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IMPLEMENTING HIGH VALUE PROCUREMENT MODELS AND STRATEGIES
Health Procure 2015 Melbourne – 17-19 February 2015
A snapshot of who we are and where and aspire to be
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 2
At Health Purchasing Victoria (HPV) we help public health care services deliver high quality
patient care by ensuring they have a reliable and agile supply chain.
We do this by:
Partnering with them to organise collective contracts for the things they buy.
Providing advice and education on how to get their supply chain working at its best.
Ensuring Victorian Government health purchasing policies are complied with.
Who is Health Purchasing Victoria?
HPV Core Functions Health Services Act 1988
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 4
1. To supply and facilitate the supply of goods and services
2. To provide Advice and Support
1. Foster Improvement in use of systems and e-commerce
2. To maintain useful data and share with health services
1. To ensure probity is maintained in the purchasing, tendering and contracting of public hospitals
2. To monitor Compliance
• $cost reduction benefits delivered
• Procurement Reform (RPA) support
• Victorian Product Catalogue System
• Recallnet
• Strategic Sourcing Suite
• Development of a policy and probity compliance framework for health services
Our Customer Base (mandated health services)
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 5
Health Purchasing Victoria | Achieving best-value supply chain outcomes for Victoria’s health sector 6
HPV Category Management Streams
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 7
Me
dic
al E
qu
ipm
en
t
Indire
ct M
ate
ria
ls a
nd
Se
rvic
es
Me
dic
al C
onsu
ma
ble
s a
nd
Ph
arm
aceu
ticals
Orthopaedic Prostheses
Pharmaceuticals
Surgical Instrument sand Laparoscopic
Trauma Implants
Heart Valves
Dressings and bandages
Gloves
Radiopharmaceutical
Continence Management
Wound Care
Clinical Protective Apparel l
Interventional Radiology
Interventional Cardiology
Enteral Feeds
Agency Labour
I language Services
Waste Management
Pathology Services
Catering Supplies
Office Requisites
Utilities
Chemical Products
Hand Hygiene
-----------------
Non-Emergency Patient Transport
Radiology Services
Linen Services
Defibrillators
Monitoring Equipment
Beds and Mattresses
Haemodialysis
Infusion Pumps
------------------Medical Imaging
Pathology Equipment
Ventilators
Equipment Maintenance
Maturity Development Growth
• Understanding spend
• Standardisation Service
requirements
• Leveraging collective
procurement efficiency
• Category management
• Rationalisation and process
improvement
• Managing supplier performance
HPV Key outcomes
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 8
Analysing the evolution of the procurement environment in the healthcare sector
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 9
Group purchasing evolution
Health Purchasing Victoria | Achieving best-value supply chain outcomes for Victoria’s health sector 10
Late 90s
Hospitals
go it alone
Supply
Early 2000s
Group
contracting
(Lower)
Price
20-teens
Contracting,
Analytics
‘Consulting’
Value
The future?
Cost-
Quality
Outcomes
Solutions
The Evolution of HPV as an organisation
2001-2006
Health Act
creating the organisation
Med-cons /Pharma focus
“low cost, high volume”
5 Employees
2007-2012
Expansion into general consumables and services.
Strategic Plan 2012-17
Organisation growth from 12+ Employees
Strategy Plan 2012 - 2017
On-going delivery of the strategic plan
>Procurement Reform
>Medical Equipment
>Re-organisation streams
Supply chain
>Capacity and Capability (65+ Employees in 2015)
>Investment on information enablers (data)
>Support sector con the compliance framework
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 11
Continue to Build Excellence - Enablers
>Single integrated supply chain organisation
>single system (HPV and health services as a system
>High level of efficiency
>Unlocking full value for the sector
>Building strong relationships customer and suppliers
>Sustainability Focus
talented organisation
Market sustainability
Key Deliverables
• Value delivery
• Bringing every year additional spend under collective
procurement
• Category Management of $625M+ spend..
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 12
Director Procurement
IMS
(HOS)
Medical & Pharma (HOS)
Equipment (HOS)
Sourcing Operations
The Procurement Team
HOS = Head of Sourcing
• 30 Staff
• SCM/CM/CO and SME
Key Deliverables – Support across
all l sourcing streams
• VGPB reform internal roll out
• Process efficiency e-sourcing
• change management
• Build internal capacity and
capability
• Drive NPC/VPC/RecallNet
compliance
The Procurement Reform – Key Enabler To Innovation/Efficiency/Excellence
• Key Aspects of Procurement Reform
Change from the threshold procurement (greater than $150K –
RFT) to strategic sourcing
Adoption of category management
Long range sourcing plans – Traditionally HPV worked on an
annual sourcing plan
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 13
1. Set up
project
2. Approve
the plan
3. Build
policy
4&5. Build
strategy &
plans
6. Build
organisation’s
skills
7. Success!
Transition
approved.
Dec 2014
Early 2015
June 2015
Dec 2015
June 2016
Victorian health supplier ‘musts’
Support GS1 data standards through
National Product Catalogue (NPC) and
Recallnet
Goods approved by TGA
Ability to meet the specific (& diverse)
operational needs of health services
Understand two-way nature of Supplier
Relationship Management process
Health Purchasing Victoria | Achieving best-value supply chain outcomes for Victoria’s health sector 14
feedback@hpv.zendesk.com
contracts@hpv.zendesk.com
Past (a reminder of Evolution)
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 15
Old hospital Materials Management model
Purchasing
• “place and chase” orders
Stores
• receive and deliver
Health Purchasing Victoria | Achieving best-value supply chain outcomes for Victoria’s health sector18
Innovation..Evolution and..Complexity
Health Purchasing Victoria | Achieving best-value supply chain outcomes for Victoria’s health sector 16
Evaluating current health procurement
trends and challenges
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 17
Innovation? Technology/Process Delivery of Patient Care
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 18
Supplier
Technology
Process
Innovation
Service
Innovation
Market
Dynamics
Sustainability
Legislation
Policies
We are making changes to Procurement..such as
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 19
Capability and Culture
• Embrace Category Management framework as it does delivery on-going contract value.
• Staff development and retention
• Learning and Development Strategic Cost Management
• Category Management
• Supplier Relationship Management
• Negotiation
• Governance
• Contract Law
Category Management
Structures and Systems
• Victorian Product Catalogue
• More interactive Website
• Recallnet
• Knowledge Management
• Strategic Sourcing Suite
• E-sourcing
• Supplier Management
• Contract Management
• Zendesk (customer interface)
• Organizational Efficiency
Price
Utilization Cost
Standardization
Demand Mgmt
Labour Productivity
Maintenance
Shrinkage
Damages
Waste
Disposal
Recall Mgmt
Revision Procedures
Infection Rates
Etc.
Supplier Relationship Management
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 20
Quarterly or Monthly Strategic Forum
(Management Executive Leadership Team)
(Contract Management Review – Top 20)
Monthly Operational Meeting (Critical Suppliers)
Driving Supply
Strategy and
identification of
further supply
chain
opportunities
Driving
Contractual
performance and
value
optimisation
throughout the
contract life
Service/Cost
improvement
Monitoring
Feedback to HPV
Strategic
Business
Directions and
Industry
Dynamics
HPV Leadership Team
Heads of Sourcing
Supplier Account Manager HS Representatives
Senior Category Managers
Key Themes in the HPV Category Management
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 21
External:
1. Buy Local
2. Regional market
sustainability
3. Ethical procurement
4. Currency
5. Innovation
6. Global Inter jurisdiction
benchmarks
Sustainability
Buy Australia First
Category
Management
Ethical Procurement
Supply
Chain
Efficiency
and Risk
Process
Governance
Sharing
Benchmarked
data
Local
Employment -
Regional Areas
Supply Chain
Efficiency
Internal (Sector/HPV):
1. Greater expectations from
stakeholders (individual HS
business priorities)
2. Greater process efficiency
3. HPV contract performance
(order efficiency )
4. Monitoring of our response
to queries (supplier and
health services) - Zendesk
5. Sharing and Collaborating
with other Sectors
Exploring and designing future models and
strategies
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 22
Unlocking Value Beyond Price
• Uncovering cost of quality
• Supply chain costs
• Over-specification (Fit for purpose)
• Duplication
• Operational Efficiency
• Administrative costs
• Supply security
• Cost of Service
• (Do we really need it next day
tomorrow?)
• Do we know the cost of servicing?
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 23
Procurement efficiencies
centralise procurement,
purchasing, accounts
payable
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 24
On-Going Value Delivery
Time
Strategic Sourcing Value
Contract Start Date
No Supplier Relationship
Management Program
Supplier Collaboration
Supplier Performance
Management
Nir
van
a
Lo
st
Valu
e
“75% of sourcing savings can be
lost within 18 months without
SRM” - Geller & Company Survey
24
GLOBAL INNOVATION IN PROCUREMENT
• France: Pre market process, online portal for suppliers to submit ideas which are preliminarily evaluated
• Canada: annual ranking of ideas that have been submitted and reviewed by a panel to say "here are the top ten ideas"
• EU: initiative for healthy aging with France, UK, Italy, Belgium, using tool to submit via online portal
• Incentives for customers - need to understand innovation is often disruptive, what are key drivers for the clinicians
• Role of GPOs in innovation - not a bystander or inhibitor
Health Purchasing Victoria | Achieving best-value supply chain outcomes for Victoria’s health sector 25
Supply chains & sustainability
Procurement is the interface between end-user and suppliers
Can be a barrier to improving sustainability
Can be an enabler of action towards sustainability
Ingredients to Success
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 27
Invest to succeed
Attract & Retain
Supply Chain
Talent
• Learning and
development
strategy
• Succession Planning
• Attract and retain
talent
• Make HPV the
employer of choice
Standardisation
, common systems,
eCommerce,
eProcurement,
• Drive compliance
Victorian Product
Catalogue
Compliance to
RecallNet Process
Standard invitation
to supply (ITS)
Capture in a
standard data
product
performance.
Data is Critical
Transactional data
Benchmarking
Evidence
• Market Data
• Clinical performance data
• Customer Service
• DIFOT
• Currency/Material movements
• Other index movements
• Benchmarking data
• Cost of Service
• Cost of care
Category Vision (Victoria Leader in Medical Imaging Sourcing)
Critical Issues being Addressed
• Streamline sourcing process (remove
duplication)
• Provide transparency around
Purchasing and Efficiency Life Cycle
Costing evaluation
• Fit for purpose – accurate
specifications
• Provide Access to latest technology
and capture innovation
Strategic Framework:
• Standardised Terms and Conditions
• Access to product details in consistent
format
• Establish Category Management Group
• Single source of data for benchmarking
• Opportunities for further savings
(BETA, Reference site etc)
• Open framework to drive Innovation
• Interface with the DHHS on key issues
of asset planning and maintenance
Move from Focused
(Today)
To Strategic
(Future)
A data vision
Point of Use Capture
Actual Cost of Products/
Procedures
Supply Chain Management
Patient Record
Comparative Effectiveness Outcomes-Based Analyses (e.g., Registries)
Sourcing Beyond Price
Reporting and Budgeting
Cycle
Recall Management/ Product Quality Surveillance
Clinical Product Evaluation Unit (Vision)
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 30
Purpose
• Promotes evidence based practice and research
• Capture of product performance via standardised report from CPAs.
Activities
• Lead clinical product evaluations and product substitutability
• Collaborates with clinicians
• Consolidate product evaluation data to share amongst health service
Benefits
• Identify market dynamic opportunities
• Minimise product evaluation duplications
• Standardise product evaluation standards
• Revise contract product list based on clinical performance
• Bring evidence based data into the sourcing evaluation process
Clinical product evaluation and research is the cornerstone in the
evaluation of product substitution. HPV is in the process of a business
case to develop a CPEU.
Some key themes
Health Purchasing Victoria | Achieving best-value supply chain outcomes for Victoria’s health sector 31
Global
markets
Profession
-alisation
Beyond
Price
Shared
services
Equipment
lifecycle
Disruption
Sustainable Procurement role
Sustainability of supply chains
Healthcare Sector
Sustainability
Agriculture
Society
Climate
Biodiversity
Water
Health
Local
Communities
Natural
Resources
Economy
Commerce &
Industry
Pollution
Developing
countries
Wastes
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 33
Building the link between suppliers and Health
services that enables excellence in Patient Care
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 34
Level 34
Casselden Place
2 Lonsdale Street
Melbourne 3000
T: 03 9947 3700
F: 03 9947 3701
hpv@hpv.org.au
www.hpv.org.au
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