The Fully Funded PeopleSoft Project : Funding your ERP Project with Non-Labor Cost Savings

© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.

The Fully Funded PeopleSoft Project Funding your ERP Project with Non-Labor Cost Savings

June 24, 2014


Agenda

Introductions Overview Transforming Enterprise Systems Reducing Non-Labor Spend The Fully Funded ERP Initiative

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Introductions

Don GreenwoodSenior DirectorOrlando, FLP 312-583-8253F [email protected]

Jason MoebiusManaging DirectorChicago, ILP 312-583-8759F [email protected]

Jason has a deep knowledge of the healthcare industry and large scale technology projects, with more than ten years of experience assisting hospitals and universities implement business critical applications. His technical expertise lies in implementing PeopleSoft and research administration applications

EXPERTS IN THE AREAS OF HEALTHCARE AND ENTERPRISE SYSTEMS

Don has over 25 years of healthcare supply chain medical and pharmaceutical supply chain operations, financial, general management, advanced logistics distribution experience, including executive leadership roles with several of the nation’s largest wholesale distributors.

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OverviewFUNDING YOUR ERP PROJECT WITH SUPPLY CHAIN TRANSFORMATION

Large systems projects are an opportunity to dramatically improve business processes, increase efficiency, and improve the end user experience.

In today’s economic reality of tighter budgets and rising costs, some organizations are forced to put off systems projects.

However, by simultaneously undertaking a supply chain transformation savings initiative that will reduce procurement and services costs and streamline processes throughout the organization, organizations can achieve the Fully Funded PeopleSoft Project.

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Sustain and Extend Procurement SavingsSUPPORTED SUSTAINMENT WITH ERP AND BUSINESS INTELLIGENCE

Institutionalize improved processes

Configure system to enforce new savings

Utilize BI to monitor and extend contract pricing and find new opportunities

Maximize EDI deployment to generate efficiencies and potential discounts

Optimized workflow

How we achieve additional savings:Sustained Improvement and Increased Value over Time

0ERP Installation

*Note: Additional sustainment savings are possible through implementation of Business Intelligence

ERP Sustainment with Supply Chain Transformation (SCT)

ERP Implementation

Time

Value/ROI Attainment

SCT with Huron assistance

SCT without Huron assistance

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© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 6

About Huron Consulting GroupHuron provides services to a wide variety of organizations, including leading academic institutions, healthcare organizations, Fortune 500 companies, medium-sized businesses and law firms.

Huron Consulting GroupHuron Consulting Group History Formed in March 2002 by a core group of

experienced financial and operational consultants, including CEO and President Jim Roth.

2,237 consultants company wide, and approximately 50% consultants comprise Health & Education Consulting practice.

We have conducted more than 11,000 engagements for over 4,100 higher education, public sector/government, and commercial clients.

LocationsAtlanta | Boston | Charlotte | Chicago | Dallas | Detroit | Houston | London | Los Angeles | New York | San Francisco | Tokyo | Washington, DC

Our Value Proposition Focused and integrated - financial and

operational consulting – implementation service provider

Combination of deep functional and industry expertise

Independence and objectivity

Working with Huron, institutions can experience dramatic transformation across the entire organization. We partner with institutions to help them become better positioned to achieve strategic and financial goals, compete for scarce resources, and plan for the future.


Huron Healthcare is the largest performance improvement consulting firm to hospitals, with almost 1,000 professionals

Non-labor practice has over 120 professionals Specialist model with highly experienced consultants We evaluate 85% of cost structure and 100% of

revenue Non labor has a 100% success rate achieving targets

on integrated projects and averages 149% to low end target

Collaborative and flexible - We fit into to your organization – we don’t try to fit you into our organization

Tools, sustainability and knowledge transfer (front-line manager focus)

Speed, certainty, sustainability

Huron’s Background and Approach

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Transforming Enterprise Systems

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Huron ERP Practice

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Over 100 PeopleSoft professionals with wide-ranging expertise in all PeopleSoft applications

Platinum member or Oracle’s Partner Network

Experience in more than 90 large-scale PeopleSoft ERP planning, implementation and upgrade projects in Financials, Grants, eProcurement, HCM and Campus Solutions

Active implementation and upgrades in every major pillar of PeopleSoft

Current healthcare engagements with HCM and Financials PeopleSoft suites and over a dozen Healthcare ERP clients

Partnered with Oracle Development for continuous improvement initiatives and testing with the Grants suite, Labor Distribution and Procurement

ERP Service OfferingsIMPLEMENTATIONS, UPGRADES, ASSESSMENTS, AND QUALITY ASSURANCE

New ERP Implementations

ERP Upgrades

Implementation Quality Assurance

Post Implementation/Process Improvement

IT Strategy Roadmap and Governance

Optimization and Cost Reduction


Enterprise Transformation | Building Solutions That LastThe Pillars of Huron Enterprise Transformation:

Business Process Transformation, which capitalizes on our deep healthcare and change management expertise

Process Focused ERP Implementation directed with rigorous project management and focused on redesigned process and optimized supply chain

Optimal Integration with Clinical Systems through best practice based interface and process design

Sustainment and extension of Non-Labor savings through a coordinated implementation effort, which will involve members of our non-labor practice with detailed knowledge

Flexible Chart of Accounts design based on Healthcare best practices and reporting requirements

Focusing on Partnership and Shared Responsibility through achieving broad based buy in and realization of project goals

Business Process Transformation

No

n-L

abo

r Efficien

cies

ER

P Im

plem

entatio

n

Clin

ical System

s

Op

eration

al Efficien

cy

Ch

art of A

ccou

nts

Enterprise Transformation and Return on Investment

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Huron ERP Implementation Approach

Phase 1

Initiate

Phase 2

Analyze

Phase 3

Design

Phase 4

Develop

Phase 5

Test

Phase 6

Implement

Phase 7

Support

T

Technical IT Support

Project Management

Organizational Readiness

Data Conversion

Business Process Redesign

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We assist organizations through successful technology transformation and implementations across a wide variety of large, complex initiatives through collaboration – by working side by side with our clients, sharing accountability, transferring knowledge, and helping transform the culture to embrace and sustain lasting change. The benefits of our methodology and approach include the following:

Result-focused. Measurable. Flexible. Reduces risk. Tools streamline the process. Facilitates consistent, overall quality.


Implementation vs. InstallationImplementation Success Defined:

Installation does not equal Implementation

Installation

Implementation

On Time On Budget Technical Objectives met

Business Objectives met Human Objectives met


Change Management Methodology FrameworkPHASES & PERSPECTIVES

Communication Change Readiness

Business Process Impact

Organizational Context

Assessment

Value Attainment Training

Huron’s Change Management Methodology is comprised of 5 phases, and throughout each phase, we address 6 inherent perspectives.

Recognizing that organizational change is actualized and institutionalized through the individual organizational members.

Phase 1Identify

Phase 2Assess

Phase 3Design

Phase 4Engage

Phase 5Support

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Transforming the Supply Chain

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© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.15

Huron Non-Labor Solution Results 100% of the time. We quickly sort through clients’ unique problems and set

priorities to implement results right away. Repositioning a hospital’s non-labor costs for long-term

success is our goal.

Non-Labor consultant leaders are senior level experts with an average of more than 20 years of experience.

We have a great depth of clinical and purchased service specialty expertise. Clinical breadth: Peri-operative, Critical care, ED,

General medical, Cardiology, Laboratory, Pharmacy and others

Non-clinical breadth: Food, EVS, Facilities, Support services, IT/telecom, Administrative services, Clinical services and others.

We are completely independent from any GPO, distributor, manufacturer, HR broker, or IT vendor whose interests and goals may not be aligned with our clients.

Our work focuses on more than just contracting/sourcing. Additional savings include utilization, standardization and contract maximization.

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Implementation Focus

Senior Level Expertise

Specialist Focus

Independence

Comprehensive Focus


Key Success Factors of Performance Improvement

Client-driven with appropriate support

Continual communication to staff and other stakeholders (formal plan)

Strong executive support and involvement (same page)

Clear vision and broad perspective

Speed to execution (keep momentum)

Build infrastructure for

sustainability of results and constant improvement

Measuring, monitoring and sustaining performance

Message: Opportunity identification is a good thing, not an indictment of the past

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Project ApproachASSESSMENT SCOPE

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Sourcing

Contracting

ProcurementDistribution

Value Analysis

Supply Chain Functional Areas Reviewed

Key Aspects Reviewed

Organizational Structure

People

Process

Technology

Performance Metrics

Assess roles and responsibilities, reporting and alignment that optimize the organization’s current resources

Evaluate of staffing levels, training and onboarding processes that enhance staff’s capability to execute and deliver services

Map workflow of each key supply chain function that enable effective delivery of services to key customers and end-users

Assess technology utilized to support the delivery of services across all supply chain functional areas

Analyze key supply chain performance metrics that provide accountability for the organization

Vision and Strategy

Review vision and goals that provide strategic direction for the organization to achieve the hospital’s overall mission

Organizational Structure


Non-Labor AssessmentProvides the most comprehensive approach to non-labor cost reductions in the industry. Our approach is broader, we uncover more opportunities for cost savings and efficiencies, and we work collaboratively to implement them quickly.

Distributor RelationshipsPerioperative/OR

CardiovascularMedical Surgical

PharmacyFoodLab

Cath Lab Interventional Radiology

LinenOthers

Supplies Services

GPO RelationshipBiomedicalPharmacyFacilities

LabEnvironmental ServicesInformation Technology

TelecommunicationsReal Estate Leases and

RentalsTranscription

Others 18


Purchased services is broadly defined as any purchased, contracted or outsourced service across all functional areas of a health system.

Identification of PS Cost Reduction OpportunitiesExamples of Purchased Services Spend Categories

Clinical EngineeringEquipment Service InsuranceOutsourced ManagementService Contracts

Clinical ServicesBed/Clinical Equipment RentalDialysisLaser RentalsLaundry and LinenLinen Items CostLithotripsyMedical GasesMRI/PET CT Perfusion Pharmacy Purchased Services Pharmacy 340B Employee PrescriptionsRehab CareRemote Radiology

DistributionIn/Outbound Freight

Med/Surg DistributionPostage/Bulk MailEnvironmental ServicesHousekeeping SuppliesOutsourcing AgreementsPest ControlPlant & Aquarium MaintenanceSharps DisposalShredding ServicesWaste-HazardousWaste-MedicalOff-site Cleaning

FacilitiesElevator MaintenanceEnergy ConservationFacility LifeLandscapingLease AuditProperty ManagementSecuritySpace ConsolidationSuppliesInsurance – PropertyUtilities

Financial ServicesBank Card AP Payment SolutionBanking FeesCorporate CardPurchasing Card

Food ServicesCateringFloor Stock UtilizationFood CostRetail Revenue EnhancementVending Rebates

Information ManagementAnswering ServicesCodingMedical TranscriptionRecord Storage & RetentionRelease of InformationTranslation Services

Marketing & AdvertisingOverall Spend

Advertising MediaCall CentersCommunity NewslettersCreative AgenciesDonationsMedia BrokersOn-line Health InformationPatient EducationPromotional ProductsWebsiteYellowpages

Office Related ProductsCopiers & Multi-Functional DevicesFurnitureOffice Supplies & TonerPrinter MaintenancePrinters & FaxPrinting & Forms

Professional Orgs & MeetingsDuesTravelArchitects

Audit, Tax & ComplianceLegal ServicesManagement ConsultingRevenue Cycle & CollectionsTemporary Labor

TelecommunicationsConference ServicesData Network – WANInternetLocal CallingLong Distance CallingMaintenanceMove/Add/Change/DisconnectNetworking EquipmentPagersPBXTelecom Expense ManagementTelevision ServicesWireless (Cellular)

TransportationAmbulatory ServicesHelicopter Services

Local CouriersParkingShuttle ServicesValet Services


Screening

Drop /Postpone /Reassess

Category Prioritization

Notes: Size of Circles = Typical Area Spend relative to size of organization. Based on healthcare client experience.

Opportunity Plot

Contract Term

TimeframeTo

Implement

Initiative Synergies

Success Enablers

Time to Implement

Cate

gory

Com

plex

ity

Shorter Longer

Low

Hig

h

Clinical PS

Collection & Compliance

EVS

Food Services

HIM

IT

Lab

Legal Services

Office Related

Staffing & Recruiting

Telecom

Clear Vision Organizational

Commitment Broad Perspective Cross-functional

teams Performance

Measures

MULTI-DIMENSIONAL REVIEW - ILLUSTRATIVE


TacticsOpportunities Huron Support

Cost Reduction

Utilization

Outsourcing / Insourcing

Standardization

Process Improvement

Buying Power Leverage

Evaluate supplier costsObtain lower cost from incumbent supplierConsider alternate supplier(s)

Concentrate volumeSystem wide coordination

Decrease items usedChallenge product variabilitySimplify specifications to reduce cost

Reduce usageFind alternative ways of fulfilling needTotal cost of ownership

Eliminate process wasteIdentify technology leverage opportunitiesImprove Value Analysis functions

Objective make-vs.-buy decision processBenchmark internal functions vs. market

- Policy and procedures- Analytical support- Development, management and

analyses of RFPs- Prioritized plans- Clearly defined clinical and

business cases - Thoroughly planned negotiation

process- Savings measurement tool- Knowledge transfer- Sustainable annual savings

Multi-Tiered Savings ApproachSAVINGS LEVERS; MORE THAN PRICE


Non-Labor ResultsIMPLEMENTED RESULTS ACHIEVED 100% OF THE TIME

Actual Implemented vs. the Project Goal



Lost Time and Savings

Time

Opportunity toImplement Cost

Savings Initiatives

6months

12 months

18months

24months

25%

50%

75%

100%

With Huron Healthcare assistance – expect 100% initiatives to be implemented in 6 to 10 months

Self-implementation results: less than 35% implemented in 24 months

Non-Labor ResultsRetrospective studies of clients who choose to self-implement show much lower achievement of savings and typically longer timeframes. On the other hand, Huron has never failed to reach our targets on any engagement and typically does so within 6 to 10 months.

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Healthcare Non-Labor Cost Reduction Experience Los Angeles - Non-Labor, Clinical Operations and Clinical Documentation Improvement. Implemented over

$7.0M in recurring non-labor savings, original target was $5.5M . Overall project implemented $39.3M in annual benefit.

Houston, TX - Non-Labor, Labor, Clinical Documentation Improvement, and Physician Services. The Non-Labor target range was $8.8M as the threshold and $12.8M as a stretch target. The project achieved over $17.0M of implemented Non-Labor annual benefit.

Dallas, TX - Non-Labor, Labor, and Clinical Operations Solutions. The Non-Labor target range was $12.5M as the threshold and $14.8M as a stretch target. The project achieved $16.4M of implemented Non-Labor annual benefit.

Cincinnati, OH – Assessed the organizational structure, duties, skill sets and duties of the supply chain organization as well as the effectiveness, timeliness and cost efficiency of their processes. Huron assisted to facilitate the reorganization of their supply chain department, redesign key processes, and implement a value analysis program to drive cost savings.

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The Fully Funded ERP Initiative

25


Sustain and Extend Procurement SavingsSUPPORTED SUSTAINMENT WITH ERP AND BUSINESS INTELLIGENCE

Institutionalize improved processes

Configure system to enforce new savings

Utilize BI to monitor and extend contract pricing and find new opportunities

Maximize EDI deployment to generate efficiencies and potential discounts

Optimized workflow

How we achieve additional savings:Sustained Improvement and Increased Value over Time

0ERP Installation

*Note: Additional sustainment savings are possible through implementation of Business Intelligence

ERP Sustainment with Supply Chain Transformation (SCT)

ERP Implementation

Time

Value/ROI Attainment

SCT with Huron assistance

SCT without Huron assistance

26