IMPLEMENTING HIGH VALUE PROCUREMENT MODELS AND STRATEGIES Chliakhtine_0.pdf · IMPLEMENTING HIGH VALUE PROCUREMENT MODELS AND STRATEGIES Health Procure 2015 Melbourne – 17-19 February

IMPLEMENTING HIGH VALUE PROCUREMENT MODELS AND STRATEGIES

Health Procure 2015 Melbourne – 17-19 February 2015

A snapshot of who we are and where and aspire to be

Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes 2

At Health Purchasing Victoria (HPV) we help public health care services deliver high quality

patient care by ensuring they have a reliable and agile supply chain.

We do this by:

Partnering with them to organise collective contracts for the things they buy.

Providing advice and education on how to get their supply chain working at its best.

Ensuring Victorian Government health purchasing policies are complied with.

Who is Health Purchasing Victoria?

HPV Core Functions Health Services Act 1988


1. To supply and facilitate the supply of goods and services

2. To provide Advice and Support

1. Foster Improvement in use of systems and e-commerce

2. To maintain useful data and share with health services

1. To ensure probity is maintained in the purchasing, tendering and contracting of public hospitals

2. To monitor Compliance

• $cost reduction benefits delivered

• Procurement Reform (RPA) support

• Victorian Product Catalogue System

• Recallnet

• Strategic Sourcing Suite

• Development of a policy and probity compliance framework for health services

Our Customer Base (mandated health services)


Health Purchasing Victoria | Achieving best-value supply chain outcomes for Victoria’s health sector 6

HPV Category Management Streams


Me

dic

al E

qu

ipm

en

t

Indire

ct M

ate

ria

ls a

nd

Se

rvic

es

Me

dic

al C

onsu

ma

ble

s a

nd

Ph

arm

aceu

ticals

Orthopaedic Prostheses

Pharmaceuticals

Surgical Instrument sand Laparoscopic

Trauma Implants

Heart Valves

Dressings and bandages

Gloves

Radiopharmaceutical

Continence Management

Wound Care

Clinical Protective Apparel l

Interventional Radiology

Interventional Cardiology

Enteral Feeds

Agency Labour

I language Services

Waste Management

Pathology Services

Catering Supplies

Office Requisites

Utilities

Chemical Products

Hand Hygiene

-----------------

Non-Emergency Patient Transport

Radiology Services

Linen Services

Defibrillators

Monitoring Equipment

Beds and Mattresses

Haemodialysis

Infusion Pumps

------------------Medical Imaging

Pathology Equipment

Ventilators

Equipment Maintenance

Maturity Development Growth

• Understanding spend

• Standardisation Service

requirements

• Leveraging collective

procurement efficiency

• Category management

• Rationalisation and process

improvement

• Managing supplier performance

HPV Key outcomes


Analysing the evolution of the procurement environment in the healthcare sector


Group purchasing evolution


Late 90s

Hospitals

go it alone

Supply

Early 2000s

Group

contracting

(Lower)

Price

20-teens

Contracting,

Analytics

‘Consulting’

Value

The future?

Cost-

Quality

Outcomes

Solutions

The Evolution of HPV as an organisation

2001-2006

Health Act

creating the organisation

Med-cons /Pharma focus

“low cost, high volume”

5 Employees

2007-2012

Expansion into general consumables and services.

Strategic Plan 2012-17

Organisation growth from 12+ Employees

Strategy Plan 2012 - 2017

On-going delivery of the strategic plan

>Procurement Reform

>Medical Equipment

>Re-organisation streams

Supply chain

>Capacity and Capability (65+ Employees in 2015)

>Investment on information enablers (data)

>Support sector con the compliance framework


Continue to Build Excellence - Enablers

>Single integrated supply chain organisation

>single system (HPV and health services as a system

>High level of efficiency

>Unlocking full value for the sector

>Building strong relationships customer and suppliers

>Sustainability Focus

talented organisation

Market sustainability

Key Deliverables

• Value delivery

• Bringing every year additional spend under collective

procurement

• Category Management of $625M+ spend..


Director Procurement

IMS

(HOS)

Medical & Pharma (HOS)

Equipment (HOS)

Sourcing Operations

The Procurement Team

HOS = Head of Sourcing

• 30 Staff

• SCM/CM/CO and SME

Key Deliverables – Support across

all l sourcing streams

• VGPB reform internal roll out

• Process efficiency e-sourcing

• change management

• Build internal capacity and

capability

• Drive NPC/VPC/RecallNet

compliance

The Procurement Reform – Key Enabler To Innovation/Efficiency/Excellence

• Key Aspects of Procurement Reform

Change from the threshold procurement (greater than $150K –

RFT) to strategic sourcing

Adoption of category management

Long range sourcing plans – Traditionally HPV worked on an

annual sourcing plan


1. Set up

project

2. Approve

the plan

3. Build

policy

4&5. Build

strategy &

plans

6. Build

organisation’s

skills

7. Success!

Transition

approved.

Dec 2014

Early 2015

June 2015

Dec 2015

June 2016

Victorian health supplier ‘musts’

Support GS1 data standards through

National Product Catalogue (NPC) and

Recallnet

Goods approved by TGA

Ability to meet the specific (& diverse)

operational needs of health services

Understand two-way nature of Supplier

Relationship Management process


[email protected]

[email protected]

mailto:[email protected]

mailto:[email protected]

Past (a reminder of Evolution)


Old hospital Materials Management model

Purchasing

• “place and chase” orders

Stores

• receive and deliver

Health Purchasing Victoria | Achieving best-value supply chain outcomes for Victoria’s health sector18

Innovation..Evolution and..Complexity


http://www.google.com.au/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://science.howstuffworks.com/mri.htm&ei=Ck_iVIjLH4iD8QX1nIAw&bvm=bv.85970519,d.dGc&psig=AFQjCNEBDhHl3CGYhEILMeeKUgn0gu8CUw&ust=1424203913167691

http://www.google.com.au/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.sodahead.com/living/amazing-advances-in-medical-robotics/question-1479539/&ei=DFDiVPa2AYmB8QW654FY&bvm=bv.85970519,d.dGc&psig=AFQjCNFUs90tfbbnBjFJmDWYtkALISC7mw&ust=1424204057040389

http://www.google.com.au/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.topnews.in/man-held-manufacturing-selling-spurious-drugs-2246813&ei=9VHiVOqWKYrf8AXZ1oJw&bvm=bv.85970519,d.dGc&psig=AFQjCNH9Ga73eoKIrC9kBLG1SZ0zOToSWg&ust=1424204540816237

Evaluating current health procurement

trends and challenges


Innovation? Technology/Process Delivery of Patient Care


Supplier

Technology

Process

Innovation

Service

Innovation

Market

Dynamics

Sustainability

Legislation

Policies

We are making changes to Procurement..such as


Capability and Culture

• Embrace Category Management framework as it does delivery on-going contract value.

• Staff development and retention

• Learning and Development Strategic Cost Management

• Category Management

• Supplier Relationship Management

• Negotiation

• Governance

• Contract Law

Category Management

Structures and Systems

• Victorian Product Catalogue

• More interactive Website

• Recallnet

• Knowledge Management

• Strategic Sourcing Suite

• E-sourcing

• Supplier Management

• Contract Management

• Zendesk (customer interface)

• Organizational Efficiency

Price

Utilization Cost

Standardization

Demand Mgmt

Labour Productivity

Maintenance

Shrinkage

Damages

Waste

Disposal

Recall Mgmt

Revision Procedures

Infection Rates

Etc.

Supplier Relationship Management


Quarterly or Monthly Strategic Forum

(Management Executive Leadership Team)

(Contract Management Review – Top 20)

Monthly Operational Meeting (Critical Suppliers)

Driving Supply

Strategy and

identification of

further supply

chain

opportunities

Driving

Contractual

performance and

value

optimisation

throughout the

contract life

Service/Cost

improvement

Monitoring

Feedback to HPV

Strategic

Business

Directions and

Industry

Dynamics

HPV Leadership Team

Heads of Sourcing

Supplier Account Manager HS Representatives

Senior Category Managers

Key Themes in the HPV Category Management


External:

1. Buy Local

2. Regional market

sustainability

3. Ethical procurement

4. Currency

5. Innovation

6. Global Inter jurisdiction

benchmarks

Sustainability

Buy Australia First

Category

Management

Ethical Procurement

Supply

Chain

Efficiency

and Risk

Process

Governance

Sharing

Benchmarked

data

Local

Employment -

Regional Areas

Supply Chain

Efficiency

Internal (Sector/HPV):

1. Greater expectations from

stakeholders (individual HS

business priorities)

2. Greater process efficiency

3. HPV contract performance

(order efficiency )

4. Monitoring of our response

to queries (supplier and

health services) - Zendesk

5. Sharing and Collaborating

with other Sectors

Exploring and designing future models and

strategies


Unlocking Value Beyond Price

• Uncovering cost of quality

• Supply chain costs

• Over-specification (Fit for purpose)

• Duplication

• Operational Efficiency

• Administrative costs

• Supply security

• Cost of Service

• (Do we really need it next day

tomorrow?)

• Do we know the cost of servicing?


Procurement efficiencies

centralise procurement,

purchasing, accounts

payable


On-Going Value Delivery

Time

Strategic Sourcing Value

Contract Start Date

No Supplier Relationship

Management Program

Supplier Collaboration

Supplier Performance

Management

Nir

van

a

Lo

st

Valu

e

“75% of sourcing savings can be

lost within 18 months without

SRM” - Geller & Company Survey

24

GLOBAL INNOVATION IN PROCUREMENT

• France: Pre market process, online portal for suppliers to submit ideas which are preliminarily evaluated

• Canada: annual ranking of ideas that have been submitted and reviewed by a panel to say "here are the top ten ideas"

• EU: initiative for healthy aging with France, UK, Italy, Belgium, using tool to submit via online portal

• Incentives for customers - need to understand innovation is often disruptive, what are key drivers for the clinicians

• Role of GPOs in innovation - not a bystander or inhibitor


Supply chains & sustainability

Procurement is the interface between end-user and suppliers

Can be a barrier to improving sustainability

Can be an enabler of action towards sustainability

Ingredients to Success


Invest to succeed

Attract & Retain

Supply Chain

Talent

• Learning and

development

strategy

• Succession Planning

• Attract and retain

talent

• Make HPV the

employer of choice

Standardisation

, common systems,

eCommerce,

eProcurement,

• Drive compliance

Victorian Product

Catalogue

Compliance to

RecallNet Process

Standard invitation

to supply (ITS)

Capture in a

standard data

product

performance.

Data is Critical

Transactional data

Benchmarking

Evidence

• Market Data

• Clinical performance data

• Customer Service

• DIFOT

• Currency/Material movements

• Other index movements

• Benchmarking data

• Cost of Service

• Cost of care

Category Vision (Victoria Leader in Medical Imaging Sourcing)

Critical Issues being Addressed

• Streamline sourcing process (remove

duplication)

• Provide transparency around

Purchasing and Efficiency Life Cycle

Costing evaluation

• Fit for purpose – accurate

specifications

• Provide Access to latest technology

and capture innovation

Strategic Framework:

• Standardised Terms and Conditions

• Access to product details in consistent

format

• Establish Category Management Group

• Single source of data for benchmarking

• Opportunities for further savings

(BETA, Reference site etc)

• Open framework to drive Innovation

• Interface with the DHHS on key issues

of asset planning and maintenance

Move from Focused

(Today)

To Strategic

(Future)

A data vision

Point of Use Capture

Actual Cost of Products/

Procedures

Supply Chain Management

Patient Record

Comparative Effectiveness Outcomes-Based Analyses (e.g., Registries)

Sourcing Beyond Price

Reporting and Budgeting

Cycle

Recall Management/ Product Quality Surveillance

Clinical Product Evaluation Unit (Vision)


Purpose

• Promotes evidence based practice and research

• Capture of product performance via standardised report from CPAs.

Activities

• Lead clinical product evaluations and product substitutability

• Collaborates with clinicians

• Consolidate product evaluation data to share amongst health service

Benefits

• Identify market dynamic opportunities

• Minimise product evaluation duplications

• Standardise product evaluation standards

• Revise contract product list based on clinical performance

• Bring evidence based data into the sourcing evaluation process

Clinical product evaluation and research is the cornerstone in the

evaluation of product substitution. HPV is in the process of a business

case to develop a CPEU.

Some key themes


Global

markets

Profession

-alisation

Beyond

Price

Shared

services

Equipment

lifecycle

Disruption

Sustainable Procurement role

Sustainability of supply chains

Healthcare Sector

Sustainability

Agriculture

Society

Climate

Biodiversity

Water

Health

Local

Communities

Natural

Resources

Economy

Commerce &

Industry

Pollution

Developing

countries

Wastes


Building the link between suppliers and Health

services that enables excellence in Patient Care


Level 34

Casselden Place

2 Lonsdale Street

Melbourne 3000

T: 03 9947 3700

F: 03 9947 3701

[email protected]

www.hpv.org.au

IMPLEMENTING HIGH VALUE PROCUREMENT MODELS AND STRATEGIES Chliakhtine_0.pdf · IMPLEMENTING HIGH VALUE PROCUREMENT MODELS AND STRATEGIES Health Procure 2015 Melbourne – 17-19 February

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