Supply Chain Management Capabilities

Strategic Cost Management	Engaging Physicians and Care Givers in Clinical Supply Cost Areas
Background	Change Management
Our Approach	MMIS Installation Support
Case Studies

Strategic Cost Management

A. Background
The increased challenges of today’s economic environment with decreasing reimbursement, escalating cost structures, and reduced reliance on investment capital, places increased reliance on efficient operations and Strategic Cost Management.

Strategic Cost Management is a management perspective that focuses an organization on achieving the lowest possible cost consistent with the organization’s quality standards and maintenance at that level to achieve ongoing financial goals. Successful cost management is an ongoing approach to managing an organization’s resources verses traditional project-oriented “quick – fix” approaches or tactical cost management.

Synergy Consulting Associates (SCA) provides Strategic Cost Management and operational improvement services for materials management, pharmacy, clinical lab, and surgery. Our approach actively engages physicians and clinicians to ensure solutions are practical and implementable. Innovative service methodologies are used to help organizations achieve rapid change and improvements, while establishing sustainable processes for the future. On average client organizations have been able to achieve 5-12% sustainable reductions in non-salary operating expenses. Expected savings vary, but our experience shows with management involvement and commitment, millions of dollars in savings can be found and implemented. In addition, all our fees are guaranteed.

Some key differentiating factors of our approach include:

• Consultants that have worked in administrative, clinical, and management positions
  
• Actively engage clinicians and physicians in strategic cost management initiatives
  
• Realistic and implementable solutions
  
• Unique methodologies to achieve rapid change and improvements, while establishing sustainable processes for the future
  
• Management tools and training to transfer knowledge and best practices to your staff
  
• Performance Guarantee – we guarantee our savings will meet or exceed your service investment

SCA consultants have worked with numerous hospitals, large IDNs, multi-hospital systems, and academic medical centers to realize millions of dollars of savings in non-salary operating expenses in areas, such as Materials Management, Pharmacy, Surgery, and Cath Labs, Clinical Labs, Purchased Services, etc. Some clients include: Yale New Haven Health System, Boston Medical Center, SCM Alliance, St. Joseph Medical Center Towson, St. Joseph Hospital Marshfield, Kaleida Health System, Butler Memorial Hospital, High Point Regional Medical Center and Skaggs Community Health Center.

B. Our Approach

Beginning with a “High Level” assessment to determine the magnitude of potential opportunities; Synergy consultants incorporate a strategic process through “Facilitation and Implementation” of approved initiatives.

C. Case Studies

• Case Study # 1

• Case Study # 2

• Case Study # 3

• Case Study # 4

D. Engaging Physicians and Care Givers in Clinical Supply Cost Areas

A plan to fully realize targeted savings opportunities will require multiple strategies  new and more aggressive approaches to contracting, improved contract compliance, establishment of supply formularies and formulary compliance programs, etc. All initiatives  whether pricing, changes to commodity/low-risk products, or physician preference items  need to be prioritized based on timeframe to actualize savings. Even what may appear to be “quick hit” pricing initiatives may require time to actualize. And, some pricing issues (e.g. pharmacy) may actually require changes to physician prescribing practices. Aligning degree of change difficulty and timeframe to realize savings need to be carefully planned and monitored.

Strategies to Concurrently Address Pricing and Utilization
While the “value analysis” and subsequent product standardization of commodity items is now a common practice (though still difficult to implement and sustain) in healthcare facilities across the country, the challenge remains to successfully direct efforts towards physician preference items. SCA's approach is a collaborative process that differs from traditional product standardization approaches where physician participation and “buy-in” is sought after a standardization initiative has been identified. SCA’s collaborative Strategic Cost Management approach turns the process upside down and begins with the physician. It works with interdisciplinary teams to first establish utilization criteria and physician accepted formularies, and then uses this as a basis to drive standardization and ultimately the best price. Concurrent efforts to fast-track commodity/low-risk product changes to realize savings through price, standardization and utilization efforts provides the Client with a balanced approach that yields both short and long-term savings impact.

Change Management

Realization of savings and resulting budget reductions from standardization and utilization initiatives will necessitate significant change management initiatives and an institutionalizing of new approaches that can withstand the rigors of time.

SCA’s approach involves the application of proven methodologies to effect transformational change in supply chain processes. Industry leading, change management methodologies have been adapted and modified to be relevant in today’s healthcare environment specifically with physician cultures.

Examples of change efforts that will be instrumental to achieving success with clinical supply cost management initiatives include:

• create a vision that is meaningful to physicians and clinicians
  
• change to the systems and structures that under gird the vision (e.g., create strategic vendor partnerships that are based on standardization and utilization goals rather than just price)
  
• establish incentives that reinvest portions of savings into new technologies
  
• minimize variability and waste in processes

Effective Use of Data - Establishing Internal Best Practices
Another critical part of our approach to driving change, particularly with physicians and other clinicians, is effective use of data, which can demonstrate that the desired change does not comprise the quality of care. The most valuable data to drive change in the use of clinical supply expenses are micro-level departmental or procedural metrics that are specific to the organization and measure performance over time against defined goals. At this level, performance improvements are driven through the identification and reduction of procedural and resource utilization variation within the system. These benchmarks/metrics provide a foundation to evaluate and compare practice patterns among physicians and across hospitals down to specific drugs, supplies, lab tests, imaging procedures, etc.

Synergy Consulting Associates’ approach to physician preference items is designed to foster physician and clinician acceptance and the achievement of lower procedural costs by first defining and aligning to internal “best practice,” and then moving to identification and alignment to a potentially “better” external or new practice. We believe this approach best addresses the complex and unique environment of each individual healthcare system.

This approach also eliminates the first hurdle and physician objection normally confronted with the use of external benchmarks  “we’re different” and the selected comparative universe isn’t comparable. Although objectivity and size of external benchmarks can be valuable in defining “better” standards of performance, the perceived relevance can establish obstacles that hinder progress towards change. Starting with internal “best practices” and definition of what realistic cost structures should be based on uniqueness of the system, including reimbursement, provides the physician with “acceptable” data to change behavior and see measurement as a means for improvement and not judgment.

MMIS Installation Support

SCA provides oversight to assist facilities with MMIS implementation by focusing on activities supporting Materials Management, Inventory Control, Supply Patient Charging, Purchasing and Contract Administration, Point-of-Use Systems, and Electronic Commerce / Electronic Data Interchange (EDI)/Trading Partner Development.

SCA will provide such supplemental support to the Materials Management department prior to, during, and immediately after the implementation. Acting as an advocate to ensure the client can fully exploit the full functionality of the new system, SCA consultants will:

• Assist in developing the position of MMIS System Administrator,
  
• Help train/orient the MMIS System Administrator relative to the best use of the system, development of system-specific policies and procedures, and the development of new user/department training materials,
  
• Help identify the functional interface requirements between the MMIS and the Cath Lab and OR systems,
  
• Help develop client-specific training scenarios for Materials Management that will address the anticipated/enhanced utilization of the system at the client vs. the more generic vendor-provided training,
  
• Participate in MMIS acceptance testing as a Materials Management advocate to ensure all proposed functionality is installed and fully operational,
  
• Help identify/resolve departmental operational issues that become apparent concurrent with, and subsequent to, the implementation of the system,
  
• Help develop/implement both regular as well as ad hoc supply cost profiling reports on a hospital-wide and departmental-specific basis,
  
• Help perform a post-implementation “benefits realization” assessment after 3 months of steady-state operation to ensure the client has maximized the full functionality of the new system and is effectively using it in support of enhanced supply chain management, and
  
• Help address/resolve any operational issues identified during the post-implementation assessment.