PARTSSOURCE Jeremy Lukovich 9/25/2014

1. PARTSSOURCEJeremy Lukovich9/25/2014 South Western Pennsylvania HFMA

2. Topics • Introduction • Who is PartsSource? • Replacement Parts Industry at a glance • How changes in healthcare are driving a Revolution of the procurement process • Inefficiencies in our current procurement process • Future state • Effecting change

3. Introduction

4. PartsSource • Nation’s only multi-modality, multi-vendor supplier of medical replacement parts • Replacement Parts Vendor • Driving Solutions in procurement • Supply Chain Powerhouse • Redefining procurement methodologies • Technology • Full-service solution

5. Replacement Parts Industry • $5.0B Annually spent on Medical Device Replacement Parts • 1,100 OEMs (GE, Siemens, Philips, Toshiba, Steris, Stryker etc.) • 42% of devices will require a replacement part EACH YEAR • Average cost spent on repairs = $3,300/bed per year • OEM/ISO Service Contracts are Expensive & Incomplete • 15-25% of parts purchased should have been covered by a contract • Current Parts Procurement Process is: Manual, Expensive, and Inefficient

6. Changing Trends in Healthcare • New laws and regulations in place today • IDN’s often consider cost savings methodologies over revenue generating approach • Capital budgets get slashed • Life of modality must be extended • Less net new device sales means a drop in OEM Net New revenue • Increased replacement part costs to make up for lost revenues • Mergers and Acquisitions are on the rise • Disjointed line of business applications • Data everywhere • Difficult to predict spend • These trends force all of us to do more with less… • Operate as efficiently as possible

7. Is your procurement process efficient? • Do you have a dedicated resource(s) who sources parts 24 hours a day, 7 days a week? • Can this resource find the right part at the right price at the right time? • Does this resource gather statistical information on all of your purchases and input this data, without error, into your CMMS and ERP simultaneously? • Does this resource guarantee you’ll never purchase a replacement part that should be covered under a contract? • Does this resource predict failures and preemptively suggest purchases to decrease urgency and lower shipping costs? • Does this resource evaluate your supply chain in real time? • Does this resource have insight into the industry’s best practices and the ability to change tactics on the fly? • Can this resource track the shipment of the parts he or she orders in real time? • Can this resource report on the management of returns at any time and without notice? • Do you pay this resource their weight in gold? Because that’s what he or she is worth…

8. Is your procurement process efficient? Double Order Entry Tech selects PO Generated Tech Device Fails which Tech enters Tech Diagnoses Replacement in ERP by supplier to part request Reviews No Part Arrives Part Procurement ( s ) use into CMMS Part Specialist Dispatch Manager Enters Work order ( random ) Mobile & Web Part Request Can part be used? No Calls OEM Yes Tech Ave call Receives length 20-30 Work Order minutes Tech Installs to get OEM Part Integration list Price NO Is device Tech Does Part work? PO Sent to Contracted? Returns to Supplier Yes Supplier What type Calls of contract? Additional Calls2nd Calls3rd Supplier Average Tech makes 2.4 supplier calls after initial call to OEM Suppliers if Supplier reviews Supplier Supplier Ships Part price cannot and sends Shared Services be found replacement Full $$$ $$$ Calls OEM OEM Sources Part

9. Initiating the change • PartsSource contemplates these questions every day • We’re implementing technologies and solutions that address every issue we just discussed • ePF • Catalogue • Account Managers who provide white glove service • Mobile Solutions • Hiring additional resources to our supply chain management team in an effort to strengthen existing agreements and add more OEM’s and vendors • Contracting Options to guarantee service levels and parts discounts • CMMS and ERP integrations • Data capture and reporting capabilities to allow predictive spend and peer comparison • OEMconnect • Developing new ways for you to purchase parts whereby you leverage our discounts and purchase parts at our cost. • Vendor Ranking Module • Client Services Team to provide best practices assessments, installation services and training

10. Examples outside of Healthcare • Costco/Sam’s Club • Leverage massive supply chain in return for membership fees • Amazon • Simple, intuitive interface that allows efficient sourcing • Auto Industry • Standardized communication platforms that allow OEM and Secondary Suppliers to electronically communicate with one another

11. The Opportunity Exists To Do It Better • Hard Costs • Discounts on OEM Parts Pricing • Maximize Existing Contracts • Leverage Supply Chain • New Pricing Methodologies • Soft Costs • Cost Containment Education • Single Platform for Procurement & Workflow • Streamline Procurement Process, Efficiencies & Best Practice • Proactive Management of the Business • Avoid Urgency • Lower Administrative Burden • Adoption of Technology & Industry Innovation • Multi-Vendor eCatalog for Automation & Mobility • Seamless Integrations with CMMS & ERP • Data Analytics & Reporting

12. Questions?

13. Thank You!