Pain Points of Product Conversion Where do those products come from and why this understanding is a bigger priority more than ever Brent Petty, CMRP Barbara Strain, CVAHP Executive Industry Consultant Director Value Management Global Healthcare Team University of Virginia Health System Lexmark International, Inc.

Objectives This session will provide a roadmap for: Reviewing the mix of products in the delivery of patient care and how to pinpoint where the value is and why.  Developing strategies using standard processes, purchase driven costs and patient outcomes helping drive the value to the organization will be understood.  Analyzing a criteria based decision matrix that will reveal critical success factors such as collaborating with clinical stakeholders, keeping supply chain management and finance in the loop and getting to a win-win solution.

Where do those products come from?

Origin of Products – know the why Professional Meetings Articles New staff Onboarding new physicians New contract cycle Supplier discontinues product Benchmarking; price, utilization, strategic direction Regulatory Procedure change Equipment – new or upgrade Unresolvable product issues Other, other, other, other, other

How to Get to the What Nurses or other clinically trained staff employed by Supply Chain Management Physician liaison to or employed by/leads SCM Alignment of institutional resources; finance, contracting, data analysts Value Analysis processes New Product Introduction standard work

One example of a decision matrix

Decision Criteria Clinical based evidence Length of stay Choose what is the best fit for your organization and the initiative Clinical based evidence Length of stay Patient satisfaction Physician alignment Efficiency Restarts/Redraws/Redo’s and Re- OUTCOME IMPROVEMENT QUALITY IMPROVEMENT SAFETY IMPROVEMENT ORGANIZATION STRATEGIC GOALS FINANCIAL IMPACT

Decision Criteria Actual performance vs Expected performance Reduction of Hospital Acquired Infections Be a member of the groups working on these initiatives Actual performance vs Expected performance Apply to the initiative under review Example Right Supply, Right Time Time or timing to deliver supplies Triggers/pars Patient special needs Hand Hygiene Falls Reduction OUTCOME IMPROVEMENT QUALITY IMPROVEMENT SAFETY IMPROVEMENT ORGANIZATION STRATEGIC GOALS FINANCIAL IMPACT

Decision Criteria Reduce employee injuries sticks/exposures Employee Health Workman’s Compensation Staff temp pool expenses Right product, Right procedure Patient Handling Shears Staff injuries Repositioning patient in bed Transferring patient to stretcher/bed/chair Up out of bed/down the hall OUTCOME IMPROVEMENT QUALITY IMPROVEMENT SAFETY IMPROVEMENT ORGANIZATION STRATEGIC GOALS FINANCIAL IMPACT

Decision Criteria Product Standardization Utilization of products or services Contract compliance/GPO Reduce on hand inventory Purchased Services OUTCOME IMPROVEMENT QUALITY IMPROVEMENT SAFETY IMPROVEMENT ORGANIZATION STRATEGIC GOALS FINANCIAL IMPACT

Decision Criteria Return On Investment – ROI Create Margin Decrease cost: per patient day per procedure per operative case per CMI Return On Investment – ROI Net cost/savings of product Net cost of conversion Net improvement of initiative Overall ROI Create Margin Physician Preference Items – PPI Neutralize or Increase Reimbursement OUTCOME IMPROVEMENT QUALITY IMPROVEMENT SAFETY IMPROVEMENT ORGANIZATION STRATEGIC GOALS FINANCIAL IMPACT

Plan the Work and Work the Plan

Cross-Industry Comparison of Size, Quality & Productivity / Efficiency

What do these numbers have in common? 86 1095 0 Died today - Ebola 86 Died today - Guns 1095 Died today - Accidentally in US Hospitals

The way IT is designed remains part of the problem! Tejal Gandhi, MD, president of the National Patient Safety Foundation and associate professor of medicine, Harvard Medical School, spoke at the hearing. WASHINGTON | July 18, 2014 It's a chilling reality – one often overlooked in annual mortality statistics: Preventable medical errors persist as the No. 3 killer in the U.S. – third only to heart disease and cancer – claiming the lives of some 400,000 people each year. At a Senate hearing Thursday, patient safety officials put their best ideas forward on how to solve the crisis, with IT often at the center of discussions.  Hearing members, who spoke before the Subcommittee on Primary Health and Aging, not only underscored the devastating loss of human life – more than 1,000 people each day – but also called attention to the fact that these medical errors cost the nation a colossal ---- $1 trillion each year!

~$750B 68% 60-70% 25% Too much waste in the U.S. healthcare system! per year in waste in the US healthcare system, according to the Institute of Medicine. (25% of total U.S. healthcare spend) Unnecessary services: ~$210 Excess admin costs: ~$190 Inefficient delivery of care: ~$130 Inflated prices: ~$105 Fraud: ~$75 Prevention failures: ~$55 3 out of 10 68% of specialists receive no information from Primary Care physician prior to referral visit 60-70% of referrals go unscheduled 25% of appointments are missed lab tests are reordered because results are lost! Institute of Medicine report: ‘Best Care at Lower Cost: . 20 September The Path to Continuously Learning Health Care in America”

Achieving a better way .… The single functional requirement for the design of a jet aircraft cockpit is to facilitate interaction between the decision – maker and the critical information. The cockpit design creates an environment that allows for efficient and reliable interaction.

Comprehensive Care for Joint Replacement Model (CJR)

Example --Scorecard Orthopedic

Supply Cost per patient Medicare Exp Reimbursement Example --Scorecard Slipper Socks Scorecard   MSDRG Name Total Volume Supply Cost per patient Total Cost per patient Margin per patient Medicare Exp Reimbursement Falls Measure Value GOAL Fall per QTR Slipper socks MFG Price Parity Floor A400 A $1.73 3 2West B $1.85 5 ICU C $1.68 8 Step Down D $2.01 12 LEGEND GOAL MET = SC Goal 1 Std Deviation from Lowest Cost Total SC Actual MSCM Total Cost HPM GOAL UNMET = Margin Total or Exp Payment (greater) - SC + Direct Variable

Value based healthcare is a reality Holistic Concerned with complete systems rather than with the analysis of or dissection into parts Session Wrap up: Value based healthcare is a reality Payer based programs will drive increase focus on cost-effectiveness of all aspects of care delivered Patients as consumers will ultimately define value Increasing demand for clinical evidence and reducing variation to support products. Can you answer this question: “In my bundled payment cases, this product will represent an increased cost that will directly reduce reimbursement. Why should I use it?” Wellmont Holston Valley Medical Center