Reforming the health supply chain down under Supply Chain Congress - - PowerPoint PPT Presentation

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Reforming the health supply chain down under Supply Chain Congress - - PowerPoint PPT Presentation

Oct 04, 2022 44 likes •415 views

Reforming the health supply chain down under Supply Chain Congress 21 August 2013 Megan Main, Chief Executive Health Purchasing Victoria (HPV) 1. HPV overview 2. Becoming more strategic 3. Global trends where are we at? 4. Reform

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Reforming the health supply chain “down under”

Supply Chain Congress 21 August 2013 Megan Main, Chief Executive

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Health Purchasing Victoria (HPV)

  • 1. HPV overview
  • 2. Becoming more strategic
  • 3. Global trends – where are we at?
  • 4. Reform opportunities
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Why do we need to improve our supply chain?

Health Purchasing Victoria | Achieving best-value supply chain outcomes for Victoria’s health sector 3

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  • 1. HPV overview
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What is HPV?

HPV was established in 2001 as an independent statutory authority

Purpose

HPV achieves best value supply chain

  • utcomes for Victoria’s health sector
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HPV – Core Functions

  • To supply or facilitate supply of goods and

services

  • To provide advice and support
  • To monitor compliance
  • To foster improvements in use of systems and e-

commerce

  • To maintain useful data and share that with health

services

  • To ensure probity is maintained in the purchasing,

tendering and contracting of public hospitals

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Sourcing program

Value under HPV contract has more than doubled since 2007-08

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Sourcing program

Annual benefit of HPV sourcing has more than doubled since 2007-08

Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes

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HPV categories

Clinical tenders Prostheses tenders

Clinical Protective Apparel & Drapes Interventional Cardiology Prostheses Continence Management Products Orthopaedic Prostheses Contrast Media & Radiopharmaceuticals Trauma Implants Enteral Feeds Interventional Radiology Prostheses Examination and Surgical Gloves

Equipment tenders

Hand Hygiene & Domestic Paper Products Beds and Accessories Hypodermic Needles, Syringes & Oral Dispensers X-ray machines Peritoneal Dialysis Fluids Ultrasound machines IV Administration Sets Physiological Monitoring Medical and Industrial Gases

Restricted access tenders

Monitoring Products Infusion Pumps Operating Room & Wound Drainage Consumables Nurse Agency Services Pathology Products Pathology Service (Gippsland Group Bs) Peritoneal Dialysis Products

Non-clinical tenders

Pharmaceutical Products & IV Fluids Catering Supplies Respiratory Products Office Requisites Sterilisation Consumables Natural Gas > 5TJ Surgical Dressings, Tapes & Bandages Electricity Surgical Instruments Open & Laparoscopic Cleaning Chemicals and Dispensers Sutures, Skin Staples and Tissue Adhesives Non-Emergency Patient Transport Wound Care

In progress/under investigation

Haemodialysis Equipment & Consumables

Interpreting Service Telecommunications

Green - Greenfield commenced in 2013-14

Neurosurgery Prostheses

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Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes

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  • 2. Becoming more strategic
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Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes

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Process Integrity Compliance to old government “rules” Built our brand on consistency Delivered benefits to the Health Services Respected by suppliers

Strengths

Agility to go to market Ability to meet market dynamics Additional value through category management Stronger stakeholder and supplier engagement Innovation driven/Whole of life contract value delivery

Opportunities

PROCUREMENT MODEL – THE PAST

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Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain

  • utcomes

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Strategic procurement

Can’t you see I’m busy?

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Strategic procurement

  • Clear line of accountability and responsibility
  • Greater visibility, oversight and strategic alignment of

expenditure

  • Better leveraging of expenditure to increase buying power
  • Consistent approach to contract management
  • Professional approach
  • Better value for money, achieves savings and efficiencies

Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain

  • utcomes

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Purchase Price

The proverbial iceberg…

Clinical variation Demand variation, uncertain demand Quality – over spec? under spec? Inventory – # lines, out of date Logistics – small orders, frequent deliveries Manual processes and rework Duplication

Drivers of price

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  • 3. Global trends
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Old hospital Materials Management model

Purchasing

  • “place and chase”

Stores

  • receive and deliver

Health Purchasing Victoria | Achieving best-value supply chain outcomes for Victoria’s health sector 17

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Dimensions of world-class Procurement

Capability and culture

  • Talent management
  • Mindset
  • Ability to change

Category management

  • Category value

creation strategies

  • Processes
  • Value chain analysis

Structure and systems

  • Organisational

structure

  • Collaboration
  • Performance

management

  • Knowledge

&information management

Source: McKinsey Global Purchasing Excellence Benchmarking Survey and Framework, McKinsey & Co

  • Align Procurement with broader strategy
  • Ensure business compliance
  • Influence of Procurement more broadly?

Strategic alignment

Health

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Emerging health trends - infrastructure

Emerging trend Key elements Are we there yet?

1 Talent / People

  • Realign resources to generate extra value
  • Strengthen quality of team
  • Bring in clinical resources
  • Bring in experts from other industries

On the way 2 Data/ Information systems

  • Consolidate for single view of data across system
  • Implement standard product coding system
  • Give front lines user friendly tools

On the way 3 Product distribution strategy

  • Build vs buy for distribution
  • Optimise inventory
  • Additional revenue generation opportunities

Not yet But other Australian states are well

  • n the way
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Emerging health trends – activity focus

Emerging trend Key elements Are we there yet?

4 Utilisation / demand management

  • Evidence-based standardised specifications
  • Close collaboration with clinicians
  • Evidence based use policies

No 5 Generic products

  • Front line expertise
  • Protocols for substitution
  • Global sourcing

Some drugs 6 Capital expenditure

  • Sourcing practices applied to capital expenditure

On the way 7 Supply chain partnerships

  • Win-win arrangements that create value
  • Reduce combined costs
  • Grow markets
  • Zero-sum models that capture value

No

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HPV example: demand management

Source: McKinsey report for HPV, HPV supplier sales data 1 Sep 10 to 31 Mar 11, clinician discussion, 28 June 2011

Bare metal stents Drug-eluting stents

Target range for % of drug-eluting stents

$ Q $4 x Q Weighted average price

Saving opportunity by reducing clinical variation and adhering to clinical guidelines

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Using data - usefully

Health Purchasing Victoria | Achieving best-value supply chain outcomes for Victoria’s health sector 22

$0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000

Sometimes the raw data doesn’t tell us much…

Graph of spend on nurse agency services, 12 months

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Using data - usefully

Health Purchasing Victoria | Achieving best-value supply chain outcomes for Victoria’s health sector 23

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0%

Nurse agency spend as % of total nursing salaries

… but when we normalise the data it tells a different story

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  • 4. Reform opportunities
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End to end procurement process

HPV reform scope - definitions

Engage Suppliers (SRM) Opportunity Assessment

  • Market

Engagement

  • Spend

analysis

  • Contract

review

Sourcing Strategy

  • Stakeholder

Engagement

  • Business

Requirements

  • Market

Analysis

Invitation to Supply

  • RFX
  • Auction
  • Negotiation

etc.

Evaluate & Negotiate Contract(s) Implement Contract(s) Place Orders / Non- contract Purchasing Warehouse and Distribution

  • Receipt
  • Payment
  • Delivery

Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain

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Procurement reform

Supply chain reform

Systems / technology

SRM

Spend analysis

eSourcing

Catalogue / Purchasing - eCommerce

EDI / Recalls Contract Management VPCS

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Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain

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The bigger reform picture

There are many inter-related elements which together deliver a modern, efficient supply chain

Initiative What is it? Why do it?

Key enablers

Victorian Product Catalogue (VPC) Procurement System

  • Critical enabler of reform – single source of truth
  • Accurate, up to date data accessible by all
  • Ability to order centrally for demand consolidation

Clinical demand / Standardisation

  • Critical enabler of efficiencies
  • Reduce clinical variation
  • Better buying power through supplier consolidation /

competition instead of all being on a panel

Key reforms

Supply chain reform

  • Coordinated, efficient purchasing, warehousing and

distribution around the state

  • Technology enabled, e.g. end-to-end e-procurement
  • Better buying power through larger consolidated volumes.

Procurement reform

  • More strategic approach to contestable non-labour spend
  • Understand where money is being spent and prioritise

effort for biggest return

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Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes

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Procurement Reform

An incremental approach will deliver some benefits

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Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes

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Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain

  • utcomes

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  • Commence pilot 4th qtr 2013 (2 + 2)
  • +8 in FY 14/15
  • Assist in reform, data analysis, procurement advice,

P&P, contract transition, procurement complexity, strategy, etc

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A (simple) hospital supply chain

External Distribution Internal Distribution

Local Distribution

Ward Management

Prosthetic Loan Kits

Supplier Distribution Hospital Ward Patient

Local Facility

Inbound Warehousing Outbound

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Victorian supply chain

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Supply chain: environment scan

Victoria sits to the far left of the pendulum

Regional Consolidation Decentralised Outsource Partial Outsource State-wide Consolidation

eg freight

?

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Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain

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Examples of economies of scale

All 86 Victorian hospitals should be able to benefit from economies of scale

18% 2-15% 1-7% 2-31% 1-23%

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An example – our gloves opportunity

Victoria spends $9.7 million per year on exam and surgical gloves

Health Purchasing Victoria | Achieving best-value supply chain outcomes for Victoria’s health sector 34

10%

18% (or $1.8m)

10%

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Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain

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Supply chain approach

Three streams of work to develop a detailed business case for a preferred State-wide supply chain model

What: Supply Chain vision statement When: Project framework and plan Business case development

Governance and Ownership

  • Working group members
  • Terms of Reference
  • Principles
  • Evaluation criteria
  • Constraints

Information and Technology

  • Working group members
  • Terms of Reference
  • Principles
  • Evaluation criteria
  • Constraints

Operations

  • Working group members
  • Terms of Reference
  • Principles
  • Evaluation criteria
  • Constraints

How: three streams Communications

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The vision for public health supply chain That buyers have at least as much information as suppliers

Suppliers Healthcare providers Information

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“And let it be noted that there is no more delicate matter to take in hand, nor more dangerous to conduct, nor more doubtful in its success, than to set up as the leader in the introduction of changes. For he who innovates will have for his enemies all those who are well

  • ff under the existing order of things, and only

lukewarm supporters in those who might be better off under the new.” Niccolò Machiavelli The Prince