Joe Colonna, VP Supply Chain, Piedmont Healthcare - IDN Summit ...

Piedmont Healthcare
IDN Summit
March 21, 2011
Innovating the Physician-Hospital Relationship
Joe Colonna, VP Supply Chain
Piedmont Healthcare

Who is Piedmont
Piedmont
Mountain- Side
Hospital 42 beds
Piedmont Hospital
481 beds
Piedmont Newnan
Hospital 143 beds
Piedmont Fayette
Hospital 143 beds

Piedmont Heart Institute (PHI) and
Piedmont Medical Care Corporation
(PMCC) Locations

Piedmont
Promise

Piedmont Healthcare Vision
VISION 2020
Within 10 years, Piedmont Healthcare will be
nationally recognized as a
Top 10 community healthcare system
where patients want to go for a
superior healthcare experience,
dedicated professionals want to work,
and the best physicians want to practice.

The Supply Chain
Vision:
“The Piedmont Healthcare Supply Chain will be recognized as
national leader in creating value for its organization within 5 years.
Piedmont clinicians and team members know that they will have
the materials they need, when they need them and that their
participation in and support of the Supply Chain will achieve value
for the organization.”

PHC Supply Chain
Guiding Principles
• Expert – Sought and valued as consultants and advisors for our
customers in Piedmont on issues related to purchasing.
• Data-Driven – Producing reliable analytics to guide plans, strategies and
decisions.
• Service-Oriented – Compassionate experts serving compassionate
experts to live the Piedmont Promise in caring for our patients and their
loved ones.
• Sustainable Value – Building lasting relationships with our customers and
vendors to achieve long-term value.
• Strategic – Effectively combines system-owned and–employed resources
with outsourcing solutions to best achieve objectives.
• Empowering – Provides information and incentives to customers to help
involve in decision making and align incentives.

Ongoing and New Challenges
Ongoing
• Ensuring all personnel have access to quality products
at the most competitive prices
• Minimizing the financial impact of new and often more
expensive devices
• Identifying and maximizing supply chain process
efficiencies across the organization
• Continuing to reduce cost of goods
New
• Maximizing the new ERP system (reengineering
processes)
• Reducing variation in processes and products
• Driving system wide accountability to the supply unit
level

The problem is that we not bailing as
fast as we are filling
$ DEVICE COST $

And how do we predict
what is coming next

Accountability at the spend
level

Typically in healthcare, we look behind
us for opportunities
Warning: opportunities may seem
larger then they appear

Should we be looking where we are
going instead

The answer is both…..
It is a ongoing dialogue not
a monologue

Example of early success…
• Physicians asked to support cost savings initiative in CRM
• Initially we tried a Capitated approach but physicians
uncomfortable with potential vendor eliminated
• We asked” “What can you support”
• Fy 2009 – Created New Contracts with CRM Product suppliers
– Vendor A = 40%
– Vendor C = 40%
– Vendor B = 15%
– Other = 5%
• Realized Annual Savings = $2 Million
• Physicians successfully managed, every quarter to the 40/40/15
model
– This sent a strong message to our business partners
• This process caused each physician to try
something new

But it was not enough
• What Changed
– Healthcare Reform Act – Impact in Fy2011 unknown
– GA Legislators pass Hospital “fee” w/Governor’s Support =
$9 to $10 Million Loss for Piedmont in Fy 2011 and again in
each of the following 2 years
• Piedmont Leadership looking to all areas for immediate cost
reduction opportunities
– Supply Chain tasked to look for greater savings
– CRM spend projected at $17 to $20 Million (largest single
category of supply spend)
• Analyst showed potential for additional cost reductions

Benefit of physician buy-in
• Goal: Save $2 million in CRM costs
• Physician leadership in the form of a Medical Director of Supply
Chain for Cardiology
• Working with physicians, we decided to commit a greater market
share to less business partners
– 85% of business went to two business partners
– Vendor A went from 40% to 55% of market
– Vendor B went from 15% to 30% of market
– Vendor C went from 40% to less then 15%
• This was driven by the comfort level of our physicians and
ensuring quality outcomes
• This model did not offer the most savings’
• We still achieved $2.4 million

Tracking and self-management
VENDOR A
Target: 55%
VENDOR B
Target: 30%
Physician Target Spend Actual Spend Variance
% of MD's Total
Spend
Target Spend Actual Spend Variance
% of MD's Total
Spend
Physician $ 5,016 $ - $ (5,016) 0% $ 2,736 $ 900 $ (1,836) 10%
Physician $ - $ - $ - 0% $ - $ - $ - 0%
Physician $ - $ - $ - 0% $ - $ - $ - 0%
Physician $ 345,318 $ 354,318 $ 9,001 56% $ 188,355 $ 213,175 $ 24,820 34%
Physician $ 116,607 $ 119,173 $ 2,566 56% $ 63,604 $ 33,550 $ (30,054) 16%
Physician $ 99,340 $ 71,784 $ (27,556) 40% $ 54,186 $ 52,475 $ (1,711) 29%
Physician $ 319,446 $ 320,063 $ 617 55% $ 174,243 $ 204,990 $ 30,747 35%
Physician $ 186,167 $ 171,896 $ (14,271) 51% $ 101,546 $ 110,425 $ 8,879 33%
Physician $ - $ - $ - 0% $ - $ - $ - 0%
Physician $ 408,969 $ 382,598 $ (26,371) 51% $ 223,074 $ 244,830 $ 21,756 33%
Physician $ 365,197 $ 330,756 $ (34,441) 50% $ 199,199 $ 185,705 $ (13,494) 28%
Physician $ 24,676 $ - $ (24,676) 0% $ 13,460 $ 29,040 $ 15,581 65%
Physician $ 246,464 $ 331,603 $ 85,139 74% $ 134,435 $ 62,745 $ (71,690) 14%
TOTAL $2,117,200 $2,082,191 $ (35,009) 54% $1,152,101 $1,137,835 $ (15,166) 30%
54% 30%

On the other hand…
When physician support is not there:
• Spine implants project
– Goal: $1.6 million
– Outcome: $716k
• Orthopedic implants project
– Goal: $1.5 million
– Outcome: $500k
We are working through these relationships

What are the differences
When we had support
• Employed
• Physicians owned the
process
• Physicians understood
their role/impact on the
organization
• High degree of executive
support
• Key physician champion
• SC acted as facilitator
When we lacked support
• Not employed
• Physicians had little
interest in support
• They did agree not to
“hurt” the process
• “What’s in it for me”
• Struggled with political
issues
• SC did all the heavy lifting

Teamwork: We
need each other to
succeed
“The way a team plays as a whole determines its success.
You may have the greatest bunch of individual stars in the world, but if
they don't play together, the club won't be worth a dime.”
- Babe Ruth

As you work with the physicians, it is important to have
achievable goals based on your abilities

And to be optimistic, realistic and humble

THANK YOU