BTOES - POSTER SPOTLIGHT: Vizient Inc. - Transforming the healthcare transactional supply chain into a strategic value driver

Healthcare is changing. From the way that people access care, to the consumerization of care, to the way that health care organizations are compensated for care, the industry faces the threats of eroding margins, new business models, mergers and acquisitions. The one thing that is certain is that healthcare’s slow-moving, slow-to-change, steady-as-she-goes approach to doing business has reached a tipping point requiring business leaders to re-consider the way things have always been done to find new approaches that can deliver savings… and FAST!

In health systems, where the supply chain function can account for as much as 40%+ of the operational budget, this is not a line item that can be easily overlooked. As such, executive leaders are recognizing the strategic importance of the supply chain function to their financial success.

Where, historically, the supply chain function has counted on leaders that can “get it done” by focusing on transactional requirements to purchase goods and services for the hospital, today’s health systems need leaders that have the skills to identify broken processes and the ability to further improve functional operations through the implementation of new technologies and solutions.

This poster session outlines the challenges one healthsystem overcame to deliver $23.5M in cost savings and operating efficiencies thereby achieving their 5 year goals in just 3 years. In the process of achieving their goals, this health systems transformed its transactional supply chain function into a strategic value driver to become a model of what it looks like when supply chain efficiency is unchained.

Critical success factors:

• Established a new way of thinking about how the supply chain function delivers value
• Centralized the supply chain function and management
• Developed formalized committees that included physicians and nursing leadership
• Aligned existing personnel with a new way of working

Organizational impact:

• Increased manufacturer’s rebates by 30%
• Implemented rapid-cycle and Lean process improvements
• Established groundwork for clinical-to-supply integration
• Drive standardization on clinical procedures to reduce supply usage and cost
• Generated positive change on nontraditional health system costs typically thought of as nonsupply chain related (e.g., labor efficiency, purchasing new technology, and capital expenditure to perform new procedures)
• Delivered $23.5 million in documented savings 

Lessons learned:

• To maximize effectiveness and be viewed as a strategic value driver, supply chain executives must operate at the enterprise level of the organization
• To deliver maximum value and achieve the necessary changes within the organization, supply chain executives must engage key stakeholders early and include them in decision making
• To optimize supply chain performance, it is critical to assess the strengths and weakness of current personnel, develop personnel where appropriate, and redeploy personnel to operate in their areas of strength
• To establish long-term efficiency gains supply chain leaders must automate transactional and repetitive supply chain functions where possible