Introduction to

Avera Health Supply Chain

Kevin Goos, MHA, CMRP, FAHRMM Director, Strategic Sourcing

Avera Supply Chain (Central Office)

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• Began centralization of supply chain in 2010– Steve Huckabaa, VP Supply Chain– Kevin Goos, Director Strategic Sourcing – Ryan Rotar, Director Purchasing, Distribution Ctr. &

Logistics– Ryan Schaefer, Manager of MMIS– Cindy Heckel & Becky Severson, CRM– Nikki Wallenstein, Contract Manager– Deb Ovre & Annette Kundert, Data Analysts

• Buyers – became AH employees in 2012

Avera Value Analysis Teams (VAT)

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• Avera teams formed in 2013 with focus on both products & processes– Maximize our collective purchasing power

• NPPC Teams (Regional Health & Avera Health) teams formed in 2010 to collaborate on projects

Avera VAT Membership

VAT Chair CRM

Med Surg Laurie Auch (AMcK.) Becky S.

Surgery Danielle Aanenson (AMcK) Cindy H.

Skin/Wound Lori Spader/Dawn Bechtold (AMcK.)

Becky S.

Respiratory Care

Lanny Baker (AMcK.) Becky S.

Radiology Lee Ann Tople (ASL) Cindy H.

Cardiology TBD Cindy H.

Dialysis Beth Deckert (AMcK.) Cindy H. & Becky S.

Lab Warren Erickson (ASH) Tanya Crockett (ALN)

Pharmacy Steve Petersen (AMcK.)

Purpose of VATs

• To provide a review and approval process for standardization of products and services

• To share and help establish best practice

• Empower team members to provide input and assist with decision making; be the voice for your facility/region

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Initiatives List

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• Expiring Contracts– Premier– Locally negotiated

• Aggregation opportunities

• Projects brought forward

• Standardization opportunities

• Consultant engagement opportunities– SYMMEDRx

Power of Aggregation

• Cost savings by leveraging volumes

• Quality

• Support service lines initiatives

• Continuity of care

• Reduce SKUs

• Reduce cost of purchasing

• Increased negotiation leverage

Contract Implementation

• Contract ‘launch’ to announce VAT decision & contract T’s & C’s

• VAT member works with facility MM to develop & implement conversion plan

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New Products

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• Complete & submit new product justification form (clinical & financial impact)

• Send to facility Dept. Director & MM director to review and approve to forward

• Send to AH Supply Chain (Sioux Falls)• Assigned to a VAT, if appropriate

– Evaluate aggregation/standardization opportunity

– Possible evaluation/trials– VAT decision communicated to requestor

New Product Justification Form

• Copy of form available on Avera Health sharepoint site: http://avera/AveraSupply/default.aspx

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AH Supply Chain Steering Committee

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• Strategic Steering Committee– Support & monitor a strategic plan to facilitate timely,

cost-effective acquisition of products & services

– Monitor results, ensure accountability, communicate

– Promote a “one” Avera Health strategy

• Operations Steering Committee– Support & monitor value analysis teams

– Monitor results, ensure accountability, communicate

– Promote a “one” Avera Health strategy

Service Lines• Service lines initiated for these specialties:

– Behavioral Health, Emergency Medicine, Radiology, Primary Care, Oncology, OB/GYN

• Build relationships, leverage improvements, advance clinical quality, care re-design/”brand” promise (same care regardless of where you are)

• Will collaborate with VATs to identify/standardize products & services within these specialties

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NPPC

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• Northern Plains Premier Collaborative, LLC

• Formed in 2008, became an LLC in 2011

• Collaborative relationship between Avera Health and Regional Health

• Both health systems are shareholders in Premier (our group purchasing organization)

• Michelle Barthel, Premier Region Director– Supports NPPC facilities

Purchase Order Policy

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• All products ordered on a PO– Credit card/petty cash purchases utilized in some

instances– No charge PO for all sample requests or product for

trials

• Any product, implant, service or equipment brought in without first obtaining a PO will not be paid for by Avera Health

Exception: patient care emergency

Capital – Budgetary Quotes

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• Budgetary quotes for FY budgets obtained by facility department director in conjunction with facility MM director

• Source to ‘spec’, not source to vendor

• Involve other key stakeholders (Biomed, IT, etc.)

• Can obtain budgetary quote from ECRI

ECRI Institute

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• An independent, nonprofit organization • Researches the best approaches to improving the

safety, quality, and cost-effectiveness of patient care

• Quote analysis/benchmarking resource• Healthcare Product Comparison report• Contact AH central office supply chain

https://www.ecri.org/Pages/default.aspx

Capital

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• If capital purchase approved: – Must be in budget & approved via Budget Advisor– > $100,000 requires AH senior leadership sign-off– Evaluate if current contract available (AH supply

chain)– Contact Tom Schoenhard, NPPC Capital Manager

to assess if others buying similar equipment for group purchase opportunity

• Process being evaluated by central office; changes may be forthcoming

Contract Management

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• Avera Contract Management System (ACMS) -- central repository for Avera contracts

• Supply Chain Contract – contract involving transfer of physical goods, also may include capital items & non-commodity goods

• Supply Chain Service Contract – a vendor supplies time, effort, or expertise instead of tangible goods or products– To include periodic maintenance on equipment,

building, grounds, etc.

Contract Management & Approval (#909)

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• Review required for all vendor contracts, vendor quotes, vendor commitment forms, and vendor proposals – anything that obligates the facility to a supply, maintenance, equipment, rental, service agreement or construction contract

• All capital

• If over $3,000 aggregate and a contract with legal terminology, it needs approval

Contract Review

• Complete “Avera Contract Request Form”– Dept. Director or designee at ASM– Found on Sharepoint,

http://avera/contracts/Forms/Forms/AllItems.aspx– Attach copy of contract, enter “Submit” at bottom

of form– Submitted forms go to appropriate S.C.

personnel

• Reviewed by S.C. or to legal for review

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Timeline

• Allow 5 days to be entered into Avera Contract Management System (ACMS), by contract manager– Will receive confirmation email that contract

received

• Allow 7-10 days for contract review process– IT Governance review may take additional 10-15

days– Service maintenance software or software

license

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Contract Signature Process

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• Supply chain contracts signed by AH supply chain leadership– All capital, regardless of spend– Aggregate > $3,000 value

• A valid contract: – Includes signature from Avera (per signature

authority) – Signature from the counter-party– Has an expiration date that has not passed

Vendor Management

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Hospital Benefits• Vendor credentialing

system• Track Vendor Activity• Track Vendor Behavior• Responsibility for vendor

credentialing is between the vendor & Reptrax

Vendor Benefits• Fast & easy• No risk for identity theft• Tight Security- all electronic

communication between user & Reptrax application occurs through high-grade industry standard security measures.

• Privacy Rights - Reptrax will never sell, rent, or make personal information available to third party organizations for any purposes not related to the functioning of the Reptrax system.

Vendor Policy

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• Admittance to an Avera facility is a privilege, not a right• Vendors are a guest in Avera facilities• Vendors must check in and out of each Avera facility,

and wear printed badge so clearly visible• Vendors must provide services in accordance with

acceptable rules of conduct• Goal is to ensure patient care is not compromised or

influenced by considerations other than what is in the best interest of patients at NPPC facilities

• All contracts will be negotiated on behalf of Avera by AH Supply Chain

Vendor Policy

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• Complete vendor registration and certification on an annual basis. This will include:– Read & sign Avera Vendor Policies/Procedures– Proof of Liability Insurance– Proof of Background Check and Drug Screen– Product/Service Training completion documentation– HIPAA training completion– Vaccinations (see policy)

• Vendors are responsible for informing Reptrax of personnel changes

Vendor Policy

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• Inappropriate vendor activities (see policy):– Offering of vendor-sponsored trips or meetings

without approval of AH Director Strategic Sourcing

– Unannounced/unscheduled department visits– Obtaining unauthorized PHI– Solicitation of staff; gifts, gratuities, food

• No food may be brought in except for educational offerings; must be pre-approved by dept. director

– Promoting products not introduced through VA process

Tips For Dealing With Vendors

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• Schedule meeting with vendors when YOU have a product/service need

• Don’t accept drop-ins (unless you desire meeting)

• Refer vendor to central AH supply chain – VAT teams drive decisions

Purchasing

• 20 Avera Health buyers, in 7 locations

• Sioux Falls, Process over 2,500 PO lines per Day

• Transacts electronically with over 1300 vendors via GHX (Global Healthcare Exchange)

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STAT Orders!

• To have something expedited, contact buyer

• Can drop-ship, send overnight, or courier products as you need them, have even flown products to location after hours.

• Be OPEN to using alternate products

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Courier Service

• Contracted with MedSpeed for courier services within the Avera System.

• There are daily routes to nearly all locations within Avera.

• They provide service to over 200 locations, moving: mail, labs, pharmacy, supplies, cash and anything else that is needed.

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Avera Distribution Center (ADC)

• 30,000 Sq Ft, in Sioux Falls

• 2,300 Active SKU’s, SOH around $1.3M

• 11 Teammates, open from 4am-5pm, on call after hours.

• Processes 30 pallets of freight per day

• Sends over 150 orders (2000 lines) per day. Ranges from bulk, to eaches.

• 75% of items are available by the “each”

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Item Master

• 5 separate item masters based on geography

• Over 160,000 active unique items

• Utilize GHX’s Nuvia to keep data clean

• Constantly working to make it more accurate

• Items added by AH Supply Chain.

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PO’s

• The more info you can provide on a REQ, the better the PO will be:– Where did you see this?– Who makes it?– What is the product code? – Scan in the product if you have to or CALL!!!

The more info you can provide the faster you will receive the correct product.

Refrigerator Scenario

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GHX

• GHX looks at our PO’s before they go to vendors; tells us if there are errors which reduces the cost of resolution per PO.

• We can pay $35 to fix a PO after the invoice has arrived, or $4 before we are invoiced.

• AH has reduced the cost per PO, and saved an estimated $2.3M in efficiencies in the last year.

Avera Supply Chain (Central Office)

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– Kevin Goos, 605.322.8702

– Ryan Rotar, 605.322.8733

– Ryan Schaefer, 605.322.8706

– Cindy Heckel, 605.322.8715

– Becky Severson, 605.322.8761

– Nikki Wallenstein, 605.322.8727

– Deb Ovre, 605.322.8732

– Annette Kundert, 605.322.7681

Thank you!

Questions?

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