If 25 years of supply chain experience has taught David Walsh one thing, it’s the value of communication.
By Laura Thill
The rules of the game have changed. “Twenty-five years ago, partnerships and capitated costs meant something much different than they do today,” says David Walsh, administrative director of supply chain, Saint Francis Hospital and Medical Center (Hartford, Conn.). Quality outcomes have become increasingly important, he says, and manufacturers understand they must “share the risk” by guaranteeing their products will help reduce hospital readmissions. “Honesty and openness; the willingness to share information; and the ability and desire to service hospitals” are essential qualities he looks for in his manufacturer partners.
But, manufacturers aren’t the only ones who must lay their cards on the table. True, Walsh looks to partner with a vendor that is ready to make an investment. However, “if we are going to have a long-term relationship, we both must be honest. We must both be able to throw punches and walk away smiling. It’s very important in our role that we, too, accept our responsibility in the agreement. If we don’t do what we are supposed to do, we can’t penalize the vendor.
“It’s not just about our partners bringing value to the table, but us as well,” he says. “When we sit down with our physicians and leaders, we discuss our strategies” – a new concept for many of them, he adds. “The role of supply chain is more important today than ever before,” he says. “Our manufacturer partners must have confidence in our ability to strategize and bring value to the table.
“It can’t be about the cath lab doing its own thing with the vendors,” he continues. “There must be a strategy. Even when we know the direction we are looking to take, we must have a strategy to get there.” To accomplish this, supply chain executives must have a clear understanding of how the market works, and bring that information to the rest of the team, he notes. “We have the benchmarking tools, clinical data on utilization and best practices data.” If the research supports that patients’ cardiovascular function improves with certain procedures or devices, “the products have been well worth the investment.”
Vision of Tomorrow
No matter how on-spot the strategy is, there’s only one way to make it work, says Walsh: Communicate, and then communicate some more.
“In the past 2 ½ years, we have restructured the supply chain at Saint Francis Hospital and Medical Center to meet the needs of the future,” he says, referring to his team’s Vision of Tomorrow project. “We have realigned [our strategy] to meet our customers’ needs.” To do so, supply chain works directly with a team of physicians and nurses, as well as service line and senior administrative leaders, he explains. “We have a robust value analysis process that involves all areas of the hospital system and focuses on quality, costs and outcomes [to determine whether] the strategy has accomplished what it intended to.
“In the process, we have created a wonderful team atmosphere,” he says. “People here want to be involved. They recognize the value they can bring to the table.” Indeed, it has become more important than ever for team players to “clearly define what their abilities are – what they can and will do – and then communicate, communicate, communicate.” There’s no denying it works. In his first year at Saint Francis, he reduced the IDN’s operating budget by $2.5 million, he says. “The following year, we had a $3.5 million reduction, and this year we will see a $7.4 million reduction – all through standardization and utilization.
“This is an ongoing project,” says Walsh. “We will adjust to meet [everyone’s] needs and constantly improve the process. My goal is to maximize technology, streamline certain processes, improve our reporting structure around cost per procedure, and to ensure that as we get into cost-sharing agreements, what we look at will be measureable.”
At the same time, he is mindful that the current structure of the healthcare system can change at any time. “The reimbursement structure, ACOs and bundled payments – all of this can change tomorrow,” he says. “We must move forward with the information we have on hand, and then be prepared to be flexible and change our course if necessary.”
Different setting, same process
A brief stint in working in electronics in the military nearly a quarter of a century ago taught David Walsh, administrative director of supply chain, Saint Francis Hospital and Medical Center, that transistors and resistors “didn’t do it for me.” His earlier experience with planning and logistics for a private-sector manufacturer – together with his wife’s encouragement – led him to a position at Massachusetts General in environmental services. “I discovered I enjoyed it, and it worked well with my background in planning and logistics,” he recalls. It wasn’t long before the hospital moved him into supply chain distribution. “I spent the next 16 years progressing through the ranks,” he says. “At one point, I was responsible for the IDN’s non-acute care network.”
From there, he transitioned to South Shore Hospital as director of materials, facilities and nutritional services, and moved to his current position at Saint Francis Medical Center in 2012. “The greatest benefit I have been able to bring to supply chain is my private industry experience,” he says. “The healthcare industry involves different products and widgets, but the process is the same. I have an understanding of logistics, planning and lead-time. I understand the challenges distributors face and I understand the healthcare industry.”
In his current role as administrative director of supply chain at Saint Francis Medical Center, Walsh is responsible for all aspects of supply chain, including managing capital needs and long-range plans. In addition he has:
• Established a value analysis committee for product and opportunity review. The committee represents all service lines and includes physicians.
• Established A centralized system for distribution reducing cost and increasing efficiencies and coverage.
• Reduced warehouse inventory by 60 percent.
• Implemented low-unit-of-measure ordering, reducing cost and improving space utilization.
• Implemented handheld inventory and a receiving / delivery module.
• Enhanced electronic data management with EDI vendor (invoicing/advance ship notice, etc.)
• Implemented contract database management.
• Restructured the supply chain to better meet needs of the institutions, including OR representation and physician involvement internally.
• Decreased non-file items purchased over the last 12 months from 52,338 to 16,607 (68 percent reduction).
• Standardized product nomenclature.
• Decreased non-file spend from $33 million to $4.3 million (87 percent reduction).
• Completed an aggressive master data management initiative and presented it as educational sessions with three professional organizations in the past year.