A Strategic Approach to Integrating Utilization Management Into Your Value Analysis Program For SEPAC Presented by Robert W. Yokl, Vice President, Operations, Strategic Value Analysis in Healthcare 1 Copyright 2013/ Strategic Value Analysis in Healthcare

Utilization Management - the Missing Link In the Supply Chain Continuum Dispelling the Misconceptions It’s Not Contracting It’s Not Best Price It’s Not Best Valued Product or Service It’s Not Inventory Management It’s Not Spend Management Copyright 2013/ Strategic Value Analysis in Healthcare2

Understanding the Relationship GAP Between Supply Utilization and Value Analysis Copyright 2013/ Strategic Value Analysis in Healthcare3 Current Approaches Employed Today Are Not Built to Reduce, Manage, and Control Utilization Over the Short or Long Term

Utilization Management Is Continuous Monitoring, Managing, and Controlling the Cost of Consumption of Products and Services Copyright 2013/ Strategic Value Analysis in Healthcare4 Meet Functional Requirements Align Products with Contracting Strategies Prove Products Work for Departments Convert Products From Old to New Eliminate Waste Eliminate Over-Use Eliminate Product Mismatches Manage Consumption Control Short and Long Term Costs VALUE ANALYSISUTILIZATION MANAGEMENT Vs.

Typical Value Analysis Study – Exam Gloves Value Analysis Performed Contract Terms Set New Project New GPO Contract for Exam Gloves Last Year’s Usage 2.1 Million Gloves Validate Product Features Prove Product with Clinical Trial New Contract Will Save 12% Implement New Contracted Product Copyright 2013/ Strategic Value Analysis in Healthcare5

Unintended Consequences of a Simple Value Analysis Study Value Analysis Re-Review Required Utilization Analysis Utilization Management Exam Glove Costs Have Gone Up by 20% Glove Usage Is at 2.7 Million Gloves Used Find ProblemDevelop Solution Hospital Not Achieving 15% Savings Over-consumption Deploy Solution Continue to Monitor Copyright 2013/ Strategic Value Analysis in Healthcare 6 Original Spend $90K 15% Savings = $14K Utilization Increased Spend $94K Cost Overrun Due to Utilization Overspend $18K % Increase in Cost Overall

Example of Exam Glove Utilization Copyright 2013/ Strategic Value Analysis in Healthcare 7

Getting Past "Price Thinking" to Increase Savings Opportunities by 7% to 13% of Overall Budget Group Purchasing Standardization Capitation/Constructs Custom Contracts Over-Consumption Waste Misuse Product Mismatches Mismanagement Copyright 2013/ Strategic Value Analysis in Healthcare8 Price Savings 1%, 2% or 3% Overall Utilization 7% to 13% Overall Price Utilization

The Big Picture on the Remaining Supply Savings Opportunities Copyright 2013/ Strategic Value Analysis in Healthcare 9

Getting Your Organization Ready for Supply Utilization Management Bridging the Utilization Gap Copyright 2013/ Strategic Value Analysis in Healthcare 10

The Strategic Approach to Utilization Management Integration Reporting Training Management Buy-In Deployment Ongoing Savings Copyright 2013/ Strategic Value Analysis in Healthcare 11

Copyright 2013/2014-Strategic Value Analysis in Healthcare - Skippack, PA 12 Utilization Over-Spend Can Effect Over 78% of Your Major Products, Services, and Technologies Pulse Oxisensors Pacemakers Coronary Stents Foley Catheters Laundry/Linen Exam Gloves Dietary Paper Products Ostomy Enterals Dressings Wound Care Urological Stents Vascular Stents Orthopedic Hips Orthopedic-Knees Bone Cement Endo-Staplers Endo-Trocars Endo-Pouch Sterilization Wraps Infection Control Wipes Underpads Adult Diapers Drapes IV Solutions IV Sets Anesth-Trays BP Cuffs SCD Sleeves IV Start Kits Electrosurgical Harmonic Scalpels Tissue Sealants Grafts & Tissues Patient ID Bands ISO Gowns Oral Care Kits Hand Soaps Electrodes Lab-Reagents Blood Collection Needles Lab-Vacutainers Suction Forceps Stethoscopes Suture Trays Sutures Biopsy Needles Floor Cleaner Surgical Skin Prep Custom OR Packs Balloon Catheters Transcription Services Ablation Catheters Blades & Burrs

Reporting You Have to Find the Utilization Savings Opportunity Before You Can Do Anything About It Monitor and Control the Day to Day Follow Up On Previous Changes Develop New VA Study Candidates for Your Teams Control "GAPS" in Supply and Purchase Service Utilization Make a Better Case for Key Changes Copyright 2013/ Strategic Value Analysis in Healthcare13

Training Don’t Expect Your Value Analysis Team/Committee Will Instantly Know How to Handle Utilization Don’t Underestimate the Power of Good Training o For Yourself o For Your Teams o For Your Department Heads & Managers o For Your Senior Leadership Don’t Reinvent the Wheel o Learn From the Best with Pride o Deploy the Best Strategies for Your Organization o You Owe it to Your Team to Give Them the Best Training Available Better Training Ensures Better Results Copyright 2013/ Strategic Value Analysis in Healthcare14

Management Buy-In If Senior Management and Physicians “Get It” Your Utilization Efforts Will Be So Much Easier! Management still lives in the price/contract first world They are not thinking on the level of a Supply Chain Professional Help them understand the upside savings potential of an organization-wide Utilization Management Program Give them case studies on Utilization Savings Copyright 2013/ Strategic Value Analysis in Healthcare 15

Deployment The Deployment Plan is Your Shortcut to Success! Train your teams to win the utilization game Find the quality gaps revealed in utilization reporting Does the heavy lifting so you don’t have to Find it and stop it from hurting your bottom line Utilization Savings Technology People Quality Objectives Copyright 2013/ Strategic Value Analysis in Healthcare 16

Ongoing Savings Utilization Is Not a One Time Event, It Is a Method to Control and Manage Costs Over the Short and Long-Term Employ An Ongoing Benchmarking System So You Always Know Where You Stand o High Level Benchmarks Let You Know Which Way the Needle is Moving o But Ground Level Benchmarks Are Where the Actionable Savings Resides Share the Reporting With Your Department Heads and Managers o They Control the Utilization of the Products and Services o At Some Point They Need to Be Responsible for Their Own Supply Consumption Beyond Budget Copyright 2013/ Strategic Value Analysis in Healthcare17

Best Practices to Uncover ALL of Your Hidden Utilization Savings Opportunities Track All of Your Utilization in Your Multi-Million Dollar Supply Chains o Supplies o Purchase Services Strategically Attack Any and All Utilization Variances Make It Competitive With Your Department Heads and Managers Focus Your Value Analysis Teams On Utilization Studies to Freshen Up Your Team’s Approach Make Your Job Easier Copyright 2013/ Strategic Value Analysis in Healthcare 18

Utilization Management – The Future is Now! This is Our Time to Shine! We Have to Take Our Value Analysis Game to a New Level Our Organizations Are Depending Upon Us to Deliver the Savings and Quality Results We Have to Meet These New Challenges Head On! Failure Is Not An Option! Copyright 2013/ Strategic Value Analysis in Healthcare19

Copyright 2013/2014-Strategic Value Analysis in Healthcare - Skippack, PA 20 QUESTIONS? THANK YOU! Robert W. Yokl, Vice President-Operations Strategic Value Analysis in Healthcare