Vanderbilt’s physician preference

with Teresa Dail, R.N.

In August, Healthcare Purchasing Nezvs profiled Vanderbilt University Medical Center'sSupply Chain Department as its 2014 Supply Chain Department of the Year for its clinical and customer service acumen via centralization, standardization and automation, as well as its solid partnerships with physicians and nurses.

Chief Supply Chain Officer Teresa Dail, R.N., shared her team's experiences, expertise and success with HPN Senior Editor Rick Dana Barlow. In a wideranging interview with Dail this month, HPN delves more deeply into Vanderbilt's leadership and philosophy.

focusing on the pain points of a given department or process, and working together to create a solution, is helping to further remove the barriers that often exist between clinical and support services teams. I credit our Director and her style on making this a successful effort.

HPN: Under healthcare reform, how has Vanderbilt tightened its administrative, financial and operational belts while cementing relationships with clinicians?

DAIL: As changes have occurred with healthcare reform and national budget deficits that have led to the impact we all are seeing in our organizations today, Vanderbilt recognized that to be able to position itself as a continued leader, discoverer, teacher and innovator in this market, we needed to determine what the overall financial impact to our organization was going to be and then take measures to mitigate that risk. This essentially has led to a rightsizing of our organization, both from a people and expense perspective. As we have implemented these changes in rapid fashion, a program has been put into place to allow line staff to provide feedback on process improvement ideas that they believe will help improve their daily work, impact patient care and/or lower cost. These efforts are overseen by a Senior Leadership team in the adult hospital. One of the areas of focus in the first wave was to work with nursing to help decrease their "hunting and gathering" of supplies and equipment in the effort to streamline their work. Our Administrative Director and her manager of logistics worked beside their nurse colleagues to come up with a plan that was both operationally and financially impactful. This joint approach to Will you share a recent success story and who was instrumental in helping to make it happen?

[Financial/Operational cost savings] takes each one of our teams' focus every single day, and the numbers or metrics we have been able to put up year after year speak volumes for the work Teresa Dail everyone does. We ended our last fiscal year with invoice exceptions totaling $46,000 against a $400 million-plus spend. Unheard of! The race is on again this year among members on the purchasing team to not only individually hit their lowest number ever but to break last year7s record. Every week from June 1 until July 10 when we close the year, an inspirational message goes out to the team. In the past, it was sent by an inspirational leader who was a purchasing assistant on the team. She retired last October but she was here on site [recently] and led the kickoff meeting with her message to all.

When you feel you've reached rock bottom on product and service pricing you tend to focus on consumption and usage, if you're not doing it already. Do you feel that is the next wave forforward-thinking supply chain leaders? Also, as you control and reduce consumption over time do you feel that prices will start rising again to compensate for reduced volume, which will repeat the circle?

We need to be thinking about what is most impactful for our organization and also what are our industry partners looking for so that there is bidirectional value. We believe in strongly remaining committed to our contracted suppliers and we monitor this compliance monthly. If you can work with an industry partner and put an agreement in place that they can count on and fix it for a period of time then it is a win for both of us. In the past, part of our work plan was also driven by our focused growth initiatives. As we enter into Episodes of Care or Bundled Payment, we will partner closely with the operational and leadership teams to ensure we are in sync with their efforts to reduce cost, improve quality and drive value. Our supply chain dashboard was created by our Director of Systems and Purchasing and she is responsible for tracking and managing all the metrics important to us as a supply chain specifically, and the organization globally.

As Chief Supply Chain Officer, you're frequently asked to speak internally and at external national forums on a variety of topics. Generally, what do you speak about?

Twice a year, supply chain is asked to present at our Clinical Enterprise Leadership Team. These presentations focus on what supply chain is doing as it relates to our organizational pillars which are: people, service, quality, growth/finance and innovation. Once a year, the Executive Medical Director and I present to our Medical Center Medical Board on the work that the medical economics outcomes committees (MEOCs) have as it relates to what we call our three phases of work: new product and technology introduction, contract negotiations for various product categories and utilization and practice variation. This year we added a fourth phase of work: strategic. In this phase, we have begun to highlight our exploration of different business models that can further help us improve value as it relates to cost and quality. We believe that by educating the customers internally, it allows us to further engage them in a joint approach toward reducing cost and improving quality. A member of the supply chain team, in one capacity or another, is almost always involved in the initiatives going on within the system.

Clinical connections

Physicians take an active role In Vanderbilt's Supply Chain initiatives. How do you persuade them to participate?

We took the opportunity early on in the committee development to purposefully expose and educate our physicians and clinicians about industry, contracting, group purchasing organizations (GPOs), corporate overlay rebate programs, anti-kickback statutes, confidentiality provisions, etc. We don't try to indirectly influence anyone. The physicians and clinicians who sit on our committees were either asked by their chair/Chief Nursing Officer (CNO) to participate, and agreed to do so, or they volunteered. Up front we talked about the need to be transparent in our interactions and we incorporated a nondisclosure statement on our new product request forms. We also ask for disclosure of the committee members on any relationships that could impact their ability to either serve or vote on a particular product or contract. We also conduct a moment of declaration at the start of every committee meeting. Even if there is a conflict, it does not preclude the member from participating in the conversation. However he/she does abstain from the vote. Our position has been to be as transparent as possible.

How does supply chain, "led" by physicians In an academic setting, work more effectively and efficiently than the opposite, say without physician buy-in? Can physicians overrule supply chain decisions? Which "side" has your CEO taken for the good of the organization?

Our charters for our committees are signed by the CEOs of both hospitals and the CEO of the Health System. We have an appeal process in the charter that allows for a physician or clinician to appeal a decision made by a committee if they disagree, but she/he must present new information to the committee not previously reviewed. I came from a community practice-based system where I implemented this same type of program. I would say that the model can extend to either setting. It is not about the model but rather about assuring you have the right level of engagement and commitment.

Are physicians In your organization employed by the organization? What would you say to cynical supply chain management pros who would question your physician efforts?

The trend is to have employed models and Vanderbilt is fortunate that we have had that model for many years. Having said that, with the way reimbursement and revenue is declining, everyone is going to have to get on board with the goals of their organization - even if they are community-based. Our performance is becoming more and more transparent to the public and the payers. If we, collectively, don't perform on quality and cost then no one wins. But you have to have a little bit of style and finesse as you approach this. The shift is traumatic for many and the first response is to dig in. Supply chain professionals have to help their organizations get past that with their physicians by being collaborative in their approach, not dictatorial.

How would you advise more open-minded supply chain pros to deal with physicians In a similar way that are not on the payroll? I see that you have implemented a "paired partnership model" with a number of medical directors for supply chain. How does this work?

If they are more open minded then they have figured this out long ago. The development and embracement of role of the Clinical Resource Nurse back in the late 1990s and early 2000s was a direct result of the traditional materials leaders figuring out that they were not going to get anywhere unless they could figure out how to talk the language, gain credibility and develop relationships with the physicians.

Clinical connectivity

To recruit physicians you need data and to obtain data as quickly and comprehensively as possible you need information technology, right?

Our goal is to run a strong supply chain from a logistics and distribution perspective by being able to measure our effectiveness of managing inventory cost, turns, and par levels. At the same time, we needed insight into market share by vendor and spend by category to help us with contracting decisions. Lastly, we needed to understand variation in practice for "like cases" to see if we could impact utilization. Year after year we have been able to reduce our supply and pharmaceutical expense in various categories by [about] $10 million per year.

What kind of IT horsepower do you use to generate and analyze this data for physicians? What's the minimum Investment you can make?

Find yourself a good analyst who knows how to tap into your electronic data warehouse! We implemented a point-of-use (POU) system to help us not only with managing our materials department but to also give us access to provider/patient type cost data. That is the requirement of the future. Supply chain cannot simply focus on inventory levels and contracting. You have to be able to provide data that is clean and consistent to the providers.

We also utilize technology to track our contract compliance on a monthly basis. I may have already said this but our compliance is running 85 to 88 percent on contract spend month over month. There are approximately 2,200 hospitals participating in this database and we are consistently ranking No.l as an academic medical center and No.l to No.2 among all participants. In addition, we have developed an internal tool that allows us to look at our item master and spend on a weekly basis. We can see where we took a price increase, a price decrease, the vendor and the potential annual impact. This tool is great for ongoing monitoring of our contract savings initiatives to ensure we are achieving what we thought but also helps us know, very quickly, if spending is going in the wrong direction on a particular item or contract so that we can begin to work it.

On the IT front you work with GHXfor your contracting efforts and Omnicell for pointof-use technology as part of your shift to automated from manual processes. What kind of ROI are you achieving?

We utilize [GHX] for the 832 and price file. This helps us to minimize our exceptions, helps with back-order tracking and confirmations. We have achieved a 5:1 return on investment since the implementation and have not added any additional staff to the procurement team despite significant growth both internally and with the addition of external customers.

Thirteen positions were eliminated from supply chain after the implementation of [point-of-use]. We were allowed to do this through attrition so we were very careful not to fill positions even during the implementations. This system has helped us achieve a significant increase in turns, overall reduction inventory value. When we benchmark our turns in the adult hospital against a peer group we are performing at the 80lh percentile. In our children's hospital, comparing ourselves against three very prominent children's facilities, we are achieving a full turn better in OR and Cath/EP.

The selection of Omnicell was achieved through multidisciplinary engagement in an RFP process and on-site vendor assessment of five companies. This included finance, OR, procedural areas, inpatient nursing units, IT and supply chain. We knew that if we were going to be successful everyone needed to understand the reason why we were going to implement this, and they were going to have to participate daily for it to work. I am not saying it was easy, or that we still do not have issues in certain areas with scanning compliance, so we do have some redundancies built into our work flow to ensure fill rates remain consistent, but if we had not engaged them and asked their opinion, we would not be anywhere near as successful.

Your point-of-use technology resides in every clinical department in the hospitals and you've recently installed it into one of Vanderbilt's ambulatory surgery centers and one of its very large clinics. How do you manage all of this tech in the far-flung areas?

One systems director and one team. We are standardized on our systems so doing implementation and training is handled in the same manner by the same team no matter the location. Our goal is to continue to implement this into our procedural-heavy clinics in the effort to not only manage inventory and cost but also to gain insight to another element of where expense is occurring as we go into fixed payments. Having vision into every aspect of what is driving variability in either cost or quality will be critical.

You're using "robots" for internal distribution. How did you decide to do that? What kind of investment was needed and what kind of results have robots generated?

As we were evaluating all the roles of the supply chain team members when I initially came, it was apparent that we had a high level of full-time equivalents (FTEs) compared to other hospitals. We evaluated all different types of technology to be able to help us maximize our productivity. We chose to implement the robots for several reasons: first, it just made sense that we could better utilize a receiving tech in the department verses having an individual walk with a cart from department to department delivering packages and second, the robots are always at work. With their implementation, we were able to eliminate three vacant FTE positions. Over this past year, our main laboratory has undergone major renovations. They came to use and asked if we could help them find a solution to help move lab specimens back and forth. We gave them one of our robots to trial and the rest is history. They were able to redirect an FTE to help with other tasks.

Boundary extensions

You oversee an extensive off-site service center operation. Do you have any plans to provide services to non-Vanderbilt facilities? What about providing services other than case carts (such as distribution, laundry/ linen, sterile processing, cook-chill, etc.)?

As part of our Vanderbilt Supply Chain Sendees agreement there is the ability for an entity to contract with us for services. Having said that, as part of our model, we have taken an approach that if the "ask" is about how to set up a tissue tracking system to achieve regulatory requirements, or how to go about selecting a point-of-use system, or how to effectively manage a GPO or distribution change, there is no fee for that. Our goal is to be collaborative and provide support within our network to help our participants achieve best practice in supply chain management. Our FY15 work plan does include the exploration of the opportunities to maximize our offsite case cart facility as a source of revenue for Vanderbilt.

You previously worked for a six-hospital system that owned and operated its own GPO, but you're not attempting that at Vanderbilt. What did you learn?

I learned that just because you think something is a great idea does not necessarily mean that others will. We wanted to start by building relationships and trust in our program with other non-owned hospitals. We also wanted to have our vendors be willing to partner with us to achieve benefits for our participants, and themselves, just like they had partnered with Vanderbilt in the past. So we have approached this as an endeavor that drives bidirectional value: value to the participant, value to the vendor through commitments, value to our primary GPO, and value to Vanderbilt. Ultimately, we may end up moving into true regional GPO model but right now we needed a model that gave the participant a lot of autonomy but was highly committed when they did decide to participate in a given category. Our goal is to help lower the cost of goods and services for standalone, not-for-profit, community hospitals through a collaborative, voluntary, contract-by-contract approach. This is a unique model, but one that we believe is not only good for the hospitals that participate but also our industry partners. It is challenging for both the participants and industry to think differently about the way they have traditionally approached this but ultimately we believe we will all benefit.

You've been unable to achieve this through your GPO?

Not to the scale we are achieving through self-contracting in specific categories. I do believe there is a solid purpose and role for a national GPO and we maximize that relationship.

Current events

Why should your counterparts in supply chain be concerned about bundled payments when the strategy seems so outside of their immediate purview - even under healthcare reform? Or is that myopic?

It's extremely myopic. This is our responsibility as much as it is the CEO's or the physicians or the physical therapist or the home health nurse. A health system cannot be successful if any one group believes that the movement toward bundled payments does not include their participation and focus. We, as supply chain leaders, need to understand what the focused strategies are of our organizations and then set our work plans up around those. What good is it going to do the organization if we decide to get a really great contract for a certain product category yet our system has decided we are not going to be doing those types of cases any longer? We have to be in sync, not working in silos. HPN