Engaging Physicians for Supply Chain Success Michael Hildebrandt Associate Vice President-Supply Chain Scottsdale Health

1. Engaging Physicians for Supply Chain Success Michael Hildebrandt Associate Vice President-Supply Chain Scottsdale Healthcare

2. Disclosure of Financial Relationships • The Speaker Has Nothing to Disclose

3. Supply Chain Education Track Objectives • Identify better ways to implement and expand a sustainability program. • Identify leading practices around physician engagement and physician preference item contracting strategies. • Describe ways to identify and prioritize purchased services opportunities and the role of supply chain in purchased services • List how CEOs support, understand, recognize, and empower supply chain managers to be successful. • Explain how LEAN tools were utilized and deployed in order to achieve successful outcomes. • Describe how you can improve and better your team's performance through leadership. • Describe how effective use of trust and collaboration, change management skills, and leadership can help a supply chain executive elevate supply chain in his or her organization.

4. Additional Session Learning Objectives • Improve communication and collaboration with physicians as a Supply Chain customer • Successfully engage physicians in specific Supply Chain cost savings opportunities • Describe how the Bundled Payment Program may help to incentivize physicians

5. Introduction About Scottsdale Healthcare • Founded in 1962 – Celebrating 50 years! • Regional healthcare system serving Arizona’s Northeast Valley • three medical centers = 800+ beds • a variety of outpatient services including surgery centers • home health services, research institute and • a wide range of community health education and outreach services • Among country’s first to achieve Magnet nursing status, one of 25 national “system” Magnet designations • Trauma Center • Cancer Center • Centers of Excellence for Orthopedics, Spinal Implants, Cardiology, Pediatrics, and Women’s Services

6. Recognition SHC Shea Medical Center was the first hospital in the Southwest region to implant an MRI-safe pacemaker, a major technological breakthrough for patients who need MRI diagnostic scans SHC Osborn Medical Center was among the first U.S. hospitals to receive approval to perform a new nonsurgical heart valve replacement procedure, the Transcatheter Aortic Valve Replacement (TAVR). SHC Shea Medical Center is the only hospital in greater Phoenix to earn the 2009 Thomson Reuters 100 Top Hospitals: National Benchmarks Award, which recognizes facilities that deliver high-quality, efficient care.   . In September 2010, SHC became Arizona’s first and only hospital approved to join the federal Medical Reserve. SHC is the state’s only recipient of the 2010 Pioneer Award for Quality from the Arizona Quality Alliance (AQA). SHC earned the Healthcare Purchasing News 2011 Sure Award for Excellence in Supply Chain Leadership

7. Volumes and Statistics Surgical Cases = 41,210 Adjusted Patient Days = 294,094 Deliveries = 5,854 Net Revenue = $912,223,000 Emergency Visits = 177,688 Supply Expenses = $194,837,000 Patient Days = 169,153 FTE’s = 6,500

8. SHC Medical Staff Dynamics • 1,800 physicians with medical staff privileges • The overwhelming majority of physicians are in individual or group private practices • Phoenix marketplace is extremely competitive

9. SHC Organizational Physician Engagement Strategies • Conduct physician satisfaction surveys and follow up with specific action plans • Appoint physicians to be on The Board of Directors • Created senior administration physician positions of Senior VP/Medical Affairs and Chief Medical Officer • Formed the Scottsdale Academy for Leadership and Development with 60 physicians and SHC managers

10. SHC Organizational Physician Engagement Strategies • Select physicians to serve as Medical Directors and Service Line Leaders • Empower physicians to lead and serve on medical section teams focusing on orthopedics, quality, anesthesia, cardiovascular, and perioperative • Provide electronic medical record software and physician portal IT services • Implemented a Scottsdale Healthcare Medical Staff Compact to improve communication, trust, and alignment

11. SHC Organizational Medical Staff Compact SCOTTSDALE HEALTHCARE – MEDICAL STAFF COMPACT PREAMBLE In these changing times it is vital for Scottsdale Healthcare and the Medical Staff to unite in the common cause of facing and overcoming the challenge of limited resources. Recognizing that: • The health and welfare of our patients and our community is paramount • Issues of trust have divided us in the past • The enemy is not each other, but the competition for limited resources • Even in difficult times we seek to foster success for both the hospital and physicians

12. SHC Organizational Medical Staff Compact Our Joint Commitment to our Patients and Community • Design and implement the most effective clinical practices. • Demonstrate accountability for the escalating costs of healthcare delivery. • Develop systems that support safe, high quality, efficient care. • Facilitate a collaborative approach to patient care by demonstrating respect for and among hospital associates, physicians, and administration. • Promote a healthy Scottsdale Healthcare-Medical Staff relationship by maintaining effective communication, transparent decision making, strong participative governance and a focus on understanding all points of view.

13. SHC Organizational Medical Staff Compact Our Commitment to Each Other • Best Clinical Practices • Succession Planning/Recruitment • Professional Growth and Development • Technologic Advances • Promoting Our Joint-Value • Communication • Citizenship • Alignment Accountability to this Compact Scottsdale Healthcare and the Medical Staff will hold each other accountable for fulfilling the obligations of this compact

14. SHC Supply Chain Physician Engagement Strategies

15. SHC Supply Chain Physician Engagement Strategies • Establish credibility and trust between supply chain and physicians • Involve physicians in all Physician Preference Item (PPI) product decisions • Be transparent with pricing, proposals, and financial options • Put yourself in the physician’s shoes • Anticipate the question: “What’s in it For Me?”

16. SHC Supply Chain Physician Engagement Strategies • Be flexible with your schedule • Expect to meet with physicians before and after normal business hours • Volunteer to serve on medical staff and section meetings • Provide supply chain updates and reports during these meetings

17. AGENDA • INVASIVE MEDICAL DIRECTORS • & CHAIRS OF CARDIOLOGY QUARTERLY JOINT MEETING • February 21, 2012 • 7:00 a.m. • I. Process Improvement Abdul Mansour • Cath Lab Turnaround Time Rob Karlovsky • II. Supplies & Technology Mike Hildebrandt • VHA Update John Donofrio • D2BBrian McMullen • QES ACC Update Susie Duffy • TPK Supervisor Transition Peggy/Sandi • Capital Equipment update Peggy • H & V Update • Next Meeting: Invasive Medical Directors • March 21, 2012 • Next Quarterly Joint Invasive Medical Directors & Chairs of Cardiology • April 18, 2012

18. SHC Supply Chain PhysicianEngagement Strategies • Partner with GPO and Distributor to provide physician purchasing contracting and cost savings for physician practices • Collaborate with quality process improvement to provide better start times, block schedules, and operational advantages for physicians • Work with physicians to insure their capital equipment needs are met • Entered into bundled payment program with physicians in the areas of orthopedics, spinal implants, and cardiac rhythm devices • Engaged consulting company to implement bundled payment program on 3/12

19. SHC Supply Chain PhysicianEngagement Strategies • Established two-year realized cost savings target of $12.5 million dollars • Documented and audited actual cost savings of $15, 461,934 in FY2010 and FY2011 • Implemented over 650 cost savings initiatives during this period • Achieved cost savings with strong physician support in orthopedic implants ($1.1 million dollars), spinal implants ($1.8 million dollars), and cardiac rhythm devices ($1.2 million dollars) • Recognized and celebrated those physicians who helped us achieve these cost savings • Continue to build the trust, collaboration, and alignment between SHC supply chain and physicians

20. Questions?