Healthcare Supply Chain Healthcare Supply Chain Strategy in NSW AustraliaStrategy in NSW AustraliaHealthcare Supply Chain Healthcare Supply Chain

Strategy in NSW AustraliaStrategy in NSW Australia

INTERNATIONAL HOSPITAL FEDERATION CONGRESS

MAY 2001

INTERNATIONAL HOSPITAL FEDERATION CONGRESS

MAY 2001

NSW Health ProfileNSW Health ProfileNSW Health ProfileNSW Health Profile Australian Healthcare >40%

Budget > $6.5 Billion

Goods & Service > $1.4 Billion

Salaries & Wages > $4 Billion

Staff > $78K

Beds > 22K

Healthcare Facilities > 224

Geography > 802,000 km2

NSW Population 6.34 Million

Legal Identities 18

The Supply ChainThe Supply ChainThe Supply ChainThe Supply Chain

The health care supply chain covers all supplies and support services required to support the operation of Health services, including such items as Medical and Surgical Supplies, Pharmaceuticals, Food, Support Services, Maintenance Services and Capital Equipment.

The set of technologies, such as electronic document/data interchange (EDI), electronic mail (email), electronic funds transfer (EFT) and work flow automation via EAN / Barcoding, combined with business processes that enable users to conduct business electronically.

eCommerceeCommerceeCommerceeCommerce

OUR VISIONOUR VISION

To be the leader in innovation and total cost To be the leader in innovation and total cost management of the healthcare supply chain, management of the healthcare supply chain,

utilising best practice supply chain management utilising best practice supply chain management systems, that connect and reduce costs for all systems, that connect and reduce costs for all

supply chain memberssupply chain members

OUR VISIONOUR VISION

To be the leader in innovation and total cost To be the leader in innovation and total cost management of the healthcare supply chain, management of the healthcare supply chain,

utilising best practice supply chain management utilising best practice supply chain management systems, that connect and reduce costs for all systems, that connect and reduce costs for all

supply chain memberssupply chain members

OUR MISSIONOUR MISSION

To provide best value products and services to the To provide best value products and services to the community by effectively managing the total cost of community by effectively managing the total cost of

the healthcare supply chain for NSW Healththe healthcare supply chain for NSW Health

OUR MISSIONOUR MISSION

To provide best value products and services to the To provide best value products and services to the community by effectively managing the total cost of community by effectively managing the total cost of

the healthcare supply chain for NSW Healththe healthcare supply chain for NSW Health

OUR DRIVERSOUR DRIVERS

•To act as one Public Health OrganisationTo act as one Public Health Organisation

•To deliver benefits to our staff, patients and the public To deliver benefits to our staff, patients and the public in line with NSW Health Charter and Codes of Conductin line with NSW Health Charter and Codes of Conduct

•To provide a quality logistic service which optimises To provide a quality logistic service which optimises the value from dollars spentthe value from dollars spent

OUR DRIVERSOUR DRIVERS

•To act as one Public Health OrganisationTo act as one Public Health Organisation

•To deliver benefits to our staff, patients and the public To deliver benefits to our staff, patients and the public in line with NSW Health Charter and Codes of Conductin line with NSW Health Charter and Codes of Conduct

•To provide a quality logistic service which optimises To provide a quality logistic service which optimises the value from dollars spentthe value from dollars spent

Basic Infrastructure

innovation

Network units, centralise supply management and

provide basic electronic tools

Basic Infrastructure

innovation

Network units, centralise supply management and

provide basic electronic tools

E-Commerce

Implement electronic commerce

philosophies that deliver a cost

effective and efficient supply chain for

NSWHealth.

E-Commerce

Implement electronic commerce

philosophies that deliver a cost

effective and efficient supply chain for

NSWHealth.

Electronic Catalogue

Assist purchasing decisions, provide better

knowledge to management on

spending patterns, enhance negotiations

with vendors & improve decision making.

Electronic Catalogue

Assist purchasing decisions, provide better

knowledge to management on

spending patterns, enhance negotiations

with vendors & improve decision making.

Procurement Practices

Re-engineer tendering and contracting practices

to enhance strategic focus and delivering

products & services to health personnel at the

lowest cost.

Procurement Practices

Re-engineer tendering and contracting practices

to enhance strategic focus and delivering

products & services to health personnel at the

lowest cost.

Support Functions

Develop adequate, secure IT & telecommunications

infrastructure, provide networking and training

opportunities, communicate outcomes and overcome

regulatory limitations.

Support Functions

Develop adequate, secure IT & telecommunications

infrastructure, provide networking and training

opportunities, communicate outcomes and overcome

regulatory limitations.

Improved systems and practices Lower prices Lower inventory Simple ordering systems

Automated processes Lower costs Reduced lead time

Improved systems and practices Lower prices Lower inventory Simple ordering systems

Automated processes Lower costs Reduced lead time

Key measures of our success will be:Key measures of our success will be:Key measures of our success will be:Key measures of our success will be:

Our breakthrough strategies will be:Our breakthrough strategies will be:Our breakthrough strategies will be:Our breakthrough strategies will be:

Functional Areas for StrategiesFunctional Areas for StrategiesFunctional Areas for StrategiesFunctional Areas for Strategies

Inventory and logistics management

(Processes)

Information management

Procurement/supplier management

(Supplier relationships)

NSW Health spends ~ $1.2bn pa on goods and services ~ This amounts to 40% of national expenditure.

KPMG estimate national savings potential of $220 million from supply chain reform

NSW Health share of potential savings amounts to $90 million pa.

[8% of current spend]

Financial IncentivesFinancial IncentivesFinancial IncentivesFinancial Incentives

Implementation Plan - Step 1 - 2 Implementation Plan - Step 1 - 2 (6 mths)(6 mths)Implementation Plan - Step 1 - 2 Implementation Plan - Step 1 - 2 (6 mths)(6 mths)

InitiativeInitiative

FunctionFunction

Review status of AHS’ procurement and Processes

inventory management systems Establish unique product identifier (EAN)Suppliers Build systems to accept EAN/Bar codes Processes Review current audit procedures Processes Lobby regulatory changes Processes Develop change management and

Processes/

benefit realisation strategy Suppliers Develop a reform communications strategy Processes Define IT&T shortfalls IT

Underline = Activity commenced

Implementation Plan - Step 2 - 3 Implementation Plan - Step 2 - 3 (12mths)(12mths)Implementation Plan - Step 2 - 3 Implementation Plan - Step 2 - 3 (12mths)(12mths)

InitiativeInitiativeFunctionFunction

eCatalogue development Processes/IT

Web site enhancement Processes Online updates of State Contract info IT Review the process for awarding State Processes

contracts (fewer vendors, better value, performance measures)

Explore further opportunities for state Suppliers contracts

Develop AHS best practice logistics/Processes/distribution model incl. Barcoding IT

Secure communications infrastructureIT/Suppliers

Clinician based product standardisation Processes

Underline = Activity commenced

Implementation Plan - Step 3 - 4 Implementation Plan - Step 3 - 4 (2 years)(2 years)Implementation Plan - Step 3 - 4 Implementation Plan - Step 3 - 4 (2 years)(2 years)

InitiativeInitiative

FunctionFunction

Supply chain reforms included in AHS’ and Processes

NSW Health business plans eCatalogue linked to suppliers ERP’s and IT

AHS’ FMS Explore benefits of prime vendoring & third

Processes/

party logistics arrangements Suppliers Implement electronic automated supply IT

system solutions (Oracle 11i?) Record clinical supply chain costs in Processes

Trendstar/HIE and monitor performanceUnderline = Activity commenced

The EAN WayThe EAN WayThe EAN WayThe EAN Way PPC EAN/BAR Coding Working Party Analysis of Options

Need for common solution across products groups Size and mass of EAN Worldwide

National/International Research/Case Studies Industry Directions

Retail / Grocery PeCC / NOIE MCCA (Medicines Coding Council of Australia) HIC (Health Insurance Commission) DPWS “Electronic Procurement – Taking up the Challenge” Australian Defence Force Healthcare EDI Coalition (USA) Health Industries Distribution Association (USA) HCOA Pharmaceutical Benefits Branch Australian Standards (AS4700-2) Electronic Prescription Messages

EAN/Bar Code Functionality in HealthcareEAN/Bar Code Functionality in HealthcareEAN/Bar Code Functionality in HealthcareEAN/Bar Code Functionality in Healthcare Short Term

Ward Imprest Receiving from Vendors Payment on Receipt Logistical Activities in Warehouses Picking and Dispatch

Phase III Episode funding requirements Vendor managed inventories Full E-Catalogue Integration Commitment to

volumes/forecasts Strategic partnerships Batch coding and tracking

Phase III Episode funding requirements Vendor managed inventories Full E-Catalogue Integration Commitment to

volumes/forecasts Strategic partnerships Batch coding and tracking

Phase II Supply Chain Visibility Procurement Transactions E-Catalogue / EAN Net Identification of Products /

Vendors / Trends Improved Supply Chain

Processes Full Contract compliance

Phase II Supply Chain Visibility Procurement Transactions E-Catalogue / EAN Net Identification of Products /

Vendors / Trends Improved Supply Chain

Processes Full Contract compliance

NSW Health Peak NSW Health Peak Purchasing CouncilPurchasing CouncilNSW Health Peak NSW Health Peak

Purchasing CouncilPurchasing Council