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Inventory Management Transformation: Bringing Visibility to Your Clinical Inventory Presenters: Steve Pohlman, Sr. Director Materials Management, Cleveland Clinic Regina Schneider, Director of Nursing, Cleveland Clinic

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Inventory Management Transformation:

Bringing Visibility to Your Clinical Inventory

Presenters:

Steve Pohlman, Sr. Director Materials

Management, Cleveland Clinic

Regina Schneider, Director of Nursing,

Cleveland Clinic

FACULTY DISCLOSURE

The faculty reported the following financial relationships or relationships to products or devices they or their spouse/life partner have with commercial interests related to the content of this CE activity:

Steve Pohlman: Nothing to Report

Regina Schneider: Nothing to Report

2

Learning Objectives:1. Define risk-based contracting and its role in supply chain.

2. Identify best practices for cost-reduction, utilization review and reduction in variation in supply chain operations.

3. Examine tools to identify savings opportunities in your organization.

3

Supply Chain Vision

• PATIENTS FIRST

• Best in Class (Build vs. Buy vs. Partner)

• Enterprise Focus

• Revenue Generating

• Insource / Outsource Optimization

• Scalable Operation

• Partner to Core Business

• Data / Evidence Based Approach

• Physicians Incorporated in All Aspects

Scale of Operations• $3B Spend Oversight (~$2B CC)

• ~432K Purchase Orders

• ~1.3M PO Lines

• ~1,500 Contracts/Price Agreements

• 92K Part Numbers

• 133 Inventory Locations

• $126M in Owned Inventory (includes RX)

• Consigned Inventory $33M

• 97% Fill Rate

• 80 Automated Guided Vehicles (AGVs) at Main Campus

CC Supply Chain Journey

2007

Inability to realize

contracted savings.

Repositioned

responsibilities

2009

Value Based Sourcing Model

2011

Clinically Integrated Sourcing

2014

Platform for other

providers

2016

Inventory Transformation

• Evidence-based Decisions

• Physician Driven

• Clinical Alignment

• Value-based Sourcing $300M+ Savings

Strategic Tenets• Visibility from manufacturer to point of use

• Actionable intelligence via powerful analytics

• Eliminate inventory challenges with expired and

lost product

• Streamline by integration and interfaces

• Enable significant and sustainable supply chain

process and cost basis

• Full End-to-End Supply Chain and Channel

Optimization

• Allow clinical staff to work to top of licensure

Inventory Transformation

• Change materials process from a storeroom

centric vantage point to a patient and caregiver

centric service

• Designed solution from point of care back to

manufacturer

Bedside vs shelf

• Provider vs supplier perspective

• Integrated Supply Chain

organization

• Real time Utilization

• Expiration

• Chain of custody

• Location

• Fragmented Supply Chain

organization

• Historical Utilization

• No visibility

• No visibility

• Limited visibility

Supply Chain and Health Care

Inventory Management Transformation

Technology

• Implementation of the

Inventory

Management system

‒ LUM

‒ 2 Bin Kanban

‒ RFID

People and Process

•Understand workflows

‒ Nursing staff

‒ Local MM staff

‒ Top of Licensure

‒ Clinical Event focus

Support

•Center Of Excellence

‒ Implementation

‒ Consulting / Assessing

‒ Analytics

‒ Best Practices

•Ongoing Enhancements of

Software

People

11

Supply Chain Model with ValueLink

Inventory count

Product delivery…………………………………………...

Products are delivered to

customer dock/receiving

Central Store…………………………………………...

Customers place

product in Central

Store

Pick/Replenishment…………………………………………...

Customers pick product

to replenish departments

Departments…………………………………………...

Products are delivered

to individual

departments

Clinician Use…………………………………………...

Customer order…………………………………………...

Customers order

products electronically

Internal OrdersExternal Orders

Supply Chain Model with ValueLink

Inventory count

Product delivery…………………………………………...

Products are delivered to

customer dock/receiving

Central Store…………………………………………...

Customers place

product in Central

Store

Pick/Replenishment…………………………………………...

Customers pick product

to replenish departments

Departments…………………………………………...

Products are delivered

to individual

departments

Clinician Use…………………………………………...

Customer order…………………………………………...

Customers order

products electronically

EDI OrdersPar Optimization

Departmental Deliveries

Eliminates Touch Points

Med/Surg Distributor

Process

14

Process Assessment Tools• Project Plan• Assessment TooloMotion and Time Studies (Pre and Post)oData ReviewoUnderstand current clinical workflowoUnderstand current MM workflowoDetermine who is ordering whatoGather tribal knowledgeoUnderstand supply storage areasoCAD Drawings

• Solution future workflow to accommodate clinical staff working to top of licensure

15

Technology

16

CURRENT

VISION

INTELLIGENT

SUPPLY CHAIN

Solution at a Glance

Just-in-time Scalable

Inventory Management Solutions

INVENTORY SYSTEM

INTELLIGENT

SUPPLY CHAIN

Low

Production

Cost

High

Production

Cost

Optimal tracking

and data

capture system

LUM

Low Cost Commodity

Products / High Velocity

2 Bin Kanban

Low Cost Commodity

Products / High Velocity

RFID

High Cost Products

High Cost Specialty Products

2-Bin Kanban Workflow: Overview

RFID

• High value products

• Risk for expiration

• Implants

Cath/EP Lab Install

Completed

• RFID Cabinets (5), Wands & 2Bin Implemented

• First Install of RFID

• Integration with GE MacLab (Clinical System)

– Improved Documentation Workflow

Opportunity

• Expand Source Tagging

• Minimize Nurses

Involvement with

Inventory Management

RFID CABINET RFID CABINET 2 BIN

KANBAN

Support

Inventory Management

Center of ExcellenceOur Mission:In pursuit of Patients First, the Inventory Management Center of Excellence

(IMCOE) actively partners with Caregivers to deliver best practice inventory

management solutions that support the strategic and operational goals of

the Cleveland Clinic.

Our Vision:The IMCOE provides the processes and governance in support of the

Inventory Transformation effort within Cleveland Clinic Supply Chain.

Our Values:The IMCOE values the following attributes to succeed in its mission:

• Patients First • Evidence based

• Collaborative • Process efficiencies

• Open • Quality performance

• Forthcoming • Empathetic

Inventory Management

Center of Excellence

Functional Responsibilities

• Subject Matter Expertise

– Inventory Management, CC Technology and Tools

• Establish standard work

– Reduce variation through enterprise

– Integration with clinical work flows

• Establish Best Practices

• Data, Metrics and Reporting

• Training, Policies and Procedures

• Integration support to other enterprise systems

• Enterprise Deployment – Project Management

Avon Hospital Deployment

26

Overview

• Hospital Go-live: Nov 15, 2016

• Merge of ASC/ED into hospital: Jan 7, 2017

• 126 Beds

• 12 ICU Beds

• 6 room OR (+ 4 procedure rooms)

• Cath / IR Hybrid lab

• ED, Lab, Imaging, Pharmacy

Avon Highlights

• 7 departments live on the CIMS platform

− Surgery − Cath/IR Lab

− Nursing Units − Radiology

− Pharmacy − Emergency Department

− Lab − Respiratory

• Expired implants & supplies were identified

through CIMS at Go-live

• Improved clinical workflow

Inventory Management by the Numbers

• Smart (RFID), Cabinets: 17

• Point Of Use Nurse Stations (OR, Cath/IR Lab): 11

• Total inventory value managed: $1,844,991

• Total Inventory Owned value: $1,514,464

• Total SKUs managed: 3,445

• Total Unique Instances (EA) managed: 306,390

• Suppliers: 302

• Expired items since 9/2016: 104 ($37,608)

Inventory Visibility

Department Owned Consigned

Surgery $862,715 $219,936

Cath/IR $398,026 $110,590

Nursing $141,327 $ -

Radiology $53,205 $ -

ED $46,398 $ -

Lab $10,677 $ -

Pharmacy $2,117 $ -

System Value

• Supply Chain staff assumes inventory management

duties: Cath Lab Nurses 6-8 Hours per day (FV)

Pharmacy Supply Tech .75 Hours per Day (AH)

Laboratory Supply Tech: 2 Hours Per Day (AH)

Respiratory Nurse 1 Hours Per Day (AH)

Value: Reallocation of Labor, Nursing work at top of Licensure

• Expiry Optimization $37,608 of Expired Products identified

─ Patient Safety

─ Enterprise opportunityo Shift at risk items across the enterprise

Value: Patient safety. Optimize SPEND

System Value

• PAR Location Optimization High utilization items identified = Adjusted 30% of

Total (658)

─ Top 10 Supplies, 90 day activity

3 Month Spend annualized = $517K

Value: Respond to Demand signal, improve SERVICE.

Medium Glove 2456 ReadyBath 3114

Carafe 1899 10cc Flush 2217

Mouthwash 181 .5L NS Solution 365

Chux 3635 Isolation gowns 1267

1L NS Solution 2171 AA Battery 948

System Value

• PAR Location Optimization

Low utilization Items identified = $460K

─ Requires Clinical decision making

259 SKU’s in OR ($270K)

427 SKU’s in Cath/IR Lab ($190K)

─ Enterprise opportunity:

Shift of at risk items across enterprise

Value: Inventory reduction opportunity. Optimize

SPEND

Nursing Feedback

• Quick, efficient, simple

• Price visibility: decreases waste. Saves both time and money

• Ability to identify expired product – patient safety

• Focus on patient and surgical team

Nursing Feedback

• The staff can’t wait until the next versions of the product – technology advancements!!!

• Relationship with Supply Chain

• Understand process, utilization, pricing

Inventory Transformation

Avon Hospital Surgery

90 Day review

Inventory Visibility

Inventory Value by Vendor

1. Vendor A $89,890 6. Vendor F $39,946

2. Vendor B $82,222 7. Vendor G $31,102

3. Vendor C $70,806 8. Vendor H $26,260

4. Vendor D $65,312 9. Vendor I $24,439

5. Vendor E $52,642 10. Vendor J $12,257

Inventory Visibility

Top 5 Vendor increases over past 3 months

Vendor QTY Increase Value Increase

Vendor A 27 $38,378

Vendor B 33 $20,075

Vendor C 127 $16,561

Vendor D 88 $15,028

Vendor E 24 $7,094

• $78k inventory increase over the past 3 months

Top 5 Product increases over past 3 months

Vendor ProductQTY

Increase

Value

Increase

Vendor A Product A 3 $30,105

Vendor B Product B 33 $7,277

Vendor C Product C 63 $7,245

Vendor D Product D 13 $6,175

Vendor E Product E 9 $6,155

Inventory Visibility

Product Waste

(10.18.16 – 02.27.17)

Expired $38,216

Opened – Not Used $9,462

Defective/Damaged $639

Total Waste $48,317

Inventory Visibility

Expired

20 16

29 38

15

$6,194$6,351

$10,585

$7,125$7,962

0

10

20

30

40

$0$2,000$4,000$6,000$8,000

$10,000$12,000

10 11 12 1 2

2016 2017

Expired by Month

• Monthly review of near-expired

• Displayed by vendor and product

• Shift near expired to other hospitals, when possible

Inventory Visibility

Expired

• $14,973 Inventory < 90 days until Expiration

March $3,123

April $9,251

May $2,599

Inventory Visibility

1635

67

95 87

$1,222

$6,890

$11,079

$15,724

$18,504

0102030405060708090100

$0$2,000$4,000$6,000$8,000

$10,000$12,000$14,000$16,000$18,000$20,000

10 11 12 1 2

2016 2017

Lost

Monthly "Lost" Product

“Lost” Product

Inventory Visibility

Slow Move• $169k of product with no use since Go-Live

112

54

6

54

13

61

21

$23,077

$14,591

$11,307$9,793 $9,408 $8,963 $7,451

0

20

40

60

80

100

120

$0

$5,000

$10,000

$15,000

$20,000

$25,000

Arthrex Covidien MusculoskeletalTransplantFoundation

Boston Scientific Stryker C.R.Bard Depuy Mitek

Smart PAR Recommendation’s

Vendor A Vendor B Vendor C Vendor D Vendor E Vendor F Vendor G

Inventory Numbers

Inventory Visibility

Summary

• Proactive Point of Care Supply Chain

• Patient Safety Focused

• Inventory Optimization

• Enterprise level system of control

Learn – Adjust – Optimize - Innovate

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