Understanding and Choosing the Appropriate Logistics Model That Best Aligns With Your System’s

Needs

Panelists:

Dan McDow, Chief Operating Officer, Iowa Health System Consolidated Services

David McCombs, President ERP/Supply Chain Operations, Bon Secours, Health System, Inc.

Mike Switzer, Corporate Supply Chain Officer, North Mississippi Medical Center

Moderator: Jim Grieger, Principal, H3 Logistics, LLC

Traditional Logistics Model

Distributor

Direct Vendors

Distributed Vendors

Example #1: Alternative Logistics Model

Dedicated Service Center

Direct Vendors

Distributed Vendors

Distributor

Example #2: Alternative Logistics Model

Dedicated Service Center

IDN, Distributor or 3PL Managed

Direct Vendors

Distributed Vendors

‘A’ Items

‘B’ Items

‘C’ & ‘D’ Items

Distributor

System Comparisons

Iowa Health System Bon Secours Health System North Mississippi

Medical Center

Net-Patient Revenue

Total Operation Expense

Total Revenue: $1.9 billion

Net-Patient: $1.6 billion

Total OE: $1.6 billion

Tot Rev: $2.64 billion

Tot OE: $2.60 billion

Net-Rev: $737 million

Tot OE: $716 million

Total Supply Spend: $354 million $425 million $70 million

Staffed Beds: 2,092 2,555 857

(+ 266 nursing/LTC beds)

Number of Acute-Care facilities: 11 14 6

Number of Alt-Care, Clinics and other care delivery points:

3 colleges, 3 nursing homes, 15 rural managed, 75 clinics

9 LTC, 5 home health agencies, 9 freestanding ambulatory care centers, multiple MD practices

33 clinics, 4 alt-care, 3 wellness.

Home health visits: 332,512 (NMMC ships direct to home)

Geographic coverage: 350 mile spread centered in Iowa and extending out to Nebraska, South Dakota, Illinois and Wisconsin.

6 states in the Mid-Atlantic region: Maryland, Virginia, New York, Pennsylvania, Kentucky, South Carolina and Florida

95 mile service radius over 2 states and 22 counties.

Mississippi and Alabama

Procurement structure: Centralized system contracting, Currently procurement is decentralized although migrating towards centralization.

Centralized system contracting.

Decentralized procurement.

Centralized contracting and procurement.

Percent of supply-spend under direct contracts:

75 – 80 % 65 % 55 %

Other: Service center wih centralized sterile processing and CPT assembly. Extensive cross-docking operation. Distribution moving to low-unit-of-measure.

Service center with centralized sterile processing.

Service center implementing centralized sterile processing and case-cart assembly.

Please describe your current supply chain model, and any aspect of it that you think is unique, and why you think it is unique.

Describe how your models, or aspects of your models address the following system strategic initiatives; how you measure its impact; and your progress in reaching your intended goal or objective.

– patient safety, care and satisfaction– expense control and/or revenue

enhancement– staff and/or physician acquisition, satisfaction

and retention– community care and outreach– other

Describe the challenges faced by systems in implementing alternative models, and suggest how you and others can overcome them?

• governance model• leadership understanding• information technology• Financial• Cultural• staff skill-sets• data availability and usability• clinical and physician preferences• outside third-party influence - GPO's, Distributors,

Manufacturers, Consultants, Regulatory Agencies/Commissions, etc

• other

Describe to what extent the scale, scope, profit or non-profit status of a system helps or hinders these type of model changes.

Describe what you and/or the system learned by implementing model changes, and what might be done differently the next time.

Describe any new models or significant changes you and the system are planning or are in the process of implementing.

Describe your supply chain wish list - what lies further out on the horizon that you might like to consider that could make a significant contribution to the success of yours and other health systems, and how might it impact traditional healthcare supply chain models?

Questions & Answers