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HOW HEALTH SYSTEMS OPTIMIZED OPERATIONS THROUGH
STANDARDIZATION AND INNOVATION
PRESENTED BY:
Improving Operations Through Standardization and Innovation 2
INTRODUCTION
In August 2015, operational leaders from Baptist Health South Florida and Ochsner Health System presented a webinar to describe the growth and optimization strategies that generated results for their organizations. They shared lessons learned and insights that led to increased operational performance and an innovative culture.
This is a recap of the highlights and information shared during the webinar. Topics covered include:
Establishing and strengthening strategic partnerships and alliances to drive growth
Fostering a collaborative and innovative culture
Increasing productivity and cost savings
Creating vendor score cards that maximize value and performance
EXPERTS
Mark Muller
Senior Vice President of Strategy & Business Development
Ochsner Health System
As Senior Vice President of System Strategy & Business Development,
Muller is responsible for the Ochsner annual operating calendar,
strategic plan, market analysis and business development, strategic
programs, and Lean deployment. Previously serving as the System Vice
President of System Strategy and Business Development, Muller also
has a leadership role in the development of International Business.
Suzzanne Thomson Quintero
Corporate Vice President
Baptist Health South Florida
Suzzanne joined Baptist Health in 2001 as Assistant General Counsel.
Through a series of promotions, she was promoted to her current position
in April 2010. As the Corporate Vice President for Supply Chain &
Insurance Services, she sets the strategic direction and priorities for all
sourcing, vendor relations and procurement, and logistics for all areas
within Baptist Health. Baptist Health's logistics needs are fulfilled by a
state of the art Distribution and Services Center. With annual revenues of $4 billion, 15,000
employees and 6,000 active suppliers, Baptist Health is the largest private employer in South
Florida.
Improving Operations Through Standardization and Innovation 3
THE VALUE OF STRATEGIC PARTNERSHIPS
As we look at potential strategic partnerships, one of
the things we try and do is identify what we can bring
of value to our partners, and then in turn what they
can bring of value to us. We find it’s important to
clearly understand what each partner
will be giving and what they’ll be getting
in any potential collaboration.
It’s certainly a challenging and dynamic
environment that we’re living in today.
State and federal budget deficits
continue to place pressure on
reimbursement, the retail insurance
environment continues to grow, and
with the recent Supreme Court decision
we continue to see growth in public and private exchanges. CMS has come out with putting a
stake in the ground. Around 50% of reimbursement will be value based by 2018. I know here
in New Orleans we’ll be part of the hip and knee replacement bundles, as I’m sure many of
you will be across the country.
Industry Trends Affecting Providers
Higher Costs & Payment Cuts
Transparency of Information
New Payment Models & Exchanges
New Competition & Delivery Models
Utilization Management & Declining Discharges
Technology Enabling Self-Care
All these value based payment models are really designed to drive unnecessary utilization out
of the system, which in turn will reduce volume for us as providers. At the same time, we see
major consolidation going on in the payer industry into what looks like the Big Three national
insurers, which will most likely place additional pressure on us as providers.
600,000 unique patients
13 hospitals, 50 health centers
1,000 group practice physicians
200,000 managed lives
Clinically integrated network
Top 1% clinical quality in United States
Leading system in Gulf South
Improving Operations Through Standardization and Innovation 4
And also, meanwhile we see new retail competitors and virtual care models popping up
virtually every month. And maybe most importantly, consumers are now empowered and
engaged with more information and tools and technology than they’ve ever had before to
begin managing their own healthcare.
So at Ochsner, as we looked at these trends, we realized that we needed to not only adapt,
but we needed to lead the change, at least in this part of the industry. We needed to
approach these challenges and opportunities fundamentally different than we had before.
And specifically, we couldn’t continue to try and do everything ourselves. I think as we
stepped back, we looked at what are the fundamental problems that we need to solve.
I think we probably all agree that as providers we need to get better, faster, bigger, leaner,
and innovative. And at Ochsner, for us, what we’ve tried to translate that into is that we need
nimble, asset light strategies that deliver value based solutions, not necessarily through bricks
and mortar facilities. We need to utilize scale to reduce variation, improve quality and cut
costs all at the same time, and we really need to help activate patients to begin to take care of
their own health, and while they’re doing that, take healthcare to patients when and where
and how they need it, and fundamentally change the whole relationship with the patient.
Pro
ble
ms
to S
olv
e Structural
Too Expensive
Inconsistent Quality
Difficult Access
Poor Experience
Go
als Better
Faster
Bigger
Leaner
Innovative
Improving Operations Through Standardization and Innovation 5
Instead of seeing a chronic disease patient maybe three or four or five times in the clinic, or
even in a convenient clinic like CVS more often, to really develop a continuous, ongoing
relationship with patients. So at Ochsner we’re looking to optimize operations through
collaborative partnerships and a focus on innovation. So let’s take a little deeper look at a
couple of examples of this.
OCHSNER HEALTH NETWORK
We’re aligning physicians through our clinically integrated network together. If
you look at the Ochsner Health Network today, it’s a statewide network with
nearly 30 hospitals and 3,500 physician partners that enable us to serve over
one million patients better, faster and more affordably than we could on our
own. Through the combined capabilities of our partners, we’re already starting
to see and gain some significant economies of scale and experience and help
optimize our combined operations.
PAYER CONTRACTS
We now have seven payer contracts, which include network insurance products,
products for the exchange and Medicare products. We’re also building a
population health infrastructure that, instead of each of us making our own
separate investments, we can do this together and again leverage scale and do
this once, and do it right, and do it big, as opposed to trying to duplicate
investments. And as part of that, we’ve partnered with EPIC EMR and some of
our IT partners to develop IT solutions and extend those to our partner
members.
TELEMEDICINE
In the area of clinical care delivery, we’ve partnered with Cisco and EPIC for
telemedicine. We now have a telemedicine network that spans about 45
hospitals across a couple of different states. I’ll be talking a little bit about what
we’re doing in the area of digital health with Apple. We’ve got a very unique
partnership in academics with the University of Queensland. The University of
Queensland is the 34th ranked medical school in the world. It’s located in
Brisbane, Australia.
And through this program, you have U.S. students who go to Australia for their
first two years of classrooms and come back to New Orleans for years 3 and 4 of
clinicals, and then come to the States to practice. And that’s a great opportunity
not only for us, but for our members to recruit physicians, especially in areas
Improving Operations Through Standardization and Innovation 6
where there are shortages today. And we also have many partnerships with
pharmaceutical companies in the area of clinical research trials.
GROUP PURCHASING ORGANIZATIONS (GPO)
For operational improvement and driving savings, we’ve partnered with our
GPO, MedAssets, as well as GE and other suppliers in the area of supply chain.
And we’ve actually formed our own supply chain collaborative called S3P. We
now have 55 hospital members. This is primarily focused around physician
preference items. And every one of those members were able to save 10% or
more on their physician preference items. So clearly all of these solutions, we’re
trying to work together in a theme that we believe we can be better together
than apart.
INNOVATION OCHSNER
The other area that Ochsner is working in to transform healthcare is through
innovation. In March we launched an innovation accelerator called iO, or
innovation Ochsner. And the mission of iO is to fundamentally change
healthcare by changing the relationship with the consumer. And again, just like
we did with our strategic partnerships and the network, we started with clear
guiding principles.
And iO is focused on solving healthcare’s most pressing problems. We’re trying
to build these solutions around the consumer and the patient and their needs,
and not the caregiver. We’re also trying to design these solutions for scalable
and efficient operations so that we can pilot small and move fast, but we can do
it in a way that we can translate across thousands of patients. This is going to be
fully integrated with a personal electronic health record for every patient and
enabled by the newest digital health technology.
So the intent of iO is to really serve as a catalyst for patient centered health
innovations. And by doing that, we’ll partner with other leading innovators both
inside and outside of the healthcare industry to find new solutions and provide
resources and support to develop these new models of care.
So one example of this, you know, we’re still early on in this, but this summer
we announced and launched a three year health innovation challenge, with GE
as a partner and the Idea Village here in New Orleans as part of the New
Orleans Entrepreneur Week. And we did that to really help ignite healthcare
innovation. Each year there’s going to be a different theme, and we’ll hold
Improving Operations Through Standardization and Innovation 7
“Shark Tank” like events each year. And the first year will be focused on
wearable technology that will enable a more personalized patient experience.
Another initiative that iO has underway is we’ve begun to tackle the leading
cause of adult admissions and readmissions in the U.S., which is congestive
heart failure. And through the use of digital scales linked with the EMR and
dedicated care teams, we’re already starting to see an impact. So we’re
delivering 45% reduction in 30 day readmits and a 95% reduction in 30 day
mortality.
iO has also begun to tackle the area of hypertension, dubbed the silent killer.
Now in Louisiana this is the hotbed of chronic disease, and in our state one in
five adults has out of control blood pressure. So iO has created an integrated
practice unit, or IPU, dedicated for hypertension, and is the first system in the
world to successfully partner with Apple and connect Health Kit and the Apple
watch with the EPIC EMR.
We can now seamlessly use digital blood pressure monitors networked with the
patient’s personal devices and really help patients control their own blood
pressure and avoid coming into the ED or even the clinic, and routinely we can
get information and send alerts back to the patient on an ongoing basis. So
again, it’s early, but through this innovation, 66% of patients whose blood
pressure was previously out of control now have their blood pressure under
control just within 90 days.
Another innovative approach is through the O Bar, which again is really styled
after Apple. And if you’ve been in an Apple store and an Apple Genius Bar,
we’ve now got Ochsner physicians that are beginning to prescribe apps instead
of medications. So patients can go to the O Bar and receive assistance to
download health apps directly to their personal device. And it’s only been in
existence for a few short months, but already we’ve got thousands of patients
that have visited the O Bar and begun to take greater responsibility for their
own health.
All of these innovations are just new ways to help enable patients to take a more active role in
managing their own care. So at Ochsner we’re trying to transform health through
collaborative partnerships and innovation focused and aligned with our triple centers of
excellent strategy.
Improving Operations Through Standardization and Innovation 8
Key Takeaways: Lessons Learned
Cultural: Commitment starts at the top
Structural: Part-time resources don’t yield full-time results
Fiscal: Can’t do it alone – need strategic partners
VENDOR SCORECARDS
A scorecard: Everybody has, throughout their career, heard if you don’t measure it, it doesn’t
happen. Like many organizations, we’re rooted in the concept of managing materials, and so
we had perfected, many years ago, how to manage inventory. However, as I look at a large,
complex organization, the reality is we cannot successfully serve the community without
patients, physicians, employees and suppliers, whether it’s a good, service or equipment.
So we felt the need, just like we measure
employee performance and results and we
measure physician performance and results, to
apply comparable skills and discipline to
measuring vendor or supplier
performance and results. We started at a
very tactical level, realizing that we have
literally thousands of thousands of
transactions, commercial transactions
with a supplier on a daily basis.
However, we’re not always so great with
sharing with suppliers our point of view of each transaction. At the end of the day, our
suppliers want to be more efficient. At the end of the day, we want to be more efficient. And
both organizations have the ultimate goal of meeting its mission, providing good quality,
regardless of what it is that they do, and ultimately keeping patients happy.
1 million patient visits each year
15,000 employees
2,200 physicians
40 outpatient centers
9 hospitals
Improving Operations Through Standardization and Innovation 9
The scorecard here is a very tactical scorecard, the theory being the more administrative time
that we spend going back and forth with suppliers increases our costs and ultimately doesn’t
drive value. So we started with every aspect of the quote transaction. Not a strategic
relationship, but the transactions. So you’ll see we’re looking at processing time, did you hit
the mark in terms of when you should have been here, did you hit the mark of hitting all of
the key terms of our relationship.
A Supplier’s score can range from 1-5 and consists of 7 quantifiable factors:
• Average Receipt Cycle Time • % Received On Time
• % Accepted • % Received Late
• % Rejected • % Received Early
• % PO Cost Variance
Improving Operations Through Standardization and Innovation 10
We also decided to use the now all familiar star system so that when we’re working with
suppliers, both Baptist Health as well as the supplier, we fully share these scorecards, solicit
feedback as to where our information is inaccurate or perhaps misleading, and just as
importantly, behaviors that we as a provider are engaging in that are contributing to less than
desirable outcomes.
I can easily see, with the largest, most sophisticated suppliers, where we will get to a place
where we have risk relationships associated with achieving goals over a one, three and five
year period. So we flipped over to another part of our score carding system, again, like you
would drive employee performance or you would drive physician performance, looking at
your top 20 and your bottom 20.
Part of the reason why we look at the top 20 is to gain a better understanding of what those
suppliers are doing that’s different and producing a great outcome, as well as whether there’s
an element that we are treating those suppliers differently. Eventually we hope to have
councils amongst various supplier groups so that a little bit of learning goes a long way. We
certainly appreciate and understand that most of our suppliers are for profit organizations
and have quarterly pressures on earnings. However, the pie is getting smaller, and so big
picture, a lot more people must work together in a more collaborative manner.
One of the keys for us, like most provider organizations, is understanding how many
different suppliers we’re doing business with. Baptist Health happens to have a very, very
consolidated supply chain, so we consider suppliers across the continuum of care, regardless
of care location, regardless of whether it’s a service, a piece of equipment or a product.
Improving Operations Through Standardization and Innovation 11
Because we are such a centralized supply chain, we’re able to look throughout the supplier
base.
Currently we have more than 4,500 suppliers that are active, excluding infrequent, one time
purchases. From my perspective, 4,500 suppliers is a lot of suppliers to manage change
through, so over the course of the next and three years, we will be looking to not just
consolidate the supplier base, but assess and determine whether we’re actually using
suppliers for the optimal need versus a legacy relationship where it’s been in place for five,
ten, 15 years.
In closing, we believe that regardless of what the future looks like, regardless of how
automated and innovative we all are in providing care to patients, we’re not going to be
able to do it without suppliers. So learning the skills, the tools, the means, the methods to
drive not only strategic supplier performance, but also efficiently enable much needed
transactions with suppliers is a competency that we will all need to demonstrate for many
years to come. With that, I will turn it over to the moderator, and thank you all for your time
and for taking a few minutes to listen.
Q&A
HOW HAVE YOU ACTIVATED AFFORDABLE CARE?
We’ve formed pretty, pretty seasoned executives with very seasoned physician
councils to look at spend from top to bottom.
We’ve divided up our councils by functional areas, so lab, surgical,
cardiovascular, facilities, IT, construction, and empowered our teams to
challenge the status quo. The pace certainly is never as fast as the supply chain
executive would like. However, I think the mutual successes become the catalyst for what else
can we do, let’s tackle another area. So for us transparency, collaboration and slicing the pie
has enabled us to help cut costs and focus care to the right location.
WHAT IS THE FUTURE OF WEARABLE TECHNOLOGY FOR CHRONIC DISEASE PATIENTS?
I think it’s almost limitless. I would go back to my experience, though, with
telemedicine and just say that at the end of the day, the technology itself,
while very useful and hopefully practical, and oftentimes pretty sexy, is
probably the least important thing in the value chain at the end. So it’s still
Improving Operations Through Standardization and Innovation 12
about the patient’s activation with that wearable technology and then the relationship with
the caregivers on the other end to help be a partner in care.
But the wearable technology, the costs have come down so much, the portability, the ability
to link that directly with the EMR has been tremendous. So now you can have digital just
about any tests at home, and they continue to expand. So on the CHF side we’ve used digital
scales to be able to track fluid retention around the heart, which then you can see in weight
increase and immediately adjust meds. The digital blood pressure monitoring on the
hypertensives. With diabetics, digital glucose meters, digital thermometers and on and on.
So I think there’s an opportunity for most chronic diseases, and some acute, but most chronic
diseases to really link that with EMR, wearable devices, and in a way that helps coach and
drive sustainable behavioral change with patients and their entire support system, including
their families and friends.
ARE YOUR ORGANIZATIONS CONSIDERING RISK SHARING ARRANGEMENTS WITH SUPPLIERS?
We are sharing, in a very limited experimentation model, risk with some key
suppliers. We fully intend to continue to expand that model. From our
perspective, just like the payers want to reduce costs and still stay in business
long-term, so do the suppliers. And risk helps everybody have skin in the game.
I would say we’re certainly starting to, and that would be on both the risk and
the reward. I think there’s probably more focus on our end in trying to take cost
out of the total system, and looking at the entire value chain, especially not just
the product elements, but beyond that, and all the SG&A costs and everything
else that goes into it. I think there’s probably more appetite—and I don’t want
to speak for our supply chain folks—but probably more appetite on the provider side than
there is on the supplier side, in many cases, to share in that. But we would be open to
entertaining any of those models.
RESOURCES
Visit www.ModernHealthcare.com/OptimizingOperations to watch video clips from the webinar and
download more resources on innovation and standardization.