Value Analysis & Clinical Supply Chain Process at Scripps What does it look like?

1. October 2016 CAHPMM Meeting Value Analysis & Clinical Supply Chain Process at ScrippsWhat does it look like? Presented by: Cecile Hozouri, MBA Executive Director, Supply Chain Management Lorin Birmingham, BSN, RN, CEN Clinical Product Specialist

2. Corporate Profile • Not-for-profit, integrated delivery system • 1,372 licensed beds // 13,100 employees • Two of San Diego’s six trauma centers • $2.6B in annual revenues • Specialized programs include: • Whittier Diabetes Institute • Accredited Cancer Center Network • Center for Integrative Medicine • Robotic Surgery Program • Graduate Medical Education • Genomics & Clinical Research • Translational Science Institute • West Wireless Partnership Scripps Physicians • 2,000 independent physicians • 600 integrated physicians • California: Corporate Practice of Medicine Laws

3. Scripps Memorial Hospital Encinitas Scripps Mercy Hospital (San Diego Campus) Scripps Mercy Hospital (Chula Vista Campus) Scripps Green Hospital Scripps Memorial Hospital La Jolla 5 Hospital Campuses

4. 22 Outpatient Centers • Scripps Clinic • Carmel Valley • Del Mar • Coronado • Encinitas • La Jolla • Mission Valley • Rancho Bernardo • Rancho San Diego • Santee • Torrey Pines • Scripps Coastal Medical Center • Carlsbad • Del Mar • Eastlake • Encinitas (2) • Escondido • Hillcrest • Oceanside (2) • Vista (3)

5. Scripps Mission, Vision, and Values

6. Information about Scripps Supply Chain

7. SCM’s Mission, Vision, and Values

8. Scripps Health Supply Chain

9. Scripps Internal Procure to Pay Metrics – YTD June 2016 • Cleaned up major pricing & internal control issues since FY13

10. Scripps Overall Contracting Performance • Prior to FY13, $84 million per year was not purchased against actual contracts.

11. Non-Labor Contract Savings Performance • Planning & strategy is everything, choosing what to do and when to do it • We’ve been able to double our performance in contracting without adding any additional labor

12. Med/Surg Supply Costs FY 07-16 (Projected) Actual/Budget Graph Current Act/Bud projection based on FY16 YTD thru January is $7M over. Includes the addition of SPCI and IHS. These categories have a cumulative year over year cost difference from the FY07-11 run rate of over $79M and a realized expense reduction of over $17M when compared to budget

13. Areas we needed to improve

14. Prosthesis Costs Rise Each Year Projected to keep rising

15. Physician & Non-physician lead committees • Too many committees making decisions (25+) • Committees were making decisions without evidence, approving everything • Committees had no fiscal authority to impact the organization • Solution: • Redesign the process and make sure products adoption is based on clinical evidence • Eliminated all committees authorities on approving new technology adoption • Change authority to reside with: • Clinical Supply Chain • Input from the physician Care Lines • CFO • CMO

16. New Product Additions At Scripps Surgery item requests account for over 75% year after year.

17. Vendor reps have 4x greater influence on device decision than the hospital/supply chain Peers have the greatest influence Physician Preference Survey • Procured Health presented at AHRMM, 2015

18. Conducted Kaizen Event Regarding Value Analysis • What we heard: • Not enough clinical involvement in the decision making • Too cumbersome • Decisions are made on preference and not clinical evidence • Physicians only want what they want, and will not challenge their peers • Nurses involved in the committees do not talk with bed side RNs • Way to many committees making decisions • No one really has ownership over the new process • Everyone felt there were two different tracks: • New product requests to the system • Supply standardization opps

19. Supply Chain Organization & Clinical Value Analysis • SW Medical Director, Value Analysis • Dr. Jon Worsey

20. Established Clinical Product Specialist Role & Competency

21. Implementation Process for Supply Standardization

22. Scripps Health VA Process

23. Scripps Health Urgent Product Request Process • This urgent process is only used in patient specific needs that cannot be addressed with what we have today on contract

24. How do I start the process? • Fill out the New Intake Form • Located on supply chain sharepoint site • Send the completed form to your supply chain department contact • The contracting team will review for pricing and standardization opportunities. • Clinical RNs in our supply chain department will review whether the request adds value and if there is supporting clinical evidence. • Careline will review request based on their overall clinical practice What Problem are you trying to solve? Conflict of Interest Disclosure: Do you have any financial interest or other relationship with the industry relative to the product requested?

25. Scripps Health Evidence Based VA Review

26. Differences between Clinical Evidence Databases

27. Final Executive Summary • A final executive summary is created, and emailed to the CMO & CFO for their final review. It contains: • Overall summary of the request • Recommendation from clinical supply chain (CPS) • Recommendation from the carelines Careline or Service Line Recommendation: Very important to have the clinicians state their recommendation for the new product & have their peers review and agree

28. Strong Evidence & Financial Impact • If recommendation is to adopted based on utilization criteria, the new product will be reviewed in 120 days after adoption to ensure utilization criteria has been met • If utilization is higher than what was approved, the results will be presented to the PLC for further discussion

29. No Evidence & Financial Impact • If there is disagreement on the decision to adopt a new product that has financial impact and no clinical evidence to support the financial impact, then the request moves to Executive Review • Careline Approves • Clinical Supply Chain Team Denies • Request goes to executive review with CMO & CFO

30. Areas of Value Analysis we tackled

31. Value Analysis Project: Physician Doctor Preference Card Updates • Working closely with each general surgeon reviewing their individual cards • Developed a DPC specifically for the physicians to review items and costs in case chronological order. • Evaluated over 9900 DPC cards with the comments “Available, Ask & Hold”

32. Value Analysis Project: Physician Doctor Preference Review • Working closely with each general surgeon reviewing their individual cards • Doctor preference card expense review • Showing total cost of hold versus opened items

33. Value Analysis Projects • DPC Card enhancements: • Change the item on 9900 lines of Doctor Preference Cards (DPCs) that were labeled ‘Ask’ to ‘Hold’ as of January 2016 • Month of February financials had a $270,000 reduction in surgical supply costs • Every day the surgery go-back carts for items coming from the room is overflowing with items to be put back on the supply carts, where as before, hardly anything was coming back from the rooms • Potential savings of $2.4 million if items are not utilized • Reviewed 264 Lap Chole and Lap Appendectomy Preference cards with physicians • Changed items that were incorrect or wasted • Reduction of an average of $154 per Lap Chole procedures • Reduction of an average of $282 per Lap Appendectomy (**For every $100 in savings per surgical case at Scripps, its reflective of a $4 million savings**)

34. Value Analysis Projects • Custom Surgical Packs: Phase I consolidating 26 different custom packs to 4 • General Surgery • Cardiac Surgery • Robotic Surgery • Difference of $350,000 from previous run rate to new proposed, next steps to determine the standardization efforts of drapes, gowns, and other material • Custom packs consolidation Phase II in the following areas: • Total Joints • Urology • Neuro/Spine • Implement the use of reprocessed surgical items • Over $750,000 in savings per year • Endomechanical: Preferential use of Ethicon vs. Covidien • General Surgery • Over $500,000 in savings if Ethicon was chosen over Covidien

35. Value Analysis Projects • Nursing procedure trays: custom kits used by nursing at the patient bedside consolidated from 15 to 10 • Reduce items getting thrown away in every kit • Savings of over $100,000 • Electrosurgical Standardization • All General surgery has agreed to standardize to Megadyne Teflon tips, reduced mfg variation • $100,000 savings • Redesigned the case picking process, moving the full process from surgery staff to the supply chain team • Created standard work, implemented system wide to all surgery sites • Identified what items would be held versus opened on Doctor Preference Cards • $1.2 million in savings the first year in reduction of product waste

36. Other major FY17 initiatives at Scripps • Epic go live Spring 2017 • Work on the following service lines for supply and Rx utilization reviews • Ambulatory Surgery • Cardiac services • Total Joints • Neuro/Spine • Bariatrics • Robotics • Women's • Implement weekend case picking coverage without increasing staff • Remove black dot inventory (items not used within 12 months) – working with care line physicians • Renegotiate the implant categories: DES, CRM, Valves, CMF, Osteobiologics & Trauma • Eliminate the ability to order any disposable medical product through special ordering at all Scripps hospitals and clinics

37. Standardization in the Following Categories • Completed or in Process: • CLABSI bundles • CAUTI bundles • Exam Gloves • Electrodes • Anesthesia disposable materials • Positioners • Plastics • Garments • DME Completed or in Process: • Nursing procedure trays • Surgical custom packs • Disposable apparel • Electrosurgical • Peripheral IV Catheters • Central Line Catheters • Foley trays • DVT sleeves • Wound care

38. YTD Supply Variances System Wide as of YTD July 2016

39. Questions?