stethoscopes/

pen lights/thermometers

Exam gloves

Infuser bags

Insufflation tubing

Medical bandages

Minor procedure trays

OB, mother and baby

OR towels and laparotomy

sponges

Patient monitoring (electrodes)

Patient positioning

Patient slippers

Personal Protective Equipment

OR turn over kits

Skin markers

Surgical accessories

Surgical clippers

30




Regard® Product Categories

Available Soon

Adult briefs

Advance wound care lotions

Baby diapers

Bed surfaces and cart covers

Bio bags

Bouffant and shoe covers

Defibrillation pads

Disposable vaginal speculums

Equipment drapes

Exam table paper

Hand sanitizers

Instant hot/cold packs

Lubricant

Orthopedic soft goods

Pre-filled syringes

Sterility assurance

Surgical drapes

Surgical gowns

Transparent dressings

Underpads

X-ray gauze



Our Integrated Model › MANUFACTURE and PACKAGE


32

Four days of Custom Pack waste in one Mercy

surgery center

Why We Got Started

Lack of cost containment

Poor pack design,

utilization and management

Unauthorized changes

Inferior product quality

Untrustworthy relationship

with CPT supplier

End user dissatisfaction





33

First provider-owned, FDA-regulated Custom

Procedure Tray Manufacturing operation in the

U.S.

Today

Activity-based pricing model

with full price transparency

No unauthorized

substitutions

Fast pack turn times

Sterile custom packs,

non-sterile bundle packs, O.R.

clean up kits

5.8+ Sigma quality level

350,000 packs produced

annually

Dedicated clinical custom

pack managers – no

commissions on sales




Regard® Medical Device Reprocessing

34

ContainProduct is placed into a

single stream container

UseProduct is used

on patient

OrderProduct is ordered and

shipped

CollectROi field techs

collect products

and manage

program

ReprocessProduct is reprocessed

according to FDA, CDC,

and APIC standards

RestockProduct is restocked

A single-use device

reprocessing program

for non-critical

medical devices




Regard® Medical Device Reprocessing

Overview

Single use device reprocessing program for disposable non-critical medical

devices (blood pressure cuffs, stethoscopes, infuser bags, pulse oximetry

probes, pneumatic compression devices, surgical tourniquets)

FDA, CDC, and APIC approved reprocessing method includes High Level

Disinfection and exposure to ethylene oxide

Dedicated ROi field techs collect products and manage the program

Significant savings on supply costs

Reduces medical waste in landfills

Minimal operational impact on nurses and staff

35




IV Compounding

36

Registered with the FDA as an Outsourcing Facility

Overview

Dedicated clean room and

packaging/storage space

inside Consolidated

Services Center (CSC)

Products: IV solutions

bags and syringes

Regulated by FDA and

DEA

Compliant with cGMP and

USP<797>

Leverages existing CSC

assets including ordering

process and quality control

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://spacecoastdaily.com/2013/06/contaminated-compounded-steroid-infects-13-floridians/&ei=-1IdVdnkJIGdgwS-jYDADw&bvm=bv.89744112,d.eXY&psig=AFQjCNFJN_0xOLHUyI2vAF-nRMzGLZrR5g&ust=1428071544390580



Our Integrated Model › WAREHOUSE and TRANSPORT


Overview

First Rental Program: Wound Vacs

$650,000 annual savings

ROi purchases the capital equipment and manages the rental

program

Fully leverages owned equipment across facilities by allowing

the transfer of equipment from one facility to another

Reduces expenses while ensuring quality control meets

rigorous facility standards

37



38

How can providers and manufacturers

collaborate to reduce waste?

Impetus for Change

List price increases

High SG&A costs

Adversarial negotiations

with vendors

Emerging reimbursement

modelsTop 9 Medical Device

Manufacturers41%SG&A

28%COGS

12%Net Income

28%Lit.; Acq. & Other

8%R&D

3%R&D

Our Integrated Model › MANAGE and USE

PPI Consolidation | Medical Device Implants



39

Traditional Industry Model

Implant

Design

Contract

MFR

Vendor

(Marketer)GPO Distributor Sales Rep. Hospital› › › › › ›

ROi Model

Implant

Design

Contract

MFRHospital› › ›Vendor (Marketer)

GPO

Distributor

Sales Rep.

Results

Physician ownership

10 to 1 supplier

consolidation

91% case compliance

54% inventory reduction

Double digit % savings

6 minute decrease in per

case time

Recipient of Gartner’s inaugural Healthcare Supply Chainnovator Award


PPI Consolidation | Medical Device Implants



40

Supplier Consolidation 91% Case

Compliance

10% Reduction

in Case Time

54%

Inventory

Double Digit % SavingsInternalized

Sales/Service

Reduced SG&A


Results

http://icongal.com/gallery/icon/20633/400/production_factory_manufacturer_industry











https://www.google.com/url?q=http://www.memetics.com/what-are-the-benefits-of-sales-training/&sa=U&ei=mz9sU-7cEdamyASeooDAAg&ved=0CEoQ9QEwDjiMAQ&usg=AFQjCNFUr3VgpARWfoT_cxfGN2_ci4QpvQ

https://www.google.com/url?q=http://www.moneysigns.net/stacks-of-australian-money-bills/&sa=U&ei=MkJsU_DjCMu2yATn0oH4Bw&ved=0CEQQ9QEwCw&usg=AFQjCNHfDPXD24O2LNIOEKPK1gb8BXU-og

http://www.aesculapimplantsystems.com/assets/base/image/ais/Spine/PosteriorThoracolumbar/S4ElementSpinalSystem/S4_Element_large.jpg

http://www.aesculapimplantsystems.com/assets/base/image/ais/Spine/PosteriorThoracolumbar/S4ElementSpinalSystem/S4_Element_large.jpg



41

Orthopedics…thought Spine was harder, we thought Orthopedics was harder

Self-run Model, partnering with Vendor

Physician partnering


Alternative Example



Another Example of Innovative

Thinking Across Healthcare



Bladen County Hospital

Columbus Regional Healthcare

System

Dosher Memorial Hospital

McLeod Health

McLeod Loris / Seacoast

New Hanover Regional Medical

Center

Pender Memorial Hospital

Sampson Regional Medical

Center

Scotland Health Care System

Southeastern Health

Vidant Duplin Hospital

Vidant Health

Established 1991

4000+ beds

NPR: $1.5B

3 Critical Access Hospitals

Regional purchasing

consortium

Reports to Board – Hospital

CEOs



EducationContracts &

SavingsQuality

Improvement

Health Information Exchange

Key takeaway: A variety of programs / services (outside of

just contracts) which bring value to the member hospitals.

CCHA Pillars



45

Built in 2011 using grant

funding from The Duke

Endowment, the Cape

Fear Memorial

Foundation and HRSA.

Interior outfitted to

portray and act as a

patient room.

Creates “real life”

training experience

without any potential

harm.

Mobile Simulation Lab



Historical Training Statistics (2010-2014)

Creates real-time training environment without patient risk

Enables clinician participation without need to leave

facility

100+ chronic / acute scenarios to support clinical

education needs

Total Staff Trained: 7612

Total CEUs Awarded (both nursing and non-nursing):

8393

Total Cost Avoidance based on CEUs: $1.3M

Drives improved clinical

education efficiency

Key Benefits:

Mobile Simulation Lab

Learning Objections:

1) Evaluating in-source/ outsource potential for your supply chain

2) Partnering aspects in the healthcare supply chain

3) Innovation focus for your supply chain – types of innovation, development of ideas and implementation



Summary

Key Considerations:

1) Evaluate both the in-source/ outsource potential for your supply chain

• Some things you will want to do yourself

• Some things are better done by others

• Consider your limits as an organization

2) Partnering aspects in the healthcare supply chain

• Can come from other providers,

• Can come from suppliers,

• Or can come from others outside today’s partners

3) Innovation focus for your supply chain –

• Consider the types of innovation, and the development of ideas as well as the implementation plan

• Traditional “scorecard” must be altered to evaluate innovative potential

• Don’t be afraid to kill lesser ideas…do it as early as possible

47



What Are Your Examples?

Date post:	12-Aug-2015
Category:	Documents
Upload:	michael-wentling
View:	34 times
Download:	2 times

GHX Presentation 5-5-2015_REV04292015

Documents