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AHRMM Update WSHMMA, April 2014 Agenda CQO: The Next Phase Educational Offerings Resources Career Planning Industry Initiatives and Advocacy Comments, Questions, Feedback CQO: a recap In 2013, AHRMM launched the CQO Movement, a new way of approaching supply chain. Under the CQO movement, the supply chain can no longer focus exclusively on price, but rather the combination of product cost, the quality of care delivered, and the reimbursement outcomes to support healthcare’s new value-based models. 3 CQO: a new way of decision-making… Cost: expenditures as they relate to supplies, services, and other areas in supply chain control Quality: patient-centered care aimed at achieving the best possible clinical outcomes Outcomes: financial reimbursement driven by outstanding clinician care at the appropriate cost 4 …has become healthcare’s new “buzzword” 5 So is CQO the most important supply chain issue? No. CQO teaches us that “supply chain issues” no longer exist. In the new world of healthcare, supply chain ties to: • Patient care • Profit margins • Quality control CQO isn’t a supply chain issue. It’s a healthcare issue. CQO Methodology Define Current State Implementation Evaluate and Measure Results CQO Methodologies, Stages 1 & 2 Stage 1 Define Current State: Stakeholders Stage 2 Define Current State: Cost (any expenditure) •Define the objectives and breadth of the initiative, e.g., • Reducing complications or infection rates • Improving employee safety, e.g., needlestick injuries • Improving process and efficiencies •Who are the stakeholders and what are their roles? • Direct users • Indirectly affected cohorts • Utilization and cost of the current products or category • Frequency and cost of adverse events • Cost of inefficiencies • Cost of change CQO Methodologies, Stages 3 & 4 Stage 3 Define Current State: Outcomes (revenue lost or gained) Stage 4 Define Current State: Quality (patient experience) • Process or Product direct and indirect impacts • Short and long term • Organization wide • Cost avoidance • Review of patient satisfaction data • Define quality indicators around product or process • Quality indicators must be unaffected or improved to proceed CQO Methodologies, Stage 5 • Provide peer reviewed evidence, avoid vendor marketing and self-funded studies Implementation: Strategy Formation • Empower the CQO intersection group to make the strategy decisions about product utilization or process improvement considering all the information about cost, quality and outcomes provided in current state • Remind stakeholders of mission to improve value (improved financial performance with better or similar quality and patient satisfaction • Reach strategic consensus with all stakeholders • Use strategy formation to guide next stages of implementation New Metrics CQO requires new metrics to transition from cost-based measurement to valuebased measurement… “Supply cost” per limited revenue categories are too narrow. 11 CQO Metrics: Managing to Value Value Determines Reimbursement, e.g., Value-based Purchasing Score Core Measures (70%) HCAHPS (30%) Your VBP Performance Score Core Measures becoming more supply dependent • Pressure ulcers stages III and IV • Vascular catheter-associated infections • Catheter-associated urinary tract infects 12 When Supply Chain Owns the CQO Intersection: Case Study 1 CQO Asks: How Do We Reduce Needlestick Injuries in Healthcare? • • • >800,000/yr in US Risk of blood borne pathogens Education only means of addressing CQO Asks: How Do We Reduce Needlestick Injuries in Healthcare? • New syringes with improved safety mechanisms CQO Asks: What is Unique About its Clinical Performance to Justify its Cost? Safety Syringes • 1 Needlestick injury/6,000 injections • Average cost of testing/treatment after injury equals $3,000 • Additional costs of treatment can add up to hundreds of thousands Case Costs: Conventional Safety Syringes Actual Historical Spend Average purchase price Units $ 0 .2207 158,700 Purchase Cost $ 35, 027.00 Needlestick Injury Benchmark Needlestick Injuries 37 Per Needlestick Cost $ 3000.00 Total Needlestick Cost $111.000.00 Total Cost of Needlesticks/Needles Total Cost of Needlesticks/Needles $146,027.00 SUPPLY CHAIN INTERVENTION: DECREASE SAFETY SYRINGE PRICE BY 15% Average purchase price Units Purchase Cost Total Savings $ 0.1876 Needlestick Injuries 37 158,700 Per Needlestick Cost $ 3,000.00 $ 29,772.95 Total Needlestick Cost -15% Note: * Negotiate minimum reduction of $3,500 mesh per unit cost Total Cost of $ 111,000.00 Needlesticks/Needles $140,772.95 0% -3.60% Case Costs: New vs. Conventional Safety Syringes Actual Historical Spend Average purchase price Units $ 0 .2207 158,700 Purchase Cost $ 35, 027.00 Needlestick Injury Benchmark Needlestick Injuries 37 Per Needlestick Cost $ 3000.00 Total Needlestick Cost $111.000.00 Total Cost of Needlesticks/Needles Total Cost of Needlesticks/Needles $146,027.00 SUPPLY CHAIN INTERVENTION: CONVERT TO IMPROVED SAFETY SYRINGES Average purchase price Units Purchase Cost Total Savings $ 0.3112 Needlestick Injuries 27 158,700 Per Needlestick Cost $ 3,000.00 $ 49,387.44 Total Needlestick Cost 41% Note: * Negotiate minimum reduction of $3,500 mesh per unit cost Total Cost of $ 81,000.00 Needlesticks/Needles $130,387.44 -27% -10.71% Case Costs: Conventional vs. New Safety Syringes Actual Historical Spend Average purchase price Units $ 0 .2207 158,700 Purchase Cost $ 35, 027.00 Needlestick Injury Benchmark Needlestick Injuries 37 Per Needlestick Cost $ 3000.00 Total Needlestick Cost $111.000.00 Total Cost of Needlesticks/Needles Total Cost of Needlesticks/Needles $146,027.00 SUPPLY CHAIN INTERVENTION: OBTAIN PERFORMANCE GUARANTEE Average purchase price Units Purchase Cost Total Savings $ 0.3112 Needlestick Injuries 18 158,700 Per Needlestick Cost $ 3,000.00 $ 49,387.44 Total Needlestick Cost 41% Note: * Negotiate minimum reduction of $3,500 mesh per unit cost Total Cost of $ 54,000.00 Needlesticks/Needles $130,387.44 -51% -29.2% Substantiating Evidence Tuma SJ, Sepkowitz KA. Efficacy of safety-engineered device implementation in the prevention of percutaneous injuries: a review of published studies. Clin Infect Dis 2006;42:1159–1170. Elder A, Paterson C. Sharps injuries in UK health care: a review of injury rates, viral transmission and potential efficacy of safety devices. Occup Med (Lond) 2006;56:566–574. Adams D, Elliott TSJ. Impact of safety needle devices on occupationally acquired needlestick injuries a four-year prospective study. J Hosp Infect 2006;64:50–55. Whitby M, McLaws ML, Slater K. Needlestick injuries in a major teaching hospital: the worthwhile effect of hospital-wide replacement of conventional hollow-bore needles. Am J Infect Control 2008;36:180–186. Jagger J, Perry J, Gomaa A, Kornblatt Phillips E. The impact of US policies to protect healthcare workers from bloodborne pathogens: the critical role of safety-engineered devices. J Infect Public Health 2008;1:62–67. Lamontagne F, Abiteboul D, Lolom I, et al. Role of safety-engineered devices in preventing needlestick injuries in 32 French hospitals. Infect Control Hosp Epidemiol 2007;28:18:23. When Supply Chain Owns the CQO Intersection: DES rate reduction to national average 22 Physician Data Physician Average 3.5 3 2.5 2 1.5 National Stent Rate per PCI = 1.54 (Medicare 2012) 1 0.5 0 Physician Average Example: DES Rate Reduction to National Average Physician A Physician B Physician C Physician D Physician National Stent Cost of Savings Stent Rate Average Variance Stent per PCI 2.4 1.54 0.86 $ 1,450 $ 1,247 1.4 3.3 2.8 1.54 1.54 1.54 -0.14 $ 1.76 $ 1.26 $ 1,450 $ 1,450 $ 1,450 $ (203) 2,552 1,827 Physician E 1.25 1.54 -0.29 $ 1,450 $ Physician F 1.2 1.54 -0.34 $ 1,450 $ (493) Totals (421) Cases Total Savings 150 $ 187,050 Less than National Average 35 250 $ 75 $ 115 638,000 137,025 Less than National Average Less than National Average 99 724 $ 962,075 Example: DES Rate Reduction to National Average • Assumptions – – – – – – – – Simulated data is risk adjusted Procedure is PCI MS DRG is 247 Average stent rates per physician over 6 months National stent average per PCI is 1.54 (Medicare 2012) Cost per DES is $1,450 Fully loaded room cost per hour = $1,500 Average case time = 1 hour DES rate reduction to National Average STAGE I – Current State - Stakeholders • Direct stakeholders – Interventional Cardiologists • Indirect stakeholders – Inventory Control Staff, Chairman of Medicine, Risk Management • $1450 cost of DES stent • $962,075 excess spend on stents based on variance against national average • Costs greater when other factors considered, e.g., cardiac cath pack, manifold, staffing, fluoroscopy, documentation system, contrast, and medications DES rate reduction to National Average STAGE II – Current State - Cost • Cost of adverse event – readmission for chest pain within 30 days • Opportunity cost – reduction in case time based on $1500/hr cath lab rate STAGE III – Current State – Outcomes • Same DRG reimbursement using fewer hospital resources, decreased number of stents, and increased case load • Direct impact – increased case volume with same capacity at reimbursement rate $11,836 for MS DRG 247 • Indirect impact – cancellation rates DES rate reduction to National Average STAGE IV – Current State – Quality • Review of practice guidelines: --ACCF, AHA, SCAI Practice Guidelines --2011 Guidelines for PCI: Executive Summary • Review patient satisfaction data incl. HCAHPS • Quality indicator – FDA approved product • Quality indicator – monitor 30 day post PCI mortality rate from state registry • Stage V - X as per methodology • Evaluation – stents used/patient/MD CQO Principles • Supply chain contributes greatly to patient care. • Supply chain is a critical part of hospital management strategy. • Under the “new healthcare,” supply chain performance requires new metrics. • All hospital stakeholders need to be educated about the role of supply chain in daily care delivery. 29 Lots of people are talking “CQO.” What’s next? • • • • • Vanderbilt University Medical Center Scottsdale Healthcare Wellmont Health System Ochsner Health System University of Virginia Health System Read more in Supply Chain Strategies and Solutions 30 CQO requires outreach. CQO requires supply chain leaders to build new and different types of relationships with: o o o o o o Clinicians Finance/reimbursement teams Medical leadership Manufacturers Distributors GPOs Monday, August 4 AHRMM will host the 1st Industry Engagement Group to pull together all of the supply chain touch points to address CQO. The Future of Healthcare is Now. The Future of Healthcare is CQO. Supply chain is perfectly positioned at the intersection of cost, quality, and outcomes to take the lead on responding to the demands of health reform. Join the CQO movement and help transform healthcare. 33 Educational Offerings Education: Live Webinars Upcoming live webinars include: May 1 Detecting Product Equivalency to Drive Lower PPI June 19 Harnessing Data Normalization to Drive Product Savings August 21 Understand How Predictive Tools Help Expedite Value Analysis October 16 Controlling Costly Physician Preference Items Education: On Demand Webinars Recently recorded webinars include: WHY, WHAT, and HOW of Strategic Planning (3 part series) Managing Supply Chain in Healthcare Reform Decoding Supply Chain Analytics for Improved Cost, Quality, and Outcomes Suppliers – Partners or Pariahs? Capital Equipment Procurement, Contracting, and Management CMRP Examination Overview Knowing When to Outsource – Making Purchased Services Work for You A Value-Analysis Perspective on Infection Prevention and Control: The Role of Contaminated Hands, Environmental Surfaces, and Skin in Transmission Education: Online Courses Online Courses Embracing the Cost, Quality, and Outcomes Movement – the Future of Healthcare Supply Chain Supply Chain: Owning the Intersection of Cost Quality, and Outcomes Patient Protection and Affordable Care Act – Goals and Components, Provider Reimbursement, and Health System Changes Application of Six Sigma to Inventory Management Challenges and Opportunities in Healthcare Provider Adoption of GS1 Standards Clinical Department Supply Management Creating and Sustaining a Lean-Cost Conscious Culture Giving Powerful Presentations Healthcare Supply Chain Considerations in Emergency Management MMIS Systems Evaluation Selection More available at www.ahrmm.org/learning_center Education: Highlights Leading a Systematic and Integrated Change Initiative In this environment of continuous change it’s critical to know how to not only manage change, but lead it. Change Management 101: Preparing to Be a Change Agent Change Management 201: How to Be a Change Agent The Why, What, and How of Strategic Planning Demonstrate how you and your department can contribute to the hospital’s bottom line with a well thought out and expertly implemented strategic plan. Strategic Planning 101: Why is a Strategic Plan Important Strategic Planning 201: How to Develop a Strategic Plan Strategic Planning 301: Implementing a Strategic Plan Education: Face to Face AHRMM Annual Conference & Exhibition Interactive educational sessions led by industry leaders Largest exhibition of its kind Face-to-face networking opportunities with peers, vendors, and association leaders Resources AHRMM provides print and electronic resources and tools to the membership to keep members informed and engaged in the CQO Movement. Resources News and information Magazine and Special Reports Supply Chain Strategies & Solutions - Bi-monthly member magazine AHRMM eNews - Weekly e-newsletter with latest on the industry and association Publications Numerous publications specific to the healthcare supply chain both published by AHRMM and other standards from the industry Online Resources Complimentary access to online resources such as CQO Headquarters, RFP Library, Lexicon, Sustainability Roadmap, Knowledge Center, etc. Networking Resources ListServs, social networking platforms, mentor program, and affiliated chapters provide an opportunity for members to connect with their peers. Career Planning Tools Career Planning Tools Career Center Open position listings, resume posting, apply online, recruit for a position AHRMM Mentor Program Connect with seasoned veterans in the field to address issues, solve problems, and plan your career path Career Advancement Guide Career milestones, education, experience, tools, and skill-sets Compensation Survey Current industry trends and demographics Career Planning Tools: Development Certified Materials & Resource Professional (CMRP) Certification Nationally Recognized Established and managed by AHA Certification Center (AHA-CC) Independent body affiliated with the AHA Convenient and Affordable Two-hour exam Available online at your local H&R Block location Administrations available at the AHRMM Annual Conference Study and review materials available through AHRMM Champion Industry Initiatives Industry Initiatives Hospital Environmental Sustainability Collaboration with ASHE and AHE Sustainability roadmap – an implementation guide for performance improvement measures to save organizations money, improve facility environmental performance, and respond to community concerns. www.sustainabilityroadmap.org UDI and Industry Data Standards AHA Engagement A Diamond for You Congratulations on your achievements! 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