Hong Kong Hospital Authority Supply Chain Best Practice & ERP Workshop

1. Hong Kong Hospital Authority Supply Chain Best Practice & ERP Workshop

2. Introductions & Objectives • Key Workshop Objectives • Develop an understanding of the importance of Supply Chain Management and ERP’s • in the context of hospital operations (ie. procurement & inventory management, etc). • Develop an awareness of best practice initiatives underway within hospitals • in Australia (incl. Case Studies). • Enhance the knowledge and skills required to introduce supply chain improvement • initiatives and how to manage change within the work environment. • Develop an appreciation of how to go about evaluating, selecting and implementing • an ERP system.

3. Topic 1 - The Hospital Supply Chain Typical Stakeholders in the Hospital Supply Chain The ‘Hospital Supply Chain’ – A sub-component of the ‘Healthcare Supply Chain’. Acknowledge that the broader ‘Healthcare Supply Chain’ encompasses many stakeholders: Wholesalers/Distributors 3rd Party Transport Providers Suppliers Blood Banks Collaborative Buying Groups Hospitals (Public & Private)) Aged Care Facilities Pharmacies Private Medical Clinics Supermarkets GP Surgeries IT Solution Providers Home Care Service Providers Health Insurance Companies Other Service Providers (catering, cleaning, linen, etc) Government Regulatory Bodies & Industry Groups Our focus will be the ‘Hospital Supply Chain’ and in particular the procurement and inventory management of clinical consumables. (refer next slides)

4. Topic 1 - The Hospital Supply Chain Typical Stakeholders in the Hospital Supply Chain Suppliers: Edward Keller Ltd Johnson & Johnson Guidant HK Ltd DCH Healthcare Products Ltd Boston Scientific HK Ltd Physicians & Clinicians Hospital Core Values Business Strategies Business Processes IT Performance Measures 3rd Party Transport Wards, Theatres, Labs, etc Patient Care Central DC or Hospital Warehouse Nursing Staff Wholesalers/Distributors Supply Chain – the efficient flow of product and information within an organisation and between trading partners

5. Recovery Ward Bulk Store Working Store Topic 1 - The Hospital Supply Chain Typical Flow of Product & Information in the Supply Chain Patient Inbound Staff Labour Physicians & Nurses Suppliers & Wholesalers Procurement of Clinical Consumables • Medical/Surgical Items • - Sutures • Syringes • Catheters • Stent • Balloon • Implant • Uniforms • X-ray film • Pharmaceutical Drugs & • Medications • Blood/Intravenous Products Patient Outbound Operating Theatre • Hospital Stock • Consignment Stock Financial System Patient Records Other Systems Procurement of Non Clinical Suppliers (paper, toner, cleaning, etc) Procurement of High-tech, Specialist Equipment & Assets Procurement of Catering Supplies

6. Topic 1 - The Hospital Supply Chain Current Hospital Supply Chain in HK Breakout Group Discussion “What type of Supply Chain issues are being experienced at your hospital?” “Which of these are being tackled through projects today?”

7. Topic 1 - The Hospital Supply Chain Typical Hospital Supply Chain Issues • Stock & Storage Space Related Issues: - Out of stock. - Excessive stock holding (incl. duplicate locations of stock) and critical funding tied up (what’s an appropriate safety stock?). - Obsolete or out of date stock. - Stock hoarding & unofficial inventories (particularly at end of year). - Lack of storage space & optimising available space.

8. Topic 1 - The Hospital Supply Chain Typical Hospital Supply Chain Issues • Reliability of suppliers. • Predicting demand accurately. • Disparate/fragmented IT systems and lack of reliable data/information (incl. metrics for measuring performance). • Inventory Record Accuracy (IRA) and lack of reliability in systems data. • Still heavily manual paper based systems – labour intensive. • Need to rationalise product range and ensure adequate labeling of product identifier. • Hidden costs in transportation/shipping (frequency), storage and labour within the supply chain. • Clinical staff being given the burden for inventory management. • Lack of the right competencies and skills in the purchasing and inventory management area. • Loss of product knowledge and informal demand & inventory management policies, when staff leave. • Vendors needing to visit hospitals to count the stock (consignment) due to lack of system integration.

9. Topic 1 - The Hospital Supply Chain Introduction to Best Practices in Hospital Supply Chain What’s being promoted in Australia • Operations & Work Practices Related • Product standardisation & rationalisation (in consultation with clinicians and focusing on • high-cost or high-use supplies). • Supplier rationalisation & Supplier Relationship Management (SRM) - establishing • prime vendor relationships (on performance based contracts/payments). • Group/consolidated purchasing power and driving supplier prices down and service • levels up. Also challenging supplier policies on minimum order quantities. • Reducing number of deliveries direct from suppliers into hospitals through cross docking • & consolidation facilities in the supply chain. Plus pick, pack and delivery to ward level (incl. the • use of shrink wrap on deliveries to help prevent damage and pilferage). • Acknowledgement of the importance of accurate demand forecasting as well as tighter • inventory planning & management work practices – particularly given the significant • portion of products being supplied through imports (80%) and thereby the need to consider • lead times, etc. Also pressure to reduce excessive inventory holdings and to optimise • in-house storage space, etc.

10. Topic 1 - The Hospital Supply Chain Introduction to Best Practices in Hospital Supply Chain • Technology Supporting Better Demand Forecasting & Inventory Planning No different to the needs of any other business that holds/manages inventory

11. Topic 1 - The Hospital Supply Chain Introduction to Best Practices in Hospital Supply Chain • Technology Supporting Better Demand Forecasting & Inventory Planning

12. Topic 1 - The Hospital Supply Chain Introduction to Best Practices in Hospital Supply Chain What’s being promoted in Australia • Operations & Work Practices Related (cont) • Moving towards collaborative forecasting with suppliers/distributors and providing • direct visibility of consumption data, even to the point of trialing Vendor Managed • Inventory (VMI) models - linking patient usage to product supply. • Increasing focus & accountability on cost tracking at ‘procedure’ level (incl. benchmarking) • to support patient billing, government rebate collection and management visibility. • This has resulted in hospitals taking the time to review standards for product numbering • (identification – EAN GTIN), ensuring suppliers adherence to the standards, and how to make • better use of mobile scanning devices, etc. • An increasing focus on better stock management (incl. product classification, setting • min/max quantities at product item level, tracking of stock shelf life to minimize • obsolescence, etc). This is leading to a review of existing IT systems to support supply • chain work practices and improve visibility of stock consumption at theatre and ward level. • Labour reduction/optimisation through automation & outsourcing (although proving difficult to • implement due to politically sensitivity).

13. Topic 1 - The Hospital Supply Chain Introduction to Best Practices in Hospital Supply Chain What’s being promoted in Australia • Technology Related • Gradual replacement of fragmented and unsophisticated IT systems – introducing reputable • ‘off-the-shelf’ ERP systems and improving access to reliable data, reports and metrics/benchmarking. • (beyond patient management – integrated supply chain, stock control & financial engines). • Industry acknowledges the potential of other data ‘carriers’ such as RSS, 2D barcodes, RFID, etc • but are still at the ‘entry level’ stage (getting some form of basic identifier/barcode on all products). • With regards to RSS (Reduced Space Symbology - liner) & 2D barcodes (Composite style - attributes), • the industry is yet to really target suppliers. • The same goes for the new Data Matrix Symbology (laser burnt/etched onto product) which should • provide a practical option for those items needing sterialisation, implants, etc. • Suppliers when choosing a carrier need to consider the item’s intended use/application and thereby • the suitability of the carrier (ie RFID signal interfering with technical equipment), etc.

14. Topic 1 - The Hospital Supply Chain Introduction to Best Practices in Hospital Supply Chain What’s being promoted in Australia • Technology Related (cont) • Some hospitals in Australia are already starting to pilot electronic trading & messaging, in • accordance with the standards set by the National Health governing body. • At this point in time, the ‘Data Sets’ for e-messaging have been defined for key business documents, although industry is free to use either mode/standards with regards to how the e-message is carried/delivered (EANCOM/EDI & XML/EDIINT). • Slow moving but some hospitals that are piloting include: Monash (Melb) and Queensland Health. • Health Insurance Commission of Australia (HIC) is trialing e-messaging with 3rd parties and is utilising specialist ‘best of breed’ integration/translation software called – Axway Integration Broker. (same software being used by Sweden’s largest emergency hospital – Karolinska, for integrating clinical chemistry functions, journal systems, lab systems, referrals and referral results, with microbiology, immunology, X-ray and pathology departments. All information about a patient is recorded centrally from disparate sources and locations, for single point of access). • In Summary: • Hospitals acknowledge that ‘Technology’ is just an ‘enabler’ and alone is not going to deliver • supply chain best practice. Need to examine the relationship between Processes, People & Technology!

15. Topic 1 - The Hospital Supply Chain Introduction to Best Practices in Hospital Supply Chain What’s being promoted in Australia The National Supply Chain Reform Task Force • A national collaborative body developing initiatives on health supply chain reform. • National Supply Chain Reform Task Force was established in July 2000 to support joint planning • by governments, public & private hospitals, purchasing agencies and product suppliers. • The major drivers for reform in Australian health include: • Opportunities to reduce costs and improve the quality and reliability of supply chains. • The importance of positioning Australian hospital purchasers and their suppliers to respond to • global e-commerce trends for hospital purchasing. • Size and fragmentation of the Australian hospital supply chain. • Different business processes, technologies and management approaches already add costs. • Inconsistent implementation of e-commerce will further entrench fragmentation, reducing • potential gains and deterring industry participation.

16. Topic 1 - The Hospital Supply Chain Introduction to Best Practices in Hospital Supply Chain What’s being promoted in Australia The National Supply Chain Reform Task Force • The major focus is on business process redesign and adoption of internet-based technologies to • automate purchasing processes (order to pay cycle). • Trying to address the existing fragmentation in the Australian healthcare industry. • A National Action Plan has now been established, identifying national, state and local level activities • to prepare the health sector and suppliers for the take-up of e-commerce. • The NSCRTF has also defined standards for EDI messaging and continues to debate the future of • EAN numbering standards versus the use of HIBCC numbering standards. • Next Annual Summit – June 2004 • Web site offers a summary of case studies & pilots currently underway within Australian health • supply chains - www.healthsupplychain.gov.au.

17. Topic 1 - The Hospital Supply Chain Introduction to Best Practices in Hospital Supply Chain What’s being promoted in US/Canada • In the US, the Food & Drug Authority (FDA) have mandated that within the next 2 years all products • must be marked with at least a barcode. • The FDA have also issued a report on "Combating Counterfeit Drugs," in which it highlighted RFID • tagging as appearing to be "the most promising approach to reliable product tracking and tracing • Class 2 drugs“. Class 2 drugs are defined as addictive pain killers and other prescription narcotics, • Although, preliminary investigations indicate that at this point in time there is no initiatives under way specific to the use of RFID within hospitals (more examples of this with Class 2 items in Supermarkets). • However, a number of hospitals are trialing RSS formats (ie. St Alexius - US), which is being driven actually by suppliers/manufacturers. • Clear evidence that wholesalers/distributors (Cardinal Health) are preparing their infrastructure to handle • e-messaging with hospitals and other trading partners. (Global Exchange Services – EAI tool).

18. Topic 1 - The Hospital Supply Chain Introduction to Best Practices in Hospital Supply Chain What’s being promoted in US/Canada • An audit of health suppliers in America show a steady and significant decline in the use of HIBC from 77% in 1995 to 56% in recent years with a corresponding adoption of EAN.UCC standards from 23% to 44% over the same period. • It is acknowledged that the HIBC has the limitation of not being able to extend itself to incorporate other data, in the same way the EAN.UCC system can through ‘Application Identifiers’. • For this reason some experts are predicting the HIBC has a very limited life and ultimately will disappear. • Note - Japan hospitals have also mandated that by 2006/7 all products must have an EAN.UCC product • Item number (GTIN).

19. Topic 1 - The Hospital Supply Chain Introduction to Best Practices in Hospital Supply Chain How Would The ‘Ideal’ Hospital Supply Chain Operate? Video – Hospital Supply Chain Best Practice

20. Topic 2 – Best Practice Initiatives Underway In Australia Case Study 1 – St Vincent’s Hospital (Melb, Australia) “Prime Vendor & Materials Management” • Organisation Profile • Part of the Sisters of Charity Health Services Group (St. Vincent’s Hospital, Caritas Christi, • St. George’s Health Service and Prague House) and is of the Catholic denomination. • Australia’s largest non-government, not-for-profit health care provider. • Statistics: • - No. of staff = 3,111 • - No. of patients = over 52,160 pa • - No. of beds = 827 • Total budget = $353 Million (AUD) – approx $1.941 Million (HKD) • www.stvincentsmercy.com.au

21. Topic 2 – Best Practice Initiatives Underway In Australia • Overview of Initiative - “Materials Management by Prime Vendor” • Outsourcing the management and replenishment (twice weekly to ward level) of a • range of common clinical consumables (based on agreed min/max levels) to a • nominated prime vendor. • Prime vendor would also take responsibility of managing suppliers of products that were not • directly part of their product range (type of wholesale model). • Built proprietary interfaces between the hospital inventory management system and the prime vendor system to enable electronic requisitioning (based on scanned consumption figures). • Significant rationalisation of products through the nomination of primary and secondary products • for a particular product type (performed in consultation with clinical staff). • Established financial accountability at ward level through establishment of cost centres.

22. Topic 2 – Best Practice Initiatives Underway In Australia • Overview of Initiative - “Materials Management by Prime Vendor” • Drivers behind the project included: • - Method of assigning Government Funding was restructured and overall funding level was cut. • - Needed to remain cost competitive. • Project objectives included: • - Reduce inventory, thus releasing funds for another applications. • - Release clinical staff from stock control and receipting activities. • - Reduce labour costs. • - Improve vendor relationships. • - Leverage technology (systems, scanning and electronic trading). • - Maintain high service levels.

23. Topic 2 – Best Practice Initiatives Underway In Australia • How They Got Started • Identified a suitable Prime Vendor using a range of selection criteria. • Negotiated costing for the supply of services sought. • Identified software and interface requirements. • Established suitable databases. • Identified primary and secondary products for each product type. • Determined trading relationships with hospital preferred suppliers. • Liaised with Prime Vendor and suppliers to mandate new operating model & requirements from suppliers • to deal through Prime Vendor (although considerate of protecting supplier confidentiality). • Developed bar codes (EAN.UCC system) for identified catalogues and cost centres. • Established suitable units of issue for all consumables. • Product Evaluation Committee rationalised product range – liaising with users (clinicians). • Established maximum and minimum levels for consumables identified on agreed ‘imprest’ range.

24. Topic 2 – Best Practice Initiatives Underway In Australia • How They Got Started (cont) • Determined delivery schedules with Prime Vendor. • Developed interfaces between hand held scanners and host computer systems. • Identified suitable locations at Ward, Unit or Departmental level for ‘imprest’ and identified other • change impacts at user level. • Educated staff in principles of “Just In Time” procurement – ongoing process. • Designed & developed an electronic purchase order acknowledgement. • Adapted system to cater for alternate suppliers to the Prime Vendor – secondary product options. • Designed systems logic for purchase order, purchase order acknowledgement, supplier delivery advice • and invoice. • Educated all hospital staff on how to use electronic forms available on the hospital intranet site.

25. Topic 2 – Best Practice Initiatives Underway In Australia • Progress So Far • Operating under this model for nearly 8 years. • As pioneers of this model the implementation took 18 months, however subsequent hospitals have completed the transition is less than 6 months. • Inventory management practices have improved, resulting in inventory being reduced from $600,000 to $57,000. • Staffing levels targeted as part of the project have seen reductions from 35 to 15 (Full Time Equivalents). • Have seen dramatic improvement in supplier performance & service levels. • Reduction in delivery costs with less deliveries directly into the hospital (Prime Vendor consolidated deliveries). • As more suppliers start to implement their own IT infrastructure to support e-commerce (based on open standards), there are new opportunities for St Vincent’s to take the next steps towards supply chain integration and potentially moving away from the Prime Vendor model as online trading and Vendor Managed Inventory (VMI) becomes more the norm rather than exception. • Any further advances would require more sophisticated finance & supply chain IT applications. St Vincent’s Hospital has decided to implement Oracle as its principal software platform across all Sisters of Charity hospitals. • A standard catalogue will also be established based on the use of the EAN.UCC Global Trade Item Number (GTIN).

26. Topic 2 – Best Practice Initiatives Underway In Australia • Critical Success Factors • Building staff confidence & trust in revised inventory levels & reliability of ‘JIT’ supply – rather than ‘Just in Case’ mindset. • Collaboration (consultation) between all levels of clinical staff at ward level and Materials Management Dept in determining processes, the content of the ‘imprest’ stock holding, etc. • Enlisting stakeholder support & minimising resistance. • Support (priority) for materials management initiatives within the overall business strategy for St Vincent’s. Plus the preparation of a clear business case (indicating a measured return on investment) for each initiative. • A product evaluation committee that has representation from clinical staff, to assist with the product rationalisation analysis - helping break down the barrier between clinical staff and the commercially focused supply chain staff. • Contingency plan for mission critical products (consignment stock, nominated staff responsible for replenishment of these items immediately at point of consumption, high service level agreements with Prime Vendor, option to transfer from another hospital within the network).

27. Topic 2 – Best Practice Initiatives Underway In Australia • Other Lessons Learnt • Need to develop computer literacy skills and a level of comfort in using technology as opposed to traditional paper based systems. • As processes and responsibilities were re-designed, there was a need to re-align budget allocations for changes in where staffing levels were needed under the new model. • Well thought out criteria to anchor the evaluation & selection of a Prime Vendor. • Be willing to radically change the existing processes & supplier relationships. • Early identification of change impact, consideration of any industrial relations issues and involvement of workers union in the process. • Adequate training to all staff and strategies for staff retention. • Professional collaboration between software vendors in order to integrate existing systems. The full case study is available in your participants binder – Section 5

28. Topic 2 – Best Practice Initiatives Underway In Australia Case Study 2 – Alfred Hospital (Melb Australia) “Medical Procedure Cost Tracking & Benchmarking” Organisation Profile • Founded in 1871, the Alfred Hospital is located in Melbourne, Australia. • No. of staff = 3,500 • No. of patients = over 250,000 pa • No. of beds = 320 (41 bed intensive care unit) • Reputation as one of the world's leading health care providers, with ‘high tech’ services • such as: Cardiovascular Medicine, Heart-Lung Transplant, Trauma Care, Oncology and • Respiratory Medicine. • Seen as a major teaching hospital with several leading research centers co-locate. www.alfred.org.au

29. Topic 2 – Best Practice Initiatives Underway In Australia • Overview of Initiative - “Patient Procedure Cost Tracking’ • Using handheld data capture devices to record stock utilisation at point of use, in high cost • procedure areas (ie. Radiology). • The data captured is then synchronised over the Internet and is made available, in a secure web • server environment. • The data is then used to automate replenishment and facilitate e-commerce, as well as assist with • patient billing and private health insurance rebates. • Accurate identification of medical devices has been made possible through the incorporation of the • EANUCC standards in addition to being able to handle the Health Industry Bar Code Council (HIBCC) • standard within the mobile computer application.

30. Topic 2 – Best Practice Initiatives Underway In Australia • Overview of Initiative - “Patient Procedure Cost Tracking’ • Key drivers behind this initiative were: • Reduce the nursing resources consumed in the day to day management of the departments • inventory requirements. • Provide management with the detail required to accurately track actual procedure costs and • facility utilisation. • Capture product knowledge through a system, rather than in people’s heads. • Specific objectives identified for the pilot trial within the Radiology department included: • Elimination of nursing involvement in routine inventory management. • Inventory reduction and product rationalisation. • Administration savings through an automatic replenishment • process. • Accurate patient procedure costing. • Facility utilisation reporting. • Accurate rebateable device reporting (private health insurance). • Improved consignment stock management.

31. Topic 2 – Best Practice Initiatives Underway In Australia The Technology • Types of Outputs: • Procedure Costing Reports • Rebate Reports • Product Usage Reports • Replenishment Orders • Types of Inputs: • Patient identification • Staff identification • Procedure codes • Medical device details • Lot numbers for implantable devices (valuable for recalls) • Procedure duration and associated facility details

32. Topic 2 – Best Practice Initiatives Underway In Australia • How They Got Started • Working with both hTrak (technology provider) and Ithaca Supply Chain Management Pty Ltd, the • Alfred went through the following implementation approach: • Process review (incl. process maps) and benchmarking • Pre-implementation audit • Scoping study & Gap analysis (change impact) • Project Plan development • Implementation • Post implementation review • Annual review

33. Topic 2 – Best Practice Initiatives Underway In Australia • Progress So Far • Implemented 12 months ago within the Radiology department. • All staff are delighted with the solution and the resulting outcomes to date, for example - the Nurse Unit Manager is able to dedicate more of their time to clinical duties; - management is able to more accurately analyse product usage, inventory levels and patient procedure costs. Has also provided an opportunity to review safety stock levels, etc. • Alfred has already recovered $60,000 (AUD) in the first 3-4 months following the implementation, • with a 300% return on the annualised costs of the hTrak solution identified. • Overall value of stock on hand has been reduced by $200,000, turnaround times for replenishment have improved from 2 weeks to 2 days on average, and mission critical devices have seen a 50% reduction of stock on hand. • Implementation does not end here - need to constantly monitor progress and iron out issues as they arise. • The solution will constantly evolve as the Alfred utilises the technology to improve its business and supply chain processes.

34. Topic 2 – Best Practice Initiatives Underway In Australia • Critical Success Factors • Thorough process review (end to end) and identifying the gaps and major areas of change. • Proactive and positive leadership group overseeing the project. • Clear business case (benefits & advantages to hospital and patient care). • Involvement & support from all parts of the business. • Contained pilot trial (Radiology has 113 staff) to fine tune the solution and work through issues, before expanding the rollout.

35. Topic 2 – Best Practice Initiatives Underway In Australia • Other Lessons Learnt • The critical role standards play as an ‘enabler’, within the quest to become more efficient within supply chains. • Client Data and Product Master Data integrity, synchronisation and centralisation. • Identifying the change impact at all levels, early in the process and addressing these adequately. • Address communication and information needs of stakeholders (ie. for this project it was critical to explain/demonstrate the benefits of storing data offsite via a third party, and how security of data would not be jeopardised). • Improving supply chains is about business processes, standards (product numbering & identification), technology, and people and all working together. The full case study is available in your participants binder – Section 5

36. Topic 2 – Best Practice Initiatives Underway In Australia Case Study 3 – Queensland Health (QLD Australia) “ERP Replacement & Process Improvement” • Organisation Profile • Queensland Health – State governing body that oversees the delivery of public health services through • out Queensland (38 service districts). • Responsible for: • - No. of employees = 63,000 (full & part time). • - No. of beds = over 9000. • - No. of patients = over 2,000,000 pa. • - Total budget = $4.1 Billion (AUD) – approx $22.55 Billion (HKD) • Leaders in Australia with regards to Hospital systems reform. www.health.qld.gov.au

37. Topic 2 – Best Practice Initiatives Underway In Australia • Overview of Initiative - “Finance & Materials Management Information System” • (FAMMIS) • Implementation of SAP R/3 modules and standard processes. • Established a centrally managed corporate product catalogue. • Consolidated purchasing into central locations for each service district. • Introduced electronic payment of suppliers and e-procurement backbone (pilot). • Key drivers behind this initiative included: • Previous systems did not support accrual accounting, were very disparate and relied heavily on manual • reporting, lacked flexibility and user friendliness. • Government budgetary pressures (need to reduce costs). • Need to introduce an integrated financial, inventory management and human resource management system. • Improve overall inventory management process (purchase to pay). • Eliminate the need for duplicate data recording, by introducing centralised data management (corporate • catalogue).

38. Topic 2 – Best Practice Initiatives Underway In Australia • How They Got Started • Defined business requirements across agreed scope of business processes. • Compiled business case that identified the key benefits/advantages that would be delivered • as a result of the project. • Enlisted support from all service districts and secured appropriate level of resources to assist. • Completed evaluation of vendor & solutions – SAP were chosen. • Re-designed businesses processes based on own understanding of improvements required, as well as • vendor input on best practices, etc. This included consolidating and centralising purchasing model. • Identified communication strategies required both internally and externally (ie. supplier relationships). • Extensive implementation planning with the vendor and hospital management, including how to address • user training and rollout, as well as how to properly resource the project for ‘success’.

39. Topic 2 – Best Practice Initiatives Underway In Australia • Progress So Far • SAP R/3 was implemented in Queensland Health in June 1999. (The scope of the system included the financial, asset accounting and materials management modules, as well as a barcode solution for stock control/supply functionality). • Improved reporting and introduced accrual accounting across all service districts. • Streamlined re-supply processes and removed cost. • At present are accommodating the use of both EAN.UCC & HBICC standards in numbering. • Have experienced significant reductions in inventory holdings. • Now planning the expansion of e-procurement which involves a web based requisitioning front end for staff and exchanging ‘purchase to pay’ business documents electronically in accordance with EDI standards set by the National Supply Chain Reform Task Force.

40. Topic 2 – Best Practice Initiatives Underway In Australia • Critical Success Factors • Solid business case. • Data alignment and synchronisation (incl. initial data cleansing). • Vendor capability and commitment. • Technical capability including infrastructure. • Standard business processes. • Dedicated cataloguing resource. • Management commitment.

41. Topic 2 – Best Practice Initiatives Underway In Australia • Other Lessons Learnt • Effective communications & collaboration with all internal and external stakeholders absolutely critical. • Business process redesign must be the pre-cursor to implementing a new system. There is no value to be derived from overlaying new technology/systems over existing processes. • Clearly articulate business rules/policies and obtain sign-off from all stakeholders. • Avoid over ambitious project objectives, scope and timelines – plan and execute for success. • Ensure sufficient skills and experience on the project team. • Allow adequate time for training so as to allow people to get up to speed to perform their job. • Establish a business relationship with your business partners and suppliers and that encourages trust, open exchange of information and an unequivocal commitment to the project. • Develop a comprehensive test plan to ensure that the proposed solution operates under the full range of scenarios and environments – do not take any shortcuts! . The full case study is available in your participants binder – Section 5

42. Topic 2 – Best Practice Initiatives Underway In Australia Case Study 4 – Department of Health & Ageing “Australian Catalogue of Medicines (ACOM)” • Background • In November 1999, the Australian Government Department of Health and Ageing (DoHA), HIC • (Health Insurance Commission) and Standards Australia sponsored a national forum on a • Pharmaceutical Terminology for Electronic Data Exchange. • At this forum The Medicines Coding Council of Australia (MCCA) was established to further action • their objectives. • The MCCA consisted of a voluntary membership of interested people representing all sectors of • healthcare including suppliers, wholesalers, medical clinicians, community and hospital pharmacists, • software vendors, database distributors, drug usage researchers, EAN and government. • The concept of a central medicines data repository was born and a needs analysis/pilot was conducted • from March – Nov 2001. • In November 2002 MCCA completed their definition of a minimum dataset for a central medicines catalogue. • The MCCA were convinced that the Australian Catalogue of Medicines (ACOM) would become a critical • piece of public health infrastructure. • In May 2003. the Australian Minister for Health and Ageing announced the Australian Government’s • approval of funding to support this initiative.

43. Topic 2 – Best Practice Initiatives Underway In Australia • Overview of Initiative - “Central Medicines Product Data Repository” • The ACOM will provide access to a reliable, on-line (via Internet), central source of medical product information. This will ensure that the many electronic health systems being used by doctors, pharmacists and hospitals are referring to the same medicine (EAN GTIN), and the information on that medicine is consistent across the various systems. • The proposed medicines catalogue system (hosted within the EANnet) will support processes such as: - Data entry and updating of product information by suppliers. • - Submission of product information to a quality assurance process for review. • - A stringent quality assurance process for all product information before being made public. • - Suppliers performing a final review and release of their product information for public access.

44. Requirement Specifications EANnet Modifications Upload Product Data DoHA Collated Source Data Workshop Information Kit Topic 2 – Best Practice Initiatives Underway In Australia Overview of Initiative - “Central Medicines Product Data Repository” Software Vendors PBS ACOM System Catalogue of Medicines • The aim is for the catalogue to eventually • hold information on: • All Pharmaceutical Benefits Scheme (PBS) • and Repatriation Pharmaceutical Benefits • Scheme (RPBS) items, including listed • dressings and some therapeutic devices • such as blood glucose diagnostics and • lubricant eye drops. • Other prescription medicines. • Over-the-counter (OTC) medicines. • Complementary medicines. 7 Pharmacists Doctors Researchers Released Product Data EAN Australia Supplier Quality Sign-off Go-live Assurance Quality Loaded Product Assured Data Data 4 5 Verified Product Data 3 Supplier Verifies Data

45. Topic 2 – Best Practice Initiatives Underway In Australia Overview of Initiative - “Central Medicines Product Data Repository” • ACOM will help address Health Industry issues such as: • Facilitate electronic prescribing and related projects, such as MediConnect which is about electronically linking information about a consumer’s medication history. • Facilitate sharing of medicine usage information across different levels of government. • Improve administrative processes such as prescription authorisation and pharmaceutical claims processing. • Reduce IT costs associated with mapping of different coding systems. • Enable accurate electronic commerce in the health supply chain. • Electronic reporting of “adverse” drug reactions. • Input to decision support systems.

46. Topic 2 – Best Practice Initiatives Underway In Australia • Progress So Far • “It’s Early Days” - population of the catalogue with all Australian medicines is expected to be a long-term project. • There are five key stages required to achieve this: • - System development • - Initial population • - Availability to data recipients • - Review process • - Ongoing updates • The system development stage, incorporating enhancements to EANnet, commenced in January 2004. • The final development of the project is expected to be completed in the first quarter of 2005. • During the course of development all stakeholders are being kept directly informed by DoHA. This will include industry forums and workshops to fully answer questions arising and to deliver user training, with the first Medicines Vendors’ workshops scheduled for early August 2004.

47. Topic 2 – Best Practice Initiatives Underway In Australia • Critical Success Factors • A ‘Central Medicines Product Data Repository’ will only be successful if it can handle: - a unique EAN.UCC identifier (for product information). - a permanent Original EAN.UCC identifier to track a medicine whose product GTIN may have changed due to company mergers or acquisitions. - a minimum dataset (of nationally agreed attributes). - a classification system (nationally agreed clinical grouping of products, ATC code). - ability to expand to cover, new, research and trial drugs and hospital manufactured items & • other drug classes. • - economically feasible system creation & maintenance. • use of Australian and international standards wherever possible. • accommodation of generic drugs identification. • - public domain (non-proprietary) system availability. • - a subset of core terminology to incorporate information necessary for safe prescribing & dispensing. • Ongoing communication & consultation with industry stakeholders (buy-in). • Ongoing governance (MCCA will be replaced by a smaller technical committee reporting directly into the Minister).

48. Topic 2 – Best Practice Initiatives Underway In Australia • Other Lessons Learnt • Significant time was required for manufacturers to pull together the full data set, due to deficiencies in their own internal systems (disparate). In the end, it was a perfect opportunity to review their own internal processes for data management, etc. • “Should Hong Kong build its own Catalogue of Medicines, or approach Australia?” The current view is that Hong Kong should develop its own catalogue of medicines data due to reasons such as: • - The Australian government has not agreed to other communities making amendments/developments • in our Australian system to accommodate another medicines communities outside Australia. • - ACOM won't be populated with all the medicines used in the Hong Kong health market. • - Further development may require introduction of Chinese characters which may be significant. • - ACOM data set does not have the links to Hong Kong regulatory authorities' systems and may lack • other fields/functionality that would be required in the Hong Kong environment. • - The necessity to engage local stakeholders within the Hong Kong health industry, to have any • chance of making this work. The full case study is available in your participants binder – Section 5

49. Topic 2 – Best Practice Initiatives Underway In Australia Case Study 5 - Sigma Healthcare (Melb Australia) “ERP Replacement & Process Improvement” Organisation Profile • Major wholesaler of pharmaceutical goods in Australia – 31% market share • No. of staff = 600 (450 system users) • Annual turnover = AUD$1.5 billion • No. of customers = 4000 (typically 2 deliveries per day) • No. of suppliers = 500 • No. of SKU’s = 20,000 • No. of Distribution Centres = 16 www.sigmaco.com.au

50. Topic 2 – Best Practice Initiatives Underway In Australia • Overview of Initiative - “The Replacement Healthcare System (RHS) Project” • Key drivers for initiating the project included: • Current in-house developed IT systems were ageing and underlying technology was no longer supported. • Competitors were already replacing their in-house developed IT systems with reputable ERP systems. • An opportunity to tap into global best practice in IT and processes by partnering with a global ERP vendor • who had install sites within their industry. • Enable the business to access a fully integrated business operating system that offered advanced capabilities in • warehouse management functionality as well as stronger searching and reporting capabilities – beyond what • their existing systems had to offer. • Would introduce a solid IT platform for extending new services to suppliers/customers (ie B2B & B2C capabilities), • etc.