Kim Barnard
director of materials management
Affinity Health System
Menasha, Wis.
Three hospitals, 351 staffed beds, one surgery center and 22 clinics, approximately $80 million annual spend.
Prior to the formalization of Affinity Health System, Kim Barnard was director of materials management for LaSalle Clinics. In 2000, after Affinity Health System was formed, she became director of materials management for St. Elizabeth Hospital (Appleton, Wis.), Mercy Medical Center (Oshkosh, Wis.), Affinity Surgery Center (Menasha, Wis.), Calumet Medical Center (Chilton, Wis.) and Affinity Medical Group (formerly LaSalle Clinics). From 1992 to 2000, Barnard was responsible for planning, implementing and maintaining the centralized purchasing and distribution program for 38 clinic locations. She designed an off-site warehouse and researched and coordinated data to set up an alphanumeric materials management computer system. Currently, she is responsible for developing and implementing strategy for the Affinity Health System materials management department to function as a fully integrated department and service all facilities within the Affinity Health System network. She oversees:
Development of a cohesive organizational structure for materials management, consisting of purchasing, distribution, mailroom, courier, operating room support, hospital central supply and print shop.
Standardization of all policies and procedures pertinent to materials management functions.
Development of a central distribution center to support the lowest unit of measure supply distribution to all Affinity Health System facilities and house the combined purchasing staff, mailroom, courier hub and print shop.
Implementation of a single database to support all purchasing, inventory and reporting functions necessary to support the entire health system.
The Journal of Healthcare Contracting: What has been the most challenging and rewarding project that you have been involved in recently?
Kim Barnard: I have been involved in an expense reduction project, which has focused on high-dollar and physician preference items. We are looking at product categories where an opportunity for standardization and savings may exist. We have analyzed data down to the utilization level to pinpoint where preference may be an issue and determined the overall impact of these items on our contact compliance. We have also held meetings with clinicians to discuss our findings and to determine whether there is an opportunity to move their business to suppliers who meet their needs, both clinically and financially. I believe that removing product variation is good for everyone involved. It enables us to know what our clinical expenses will be, and everyone understands how a particular device works, reducing the potential for error.
JHC: Describe a project you are excited to implement in the near future.
Barnard: Our pricing for commodity items has leveled off, which has prompted us to look at more difficult areas, such as orthopedic implants, cardiac rhythm devices and more. We will identify potential opportunities, while rating their difficulty for implementation.
JHC: What is the most important quality you look for in a supplier partner?
Barnard: First and foremost, we look for partners that demonstrate honesty and the willingness to work hard. I believe Medline has done this for Affinity Health System.
JHC: What is the biggest change we can expect to see in healthcare contracting in the next five years?
Barnard: Due to the economic times, suppliers and manufacturers must understand that hospitals are working on very small margins. I believe suppliers must be comfortable with lowering their profit margins. Otherwise, no providers will be left to service patients. True partnerships need to develop in order that everyone involved can remain viable.
Karyn Gattermann
corporate vice president
Continuum Health Partners Inc.
New York, N.Y.
Five acute care hospitals and various ambulatory care centers, physician practices and hospice care.
2,727 certified beds, $350 million annual supply chain spend.
Karyn Gattermann joined Continuum Health Partners in 2005, bringing with her 30 years of experience in supply chain, contract negotiations, hospital operations and quality/utilization/risk management. She began her career as an RN, practicing in psych/alcohol detox, med/surg and critical care. Today, Gattermann oversees contracting, procurement, purchased services and capital for Continuum, as well as oversight of value analysis committees and Oracle ERP supply chain management redesign/implementation.
The Journal of Healthcare Contracting: What has been the most rewarding project you have been involved in recently?
Karyn Gattermann: Since I joined Continuum, we have achieved supply chain savings of $30 million. We have achieved much of this savings by driving a partnering process with our physicians and working together in our negotiations with the vendors. We are continuously expanding our relationships and partnerships with our physicians in order to identify and achieve cost reduction opportunities, whether through contract negotiations or utilization efforts. Our multidisciplinary value analysis teams, as well as others we pull in on an ad hoc basis, have also been critical in helping achieve these savings.
JHC: Describe a project you are excited to implement in the near future.
Gattermann: I am responsible for the supply chain aspects of a large, multi-year effort to redesign and re-implement our ERP system. Some key objectives are to make the system more user-friendly, such that folks at Continuum can find what they need to order; improve the inventory management and accounts payable aspects of the system; and implement an organization-wide educational component designed to increase the efficiency of financial reporting and the procure-to-pay process. I look forward to seeing overall improvement in functionality and the positive impact these changes will have on the procurement experience for our people and organization, as well as our vendors.
JHC: What is the most important quality you look for in a supply partner?
Gattermann: I look for supply partners that seek a true partnership between our organizations. I define a true business partnership as one that not only focuses on the vendor’s sales goals, but also brings a high level of quality and integrity, as well as focuses on mutual goals. Broadlane, our group purchasing organization, and MMS East, our med/surg distributor, come readily to mind as organizations that embody these characteristics.
JHC: What is the biggest change we can expect to see in healthcare contracting in the next five years?
Gattermann: With the current economy and a renewed focus on healthcare reform both at the forefront, it is challenging to envision the next five years. There will certainly be an ongoing and increasing demand for cost reductions and savings. Continued gains toward greater transparency and better tools for evaluating and weighing clinical benefits vs. the cost of devices, equipment and products will play a role in successfully meeting the challenges.
Mark Grove
associate executive director, supply chain and alliance services
Scott & White Healthcare
Temple, Texas
Nine hospitals, 1,334 beds, medical group practices with 750 physicians and scientists, four-year medical school campus for Texas A&M HSC College of Medicine, $1.2 billion net operating revenue, $181 million annual supply spend, $150 million annual purchased services, $35 million annual capital purchases.
Mark Grove joined Scott & White Healthcare in 1996 as director of materials management, bringing with him 21 years of healthcare supply chain management experience. His career has included sales and operational roles in healthcare retail, distribution, consulting and provider operations. Today, he oversees Scott & White Healthcare’s development and implementation of supply chain strategy, including corporate alliances, group purchasing, contracting, purchasing, distribution, technology, records/property management and mail distribution.
The Journal of Healthcare Contracting: What has been the most challenging and rewarding project you have been involved in recently?
Mark Grove: I had the opportunity to work with leadership at VHA Texas to develop the Texas Purchasing Coalition, which is comprised of 14 independent health systems in Texas that joined to achieve savings through an aggregated purchasing strategy. Currently, I act as chairman of the Coalition. Since its inception in late 2007, the coalition members have achieved additional value of approximately $11 million.
JHC: Describe a project you are excited to implement in the near future.
Grove: As our health system has grown, a continuing priority is to discover ways to eliminate waste, streamline processes and reduce cost. One project underway is a significant e-commerce strategy with GHX, focused on content management, spend analytics and EDI. Our goal in the next few months is to push all transactions through the GHX exchange in order to drive efficiencies in the procure-to-pay process. With a focus on content management, our ability to reduce the amount of back-end re-work will be significant and facilitate our ability to re-deploy staff into other areas within supply chain.
JHC: What is the most important quality you look for in a supply partner?
Grove: Scott & White Healthcare’s vision is to be the most trusted and valued name in American healthcare. As such, our organization expects our supply partners to share this vision in a manner that supports our continued success.
JHC: What is the biggest change we can expect to see in healthcare contracting in the next five years?
Grove: Scott & White has successfully established sole-source, multiple-year (for up to 10 years) strategic alliances with Siemens, Aramark, Stryker, Cardinal and St. Jude. These are committed agreements that have delivered great value for both parties. The agreements have allowed the suppliers to focus on helping deliver operational improvements for Scott & White, rather than the standard transactional sales process. The ability to commit has provided us with access to significant discounts and programs that would otherwise be unobtainable. I have been approached by several suppliers interested in learning how to appropriately structure these types of multi-divisional agreements. I expect to see this strategy implemented by the larger and more progressive suppliers.
Jay Kirkpatrick
CEO
HCA’s Nashville Supply Chain Services
Nashville, Tenn.
24 HCA hospitals throughout Tennessee, Kentucky and Georgia, 3,300 licensed beds, annual supply spend of $370 million for HCA’s TriStar division in 2008.
As CEO of HCA’s Nashville Supply Chain Services, Jay Kirkpatrick oversees purchasing, accounts payable, distribution and facility supply chain operations for 24 hospitals throughout Tennessee, Kentucky and Georgia. His responsibilities include materials management and pharmacy distribution for HCA’s TriStar division, including 16 hospitals and 33 entities; consolidated purchasing, accounts payable, warehousing for Nashville and Atlanta facilities, customer service and pharmacy order entry for all 24 hospitals and 50 entities; supply cost management and regional contracting for HCA’s TriStar division, including 16 hospitals in Kentucky, Georgia and Kentucky. Kirkpatrick’s 19 years of healthcare materials management experience include six years as CEO at Nashville Supply Chain Services and eight years with HCA’s corporate offices. In addition to his responsibilities for HCA, he is a certified materials resource professional (CMRP) and the 2009 president of the Association of Healthcare Resource Materials Management (AHRMM).
The Journal of Healthcare Contracting: What has been the most challenging and rewarding project you have been involved in recently?
Jay Kirkpatrick: In 2008, my entire team was involved in the contracting and implementation of multiple medical devices across multiple product categories. We developed a strategy, communicated the strategy to division and hospital leadership, negotiated and contracted with manufacturers and operationalized the agreements. In the beginning of the year, we executed our GPO cardiovascular agreements across CRM, BMS and DES; we developed a strategy in spine, communicated that strategy to our administrators and surgeons and negotiated 30 supplier agreements; and we worked with our administrators and surgeons in the area of orthopedic joints.
JHC: Describe a project you are excited to implement in the near future.
Kirkpatrick: My team has applied UNSPSC codes to all of our purchase and stock item history in our data warehouse. In turn, we have developed reports designed to empower our clinical resource managers and value analysis teams to standardize products throughout the TriStar division and expand the percentage penetration of contracted/stocked warehouse items. This will increase the efficiency and effectiveness of our operation and lower overall costs.
JHC: What is the most important quality you look for in a supply partner?
Kirkpatrick: Honesty, integrity and transparency are key qualities I appreciate in my suppliers. It is a pleasure working with suppliers who have aligned priorities and incentives with us and perform their jobs just as they say they will. I work with many suppliers whose cultures exemplify these qualities.
JHC: What is the biggest change we can expect to see in healthcare contracting in the next five years?
Kirkpatrick: Three segments of the healthcare industry that are positioned to influence, if not completely change, the healthcare contracting process are payers, consumers and the government. All three will pressure the industry over the next three to five years to reduce costs. Consumers can influence the contracting process by demanding transparency in device pricing. Payers can influence the process by replacing contracting at the hospital or GPO level. And, the government can fix prices for devices similar to models in other countries, rather than continuing to reduce reimbursement.
Donald Klusmeier
director supply chain
Sisters of Charity of Leavenworth Health System (SCLHS)
Lenexa, Kan.
Eight care sites in four states
1,914 staffed beds, $1.5 billion operating revenue and a collective supply spend of $267 million.
Donald Klusmeier joined Sisters of Charity of Leavenworth Health System (SCLHS) in 2007 to oversee the IDN’s relationship with Broadlane, the group purchasing organization that manages its supply chain. Klusmeier ensures the performance and progress of the relationship and acts as the liaison between the SCLHS C-suite and Broadlane. In addition, he works with SCLHS’ six clinical value analysis teams to promote a clinically-driven supply chain; provides the infrastructure and direction for supply chain advances; and champions the value, efficiency and compliance throughout all processes in which he is involved.
The Journal of Healthcare Contracting: What has been the most challenging and rewarding project you have been involved in recently?
Donald Klusmeier: Our surgery value analysis team and Broadlane have been working on our spend and practices relative to spine procedures. Initially, this involved an exhaustive data collection in order to analyze our spend by category (e.g., metal, bone, morphogenic protein, biologics, etc.). This provided us with a complete picture, by market, physician, clinical problem, etc. We have had to engage local administrators and physicians to tailor specific strategies for sustainable results. The process has been challenging because there are so many facets of products, an ongoing introduction of new technology and so many clinicians, markets and approaches. It has been rewarding in that it constitutes our largest segment of spend next to pharmacy, so our progress is noticeable. And, the experience has added to our trove of lessons learned.
JHC: Describe a project you are excited to implement in the near future.
Klusmeier: I am anxious to see our industry bring the GS1 standards to reality. If we don’t embrace this at all levels and find ways to compromise, we will continue to have a mediocre supply chain. We continue to have proprietary data and nomenclatures at multiple levels of the supply chain, which can be confusing and which fuels duplication of effort and rework. We also are missing out on communication efficiencies and information sharing that other industries have accomplished. Bar code technology is 35 years old this year, and healthcare remains largely on the sidelines. In my opinion, it’s time for the healthcare industry to get with the program.
JHC: What is the most important quality you look for in a supply partner?
Klusmeier: The ultimate supply partner is in for the long haul and will warn us when we are about to do something we may regret – even if it means less money for them.
JHC: What is the biggest change we can expect to see in healthcare contracting in the next five years?
Klusmeier: I have to believe we will see significant change with regard to physician preference items. The question is, will this happen through market forces or through regulation, directly or indirectly? Even if we were not involved in discussions about healthcare reform, the spend on physician preference items, including pharma, must be apparent to the government, payers and hospitals. It would seem to be unsustainable. In addition, we should see increased information about, and demand for, evidence-based results, particularly around so-called new technology. It will no longer be sufficient to introduce new technology simply because it is different, not harmful or intuitively seems better. It will need to demonstrate verifiable, incremental improvement to health status that someone is willing to pay for. This will change the dynamics of contract negotiations.
Darryl Long
senior vice president and chief supply chain officer
OSF Healthcare System
Peoria, Ill.
Seven acute care hospitals, 1,578 beds, two long-term care facilities, net patient revenues of $1.5 billion, total spend of $348 million in supplies and purchased services, approximately $100 million in capital.
Darryl Long joined OSF Healthcare System about 15 months ago to oversee all supply chain activities across the health system, including sourcing, contracting, purchasing, materials management, logistics, distribution and OSF’s affiliate group purchasing program. He is responsible for all supply chain management and materials management employees. Long is relatively new to the healthcare industry, with only 4 ½ years of healthcare supply chain experience. Prior to his involvement in healthcare, he spent about 20 years in the consumer products industry in various leadership roles in supply chain management and procurement.
The Journal of Healthcare Contracting: What has been the most challenging and rewarding project you have been involved in recently?
Darryl Long: Since joining OSF, I have been engaged in a system-wide supply chain transformation initiative to develop an integrated supply chain. We originally focused on developing an understanding of current supply chain processes and identifying significant gaps between the current and desired state. We also spent a good amount of time evaluating the effectiveness of existing systems, technologies, data integrity and contract compliance. We implemented a robust spend-management tool to facilitate data cleansing, normalization and to increase spend transparency and contract compliance. In addition, we developed measures and metrics and began rigorous benchmarking efforts to achieve a greater understanding of our performance. Organizationally, we realigned reporting and restructured departments along process dimensions. These changes are enabling us to drive sourcing initiatives faster, more efficiently and with greater accountability.
JHC: Describe a project you are excited to implement in the near future.
Long: We plan to continue moving forward with our supply chain transformation. We will complete the centralization of the buying function, which will free up existing local resources to improve service, optimize material flow and reduce inventories. In addition, we will enable some new features within our current ERP system and leverage that to drive greater accuracy and efficiency in the requisition-to-payment process. We will also complete a few initiatives designed to substantially lower our costs in high-dollar implant categories. Finally, we will complete the implementation of a standard system-wide value analysis process to drive item standardization, improve utilization and better manage and control the use and adoption of new products.
JHC: What is the most important quality you look for in a supplier partner?
Long: Integrity is the most essential trait in a supplier. Suppliers that tell the truth about the strengths and weaknesses of their products – even if it means losing business – can gain tremendous credibility and respect.
JHC: What is the biggest change we can expect to see in healthcare contracting in the next five years?
Long: I think healthcare supply chain managers will become increasingly more competent, resulting in better analysis of total costs and more time spent engaging their suppliers. We will see a significant increase in physician involvement and collaboration in sourcing and contracting initiatives involving physician preference items. We may see contracts with value-enhancement clauses tied to patient outcomes and price escalation/de-escalation clauses linked to reimbursement. Finally, I think we will see greater use of spend-management and e-sourcing tools, which will drive price transparency and facilitate improvement in sourcing cycle times.
Gary McMann
director supply chain operations
Billings Clinic
Billings, Mont.
$103,835,546 total purchasing volume, 272-bed acute care hospital, seven critical access hospitals, 11 clinics, nursing home, surgery center, cancer center, heart center, research center and psychiatric center in two states.
Gary McMann joined Billings Clinic in 2006 and within a year, he and his team facilitated the development of a nine-facility IDN. He currently is responsible for oversight, management and leadership of supply chain programs and strategy for the entire health system, including strategic planning, program development and tactical implementation. In addition, he serves as board chair of the joint venture hospital laundry services and co-chair of the VHA Mountain States Purchasing Group.
The Journal of Healthcare Contracting: What has been the most challenging and rewarding project you have been involved in recently?
Gary McMann: What truly makes a difference are the challenges we accept, not the formidable ones we reject. Following an extensive search for a distributor that was willing and able to work with us to launch a new med/surg distribution model, we found the right fit – Kreisers Inc. Its charge was to bring a med/surg distribution center to Billings, Mont.; provide us with one of its full-time employees to work with our supply chain and clinical staff at no cost; guarantee zero stock-outs on all distributor-related stock items and full access to its warehouse; and provide service to all eight of our hospitals. At the same time, we embarked on a new inventory management theory that combined consequential and intelligent inventory management principles. Our distribution model has been in place for a year, in which time we have had only three distributor-related stock-outs.
JHC: Describe a project you are excited to implement in the near future.
McMann: We are developing a supply chain “stress test” (coined from the recent banking industry oversight), which will alert us to potential maladies within supply chain operations. By design, the stress test will quickly and accurately take a categorical pulse of supply chain effectiveness relative to financial, operational and functional programs. The process will incorporate electronic data collection with built-in control features, which will flag systemic aberrations.
JHC: What is the most important quality you look for in a supply partner?
McMann: The single most important quality in a supplier partner is that it be a true partner. By definition, partners take care of each other. I like to tell our supply partners, ‘We will buy your product, pay our invoices on time, allow you pre-arranged access to key end users and honor agreement terms. In turn, keep us strong through a continuous value proposition, periodic business reviews, product updates, a consistent pipeline of product and advance notice of potential outages beyond your control. And, by the way, do this without us having to ask.’ We will never be stronger than our weakest link. We have some superb suppliers, but the one that stands apart from the rest is Kreisers Inc.
JHC: What is the biggest change we can expect to see in healthcare contracting in the next five years?
McMann: My hope and expectation is that President Obama stays the course with healthcare reform. He and his administration appear to have the courage and conviction to see this through. And, the healthcare contracting industry has a huge role to play in directly supporting the healthcare reform initiative. Healthcare manufacturers, suppliers, distributors, service providers and care givers all will find themselves in a different ball game with a new set of rules. Our industry will see company goals and incentives tied to their degree of success in helping hospitals and care givers improve patient outcomes, patient safety, operational efficiencies and costs.
James O’Connor
vice president, supply chain management
Henry Ford Health System
Detroit, Mich.
903-bed tertiary care hospital, medical education and research center, seven community hospitals, over 30 medical centers, numerous community-based and in-home services, including pharmacy, nursing home, home health and medical equipment, 2008 total revenues of $3.7 billion, with a net income of $8.5 million and uncompensated care of $160 million. The health system serves over 1 million residents in southeast Michigan.
Prior to joining Henry Ford Health System in 2006, James O’Connor served as executive director, supply chain management, for Trinity Health, a national Catholic healthcare organization, and as vice president of materials resource management for the Detroit Medical Center, a regional multi-hospital academic medical center. Currently, O’Connor is responsible for seven institutions, including 2,495 beds (2,395 acute care beds/100 non-acute care beds), $413 million in supply expense and $150 million in capital.
The Journal of Healthcare Contracting: What has been the most challenging and rewarding project you have been involved in recently?
James O’Connor: In the last two years, Henry Ford Health System has acquired two institutions, Henry Ford Macomb (435 beds) and Henry Ford Cottage (175 beds), and has opened a new facility, Henry Ford West Bloomfield (300 beds). Assimilating each of the newly acquired institutions into our supply chain systems and practices, as well as sourcing and preparing for our new institution, has kept our entire supply chain management staff very busy. Additionally, our supply chain management team has made great strides in achieving product standardization through our 13-system-wide value analysis teams, resulting in savings in excess of $22 million.
JHC: Describe a project you are excited to implement in the near future.
O’Connor: We are focusing on expanding our sourcing management process throughout our entire operation and capital spend. We are implementing “Sourcing Management Tools,” a software application designed to enable the supply chain to more precisely track implemented savings, as well as forecast opportunities and effectively manage over 3,000 contracts. We have developed this software application to enable us to manage the entire sourcing and contracting process, from inception through completion.
JHC: What is the single most important quality you look for in a supply partner?
O’Connor: We look for the typical performance metrics that all healthcare organizations require – quality, cost, delivery and integrity. I believe the vast majority of suppliers are achieving these basic metrics, or we wouldn’t be doing business with them. In addition, we emphasize domestic content from a quality and availability perspective. We believe the dependence on foreign manufacturing lengthens the supply line, thereby increasing the risk of supply. We believe our mission statement – serving the communities we serve – includes the aspects of domestic investment.
JHC: What is the biggest change we can expect to see in healthcare contracting in the next five years?
O’Connor: Transparency. I think it is in every provider’s and payer’s interest to narrow the variation in product cost that exists today throughout healthcare. The profit margin imbalance between suppliers (high double digits) and providers (low single or negative digits) is disproportionate to the value of innovation vs. the value of care served by patient care providers.
Brent Petty
CMRP, director, supply chain
Wellmont Health System
Kingsport, Tenn.
Eight acute care hospitals in two states, three ambulatory surgery centers, two outpatient imaging centers 1,327 beds, $140 million annual supply spend.
Brent Petty joined Wellmont Health System in 2001 as director of materials at Holston Valley Medical Center, the IDN’s largest hospital. In 2006, he became corporate director of supply chain and currently oversees contracting, purchasing, operations, logistics, value analysis and information technology for the entire health system.
The Journal of Healthcare Contracting: What has been the most rewarding project you have been involved in recently?
Brent Petty: The one project that comes to mind is Wellmont’s initiative to leverage our enterprise data to create an accurate, consistent and transparent data model, enabling us to benchmark hospital to hospital, physician to procedure and procedure to physician. This model emphasizes data precision across our day-to-day operations, permitting us to focus on cost and reimbursement. By providing real-time data that is repeatable and measurable to our physicians around the cost of their procedures, margin management becomes easier and more flexible.
JHC: Describe a project you are excited to implement in the near future.
Petty: We are creating a new med/surg distribution contract, which will impact every department in our health system and represent 16 percent of our total spend. The contract will enable us to fully assess our processes, people, data and technology, as well as to strengthen our balance sheet and reduce our liabilities.
JHC: What is the most important quality you look for in a supplier partner?
Petty: There is a distinct difference between partners and everyday vendors. In today’s fast paced environment, it is easy for vendors to become far removed from their customers’ needs. When evaluating the quality characteristics of a genuine strategic partner, I look at several traits, such as integrity. This means that vendors must do what they say they will do, when they say they will do it. I also value such skills as listening, patience and problem solving, which enable vendors to better understand Wellmont’s needs. We rely on supply partners that will take time to help us manage our business. Corporations that amplify the above qualities are MedAssets, Philips Medical, Steris Corp., Abbott Vascular and Cardinal Health.
JHC: What is the biggest change we can expect to see in healthcare contracting in the next five years?
Petty: The introduction of new technology in patient care is at an all-time high. Regardless of whether technology is evolutionary or revolutionary, the greatest contracting challenge will be to help balance hospital margins while justifying the value of cutting edge technology to physicians. We will also see change with regard to cost reduction. Hospitals have done a good job of beating down the price. Now they must implement efficiencies to remove costs. Hospitals will also continue to find and implement new best practices and utilization management strategies. And, lastly, they will continue to learn to grow as a system through consolidation, standardization and leveraging. If we are bound by the past, we will never move forward. We must think differently and act differently.
Celeste West
vice president supply chain
Adventist Health System, Winter Park, Fla.
37 hospitals, 8,500 licensed acute and long-term-care beds, 17 skilled nursing facilities and over 20 home health, hospice, medical equipment and infusion entities across 12 states. Annual supply spend of $880 million, purchased services spend of $282 million.
Celeste West joined Adventist Health System in 2003 as corporate director of materials management. Her responsibility was to transition the health system from a group of independent hospitals to a centralized, clinically-driven supply chain. Her department’s job was to save $12 million in supply cost over three years, and it succeeded in logging $58 million in five years. She currently oversees supply chain leadership and contract management for AHS.
The Journal of Healthcare Contracting: What has been the most challenging and rewarding project you have been involved in recently?
Celeste West: When I began this process, our hospitals did not work together, and we had old legacy systems with no multi-entity functionality. Since then, we have engaged a third party to help us consolidate data. We have created a database of all contract commitments and produced data analysis tools. We also have created purchasing advisory committees in most disciplines to help make contracting decisions; implemented scorecards and dashboards; and begun evaluating standardization and utilization of products. Today, 80 percent of all of our contracts are completed corporately, with system pricing, and we have increased our GPO penetration, standardized much of our equipment and streamlined distribution in all disciplines to a single source.
JHC: Describe a project you are excited to implement in the near future.
West: We are implementing a new program with supply chain action teams for nursing and surgical services. This process will limit the resources needed to evaluate contracts and product options, and leverage AHS purchase volume for sole-source contracts to achieve 3 to 5 percent savings. Each of our teams will include 20 members representing different disciplines in nursing and surgical devices and will be tasked with selecting products and awarding contracts for commodity items. They will set criteria for selection, evaluate options, make decisions and share this information with our hospitals. Our hospitals, in turn, will make conversions within 90 days of a contract award. Our goal is to eliminate the need for additional product evaluations at each hospital and speed implementation.
JHC: What is the most important quality you look for in a supplier partner?
West: First and foremost, we look for a supplier partner that demonstrates integrity and an understanding of our mission and strategic goals. We seek vendors that can help us improve patient care with products that perform as indicated and help us reduce costs through multiple avenues.
JHC: What is the biggest change we can expect to see in healthcare contracting in the next five years?
West: As the government pushes for reduction of healthcare costs and more information through technology, it should get easier to determine whether a product actually meets its claims. This could mean that contracting may be based on evidence, and longer-term relationships may likely develop. If government or third-party payers begin contracting directly for products, this will greatly impact contracting for such items as drugs and implants, and we likely will see greater alignment of hospitals with physicians.