Darcy Aafedt CMRP, FAHRMM Cost Improvement Sr. Manager Banner Health The Supply Chain Game “Is there an App for That?

2. Darcy Aafedt CMRP, FAHRMM • Cost Improvement Sr. Manager • Banner Health • The Supply Chain Game • “Is there an App for That?”

3. Banner Health • Non-profit Secular Multi-State Health System, formed in 1999 • 23 Acute Care Hospitals • Long Term Care Units, Surgery Centers, Home Health, Clinics, Hospice, Behavioral Health, Home Medical Equipment • 3 Regions within Banner Health • 4,520 Licensed Beds • 35,300 Employees • >60 Physician Clinics • 865 Employed Physicians

4. Banner Health Supply Chain - Centralized Operations • Supply Expense - $750M • Purchased Services - $400M • Contracting – 1000+ Supply Contracts • Lawson ERP– One Master File, One Source of Truth • Self Distribution Vertical Model - $50M • Distribution for AZ – Ship 48 pallets/day with 99.7% fill • Pharmacy Distribution for AZ – Licensed Rx Wholesaler

5. 20/20 Vision - Innovation "Innovation at Banner is defined as the rapid identification and deployment of strategies leveraging Banner’s operating model and the science of care delivery to ensure an extraordinary patient experience, which is safe, efficient and effective."

6. One of Top Five Health Systems in the U.S. --Thomson Reuters One of Top 25 Connected Facilities-- second year in a row Top Leadership Team in Healthcare In the Top 100 of InformationWeek's Top 500 One of Top Ten of Integrated Health Networks --second year in a row Named one of Arizona's Most Admired Companies for a second year in a row Most Wired Award 2011

7. Challenges • Arguably the most difficult time in the history of healthcare • Rising prices • Shrinking reimbursement – Hospitals and physicians • Shrinking margins • Increasing Bad Debt and Uncompensated Care

8. Day to Day SCM Operations: The Sky is Falling! http://www.youtube.com/watch?v=cW9p8u03rU4 Today’s SCM strategy…

9. Supply Chain Influence • 2004 – Created vertical distribution model with our self distribution center • 2007 – Insourced the management of the distribution center • 2007-2010 – Continued to grow our inventory for appropriate items • 2011 – Purchased the building and added perfusion distribution

10. Supply Chain Influence • 2012 – Added a process for all purchased services review through SCM • 2012 – Additional ROI projects to insource or house services within the DC • 2012 – Evaluating global sourcing options

11. Capped Pricing at Banner • 2003 – Cardiology • 2006 – Total Joints: Hips, Knees, Shoulders • 2007 – Spinal Implants • 2010 – Heart Valves, Total Joints • 2012 – Trauma

12. Banner’s All Play Contracting Evolution / Race

13. 2011 Supply Utilization Strategic Initiative Results

14. 2012 Supply Utilization Strategic Initiative Targets • Final • Results • ?

15. Change Management Exercise

16. The Dynamics Of Change • It’s uncomfortable • What will I lose? • Am I alone? • Will I have enough resources? • You’re overwhelmed • It’s different for each of us

17. and the most important one... People Revert Back !! …So make your change sustainable in order to hold the Gains

18. Is there an app for this? http://www.youtube.com/watch?v=o6mt9xITmps&feature=related Angry Birds and the Mighty Eagle

19. Shallow Argument • Comes across strong and powerful at first • With the right data, may not be able to withstand stronger arguments …so have the right data

20. Real Life Example • Clinical manager likes special product A over product B • Provide clinical data on both products • Their argument does not hold up

21. Internal Intranet Site Site used to post latest updates and links to information and tools to support the project

22. Preference Card Report

23. The Influential Workhorse • Frontline doesn’t always have a loud voice • Once on board can be very influential • Can get themselves into trouble if they don’t have all the information • Can make or break the project …Fully communicate rationale behind the change in order to win their support

24. Real Life Example • Nurse observed practice differences between health systems • Worked with OR and SCM leadership to analyze and implement change • Information shared and replicated across the system

25. The Guided Missile • High impact if you direct them in the right place • Very influential …Give clear data and outline expectations

26. Real Life Example • Physician champion able to address concerns from vendors and physicians • Communicate Banner’s message with internal stakeholders before vendor meetings

27. The Critic • Loud voice • Throws obstacles into our path to hinder progress • …so involve early and often

28. Real Life Example • Multi-disciplinary team meetings • Key OR Stakeholders • Key Surgeons • C-Suite members • Replicated current process, considered the gold standard and then address opportunities for improvement and cost reduction

29. The Resister • Does not like change • Revert backwards …Recognize and continually monitor

30. Real Life Example • Product conversions • New processes

31. The Explosive Bomb • Incredibly destructive • Difficult to recover – almost impossible …Address issues logically – keep emotions out

32. The Ultimate • Represents strength and success • Full alignment of all stakeholders • Celebrate and communicate your successes …Constantly ensure alignment is intact

33. Real Life Example • Preference Card Project • Unclear and unaligned goals • Initially relied heavily on leadership instead of the influential workhorses • Communication was sketchy • Lack of alignment and support between and within teams

34. Metrics Focus • Stop light scorecards for everything • High-level with ability to drill into additional detail

35. YTD Metrics

36. Discipline Team Results

37. YTD Metrics

38. Top Utilization Projects by Facility

39. Keys to Success • Involve the team • Stakeholder Communication Plan - Communicate constantly • Plan properly • Use Metrics and Visibility • Don’t let up

40. Thank you!