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WCPC Confidential Information - For use by WCPC Participating Member onlyVHA Inc. Confidential Information

March 25, 2014

Cindy Dranttel Vice President WCPC OperationsVHA West Coast Region

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West Coast Purchasing Coalition (WCPC)

2

2011WestPac

WPC

2012

A member owned LLC $2B in Spend

Commitment, Innovation, Growth

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3

1 Antelope Valley Hospital Lancaster CA

2 Cedars-Sinai Health System Los Angeles CA

3 Citrus Valley Medical Center Covina CA

4

Community Hospital of the Monterey

Peninsula Monterey CA

5

Community Memorial Hosital of San

Buenaventura Ventura CA

6 Cottage Health System

Santa

Barbara CA

7 Doctors Medical Center San Pablo CA

8 Grays Harbor Community Hospital Aberdeen WA

9 John Muir Health

Walnut

Creek CA

10 NorthBay Healthcare Fairfield CA

11 Palomar Health Escondido CA

12 PIH Health Whittier CA

13

Pomona Valley Hospital Medical

Center Pomona CA

14 Redlands Community Hospital Redlands CA

15 Scottsdale Healthcare Scottsdale AZ

16 Sierra View District Hospital Porterville CA

17 The Queens Medical Center Honolulu HI

18 Torrance Memorial Medical Center Torrance CA

19 Tuality Health Hillsboro OR

20 Tucson Medical Center Tucson AZ

21 ValleyCare Health System Pleasanton CA

22 Washington Hospital Health System Fremont CA

WCPC: 22 Not-for-Profit Owners

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The New Current Healthcare Environment

44

Align physician behavior

Pay for performance

Reduce costs

Measure clinical and supply chain performance

Reimbursement cuts

Provide accountable care

Reduce readmissions

Compete in a new system of health care delivery Hospital Margins are declining…

Executives Report theseTop 3 Areas to Improve in Order to Achieve

Financial Targets

44%

Physician-Hospital Alignment

41%

CostReduction

40%

CareModel

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VHA asked hospital executives what they see as the primary drivers for improving cost, quality and patient experience in their organizations for the next few years.

Top 4 Activities:

Efficiency & Affordability

Source: 2012 VHA Survey of top U.S. Health Care Leaders Large IDN Supply Network

• Process & Workflow Efficiencies71%

• Supply & Services Utilization70%

• Practice Variability Reduction57%

• Physician Preference Cost Reduction43%

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VHA West Coast Region

Efficiency and

Affordability

• West Coast Purchasing Coalition (WCPC)

• Regional contract aggregation

• PPI initiatives

• Pharmacy

• Capital

• Purchased Services

• Supply Chain and Operational Cost Reduction

• Labor Cost Management

Clinical Quality and

Patient Safety

• VHA West Coast Patient Experience Collaborative

• Accreditation Services

• Knowledge Transfer and Networking

Care Delivery System Transformation

• Physician Engagement and Alignment

• Continuum of Care Advancement

Leadership Success and Acceleration

• West Coast Board of Directors

• Executive/Management Leadership Development and Networking

• Physician Leadership Development

• Business Development and Regional Growth

Shared Regional Platform

Business Intelligence Platform

PerformanceImprovement Model

VHA West Coast Value Statement

“We harness the collective power of our VHA West Coast members, constantly demonstrating value and driving toward top decile performance.”

W

C

P

C

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WCPC: Commitment to Partnership

7

Spread the work/ Expand your capacity

Do the hard stuff

Time & Attention

Integrating WCPC in our

org.

We AND MeInstead of We vs Me

Trust each other

Sharing Best Practices

Think past “today” –

What’s Next?

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WCPC: Expense Management

8

Executive

Oversight

Committee

Operating

Committee

Pharmacy Capital Physician

Preference

Purchased

Services

Scope

Commodity/Clinical

Commodity items

Clinical Preference

Tier Max/RFE/ITC

Best Practices

Scope

Drug Utilization

Drug shortage Program

Oncology

Distribution

Efficiency

Cost

Scope

Construction projects

Routine capital

Small Equipment

Scope

Physician sensitive

Products & Services

Scope

“Commodity” Services

Geographic aggregation

New Services in

Population Health

New Technology

Solutions & Services

Resources

EOC Sponsor

Ops Reps

Clinical Resource

SME as needed

Analytics

Contracting

Tracking

Monitoring

Resources

EOC Sponsor

Ops Rep

Pharm D Lead

Pharmacy Assmt

Analytics

Contracting

Tracking

Monitoring

Resources

EOC Sponsor

Ops Rep.

VHA Capital Experts

Hospital SMEs Analytics

Contracting

Tracking

Monitoring

Resources

EOC Sponsor

Ops Rep.

Clinical Lead

Physician Leads

SMEs as needed

Analytics/benchmarks

Contracting

Tracking

Monitoring

Resources

EOC Sponsor

Ops Rep.

Member SMEs

Analytics

Contracting

Tracking

Monitoring

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WCPC: Our Long Term Strategy

• Using more evidence based/clinical data

+ Physician/Clinician alignment with the network

+ Standardized Network Rx Formulary

+ Standardized Network Med/Surg Formulary

• Centralized contracting for Purchased Services

• Standardized value analysis: Process, Date/Time, etc.

9

+ Alignment with other Networks

+ Establish performance metric baseline and goals

• Define goals around Revenue Enhancement

• Feasibility study for “Consolidated Services Center” (CSC) model

• Member satisfaction scores are 90+

+ In Process • Not Started

Board &

EOC Roles

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10

WCPC: Efficiency & Affordability

Aggregate Volume to

leverage per unit price

Committed Volume plus

standardization of supplies

Utilization of products to drive down

costs

Total cost of care focused-based on clinical effectiveness

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Network Value

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Network Value

To

tal C

ost

of

Ca

re

Network Value

Network value increases dramatically as the focus shifts to clinical utilization and the total cost of care.

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WCPC: Expense Management Trend

11

Percentage of Network Activity

71%

62%

34%

13%

9%

20%

9%

7%

4%

4%

22%

42%

Percentage of Total Network Spend

Purple = National

Red = WCPC 2012

Green = WCPC 2013

Network Total Spend

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WCPC: 2014 Strategies and Programs

• Increase savings for members

• Increase ROI for members

• Expand scope to untouched areas of opportunity

• Appropriate Use, Total cost of care, Utilization

• Identify and utilize new innovative approaches to Speed to Value

– Aptitude, Reverse Auction, Shared Analytics Program

• Strategic Collaborations with other Networks

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WCPC: Effective & Cohesive

Journal of Healthcare Contracting, February 2014, pp11-12

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WCPC Management Team

Rick BarnettExecutive VP VHA West Coast Region, WCPC President

Cindy Dranttel VP, VHA West Coast Region , WCPC Operations Exec

Don Stutsman Supply Networks Director, WCPC Operations

Peggy Jenkins Sr Director Supply Networks

Mike Noel Pharmacy Network Implementation Manager

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