The client is an urban, nonprofit hospital with a trauma center and nearly 300 licensed beds. The client organization sees almost 300,000 patients annually, has approximately 1,500 employees, and retains over 300 physicians on staff.
In the past, inquiries for new product purchases did not follow a standard process. There was little or no evidence-based justification for product requests and no evidence-based justification for denial or acceptance. This culture often resulted in resentment between members of service lines and departments, when some would receive approvals and others would not.
In addition, the supply chain’s purchasing strategy focused mostly on cost reduction, with the decision to approve based on the following questions:
- What are we paying?
- From whom are we buying this?
- Can we pay less?
This unsustainable approach to product request and acquisition resulted in
- the purchase of items that were often underused, due to poor physician buy-in or scenarios in which the requesting physician left the organization;
- products that were only used until the next best item came to market (which typically occurred before any ROI was achieved); or
- items that were bought without supplementary stakeholder engagement, which led to problematic downstream issues, such as lack of electrical requirements at the point of service, lack of central sterile resources for maintenance, or lack of physical space.
The client contacted Nexera to assess its current state, and based on Nexera’s findings to implement a system-wide, clinically integrated value analysis process. The Nexera team met with executive leadership to discuss and formulate a plan that would fit the needs of the organization. First the team explained that value analysis was a means of evaluating and reducing costs without compromising care quality—an important step toward achieving a clinically integrated supply chain. To help achieve that end, Nexera created a clinically integrated value analysis program based on partnerships between clinical and administrative staff members, which featured a mix of the right people, the right structure, and the ability to evaluate the right data.
The right data included PO history, the item master list general ledger spend, distribution partner order history, contracts loaded into the connectivity report, GPO contract list and activation status, and GPO contract opportunities.
The right structure included an Executive Steering Committee and three value analysis teams: for perioperative, for medical/surgical and interventional, and for business services. An implementation team was also established to coordinate the purchasing, receiving, and distribution of the products and services approved through value analysis, while ensuring that old products were not wasted.
Nexera’s help in establishing value analysis teams included guiding organizational leadership about who should be selected and why, as well as providing information about experience and the skill sets required for the job. From that foundation, the organization’s leadership was able to select the appropriate people. The Executive Steering Committee was chaired by a physician, in this case the Chief Medical Officer, who had been appointed by the Chief Financial Officer. The Executive Steering Committee chair selected the physician chairs for both the perioperative and medical/surgical & interventional teams, a decision that was based on each individual’s ability to engage other physicians and solicit feedback from their peers. The Chief Medical Officer also sought physicians who were open to new opportunities, were influential, and were well respected throughout the system. In order for the initiative to succeed, the physician chairs had to be invested in the success of clinically integrated value analysis outcomes.
The Assistant Vice President of Revenue Cycle & Compliance chaired the business services team. Additional team members were selected by each committee chair with the help of the Value Analysis Director.
To garner organization-wide support and to communicate that this initiative warranted classification as a high priority, Nexera helped the Chief Financial Officer and Chief Medical Officer develop introductory presentations for medical staff meetings, where the concept, process, and program rollout of clinically integrated value analysis were communicated. Additional presentations were also given to various key stakeholders, such as nursing, infection control, and orthopedics. Furthermore, the client hospital’s communications department helped put together introductory announcements that were distributed to the entire hospital via email.
Within three years the savings totaled $5.3 million.
Thanks to Nexera’s assistance in setting up clinically integrated value analysis committees and teams, virtually anything that touches supply chain and patient care is discussed at meetings. Agendas follow the same pattern at each meeting, including a review of initiatives that have either been approved or have been denied and are to be elevated to the Executive Steering Committee meeting. Initiatives that are in review are discussed and updated. New initiatives—whether a cost-saving opportunity, quality improvement campaign, or best practice suggestion—are presented to the committee for a decision on whether or not they should be pursued. New product requests from physicians or staff are also presented at this time. The last item on the agenda is a discussion. It provides time to communicate important additional information to team members (e.g., recalls, backorders, etc.) and other topics proposed for review.
The implementation of a clinically integrated value analysis structure has resulted in a cultural shift that is geared toward process transparency and standardization. There is now an expectation that product requests must be supported by specific, articulated value-adds, where value means cost-savings and patient outcomes that are supported by clinical-based evidence. Teams even vie to outdo each other—because savings are categorized by team, with totals listed and tallied, each team strives to attain the greatest savings. The clinically integrated value analysis decision-making structure is not only used for clinical products; it forms a strategic framework for all types of decision-making across the hospital.
Traditional vs. Clinically-Integrated Approach to Purchasing
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