by Bill Fallon, Senior Vice President at ASP Global
We’re continuing with our coverage of the recent Chicago ARHMM chapter meeting. This active chapter drew leaders from Amazon and participating health systems.
The audience gained insight from Ed Hisscock, VP, Strategic Sourcing & Informatics/Transformation Officer, Non-Labor Spend, at Trinity Health. Trinity Health spans 22 states with 93 hospitals, and the system is supported with $7.4B in non-labor spend.
Trinity Health’s sophisticated supply chain made a big bet on self-distribution in 2016, with the launch of their distribution hub in Fort Wayne, IN. This investment, granting the health system greater control over the supply chain, reflects Trinity’s strategic approach to supply chain value improvements. Ed Hisscock’s AHRMM presentation gave us a peek “under the hood” at the Trinity team’s thinking, and described recent initiatives yielding big returns for the system.
Trinity’s leaders are keen observers of supplier economics, noting SG&A expenses for their top suppliers. Trinity believes that with the right supplier partnerships, every part of a product’s cost structure can be measured and improved. Like many large systems, Trinity expects transparency and innovation from their suppliers to improve the value of their spend.
Hisscock gave our audience an overview of Trinity’s phased approach to supply chain improvement. Trinity’s improvement initiatives are clinician-led, and linked to multi-million-dollar savings targets or quality improvement, such as elimination of latex from surgical gloves.
With clinician leadership, Trinity has captured impressive savings and quality improvements from the type of clinical supplies that don’t often make headlines. Hisscock shared data on Trinity’s work to achieve quality improvements, SKU reductions and savings in patient slipper socks, using a formulary approach. The Trinity team tackled slipper socks with this familiar tool from PPI and pharmaceutical sourcing, by documenting clinician and patient requirements, then seeking a sourcing partner who could deliver exactly what they wanted at an improved price.
Slipper socks need to meet performance standards for every patient: the fit has to be correct to avoid compromising circulation, and the tread helps minimize the risk of falls. Sock color is used on some units to flag fall risk. Remarkably, Trinity discovered that despite ninety-seven slipper sock SKUs in use across the system, the socks still weren’t exactly right. Feedback from the local Ministries reflected poor satisfaction with the products in use, including complaints about a limited size range and reports of possibly-preventable falls. Spend in this category drifted off-contract as well, with two contracted suppliers in place but eight suppliers used system-wide.
Trinity decided to deploy a direct sourcing strategy for slipper socks, to get socks with the features their clinicians wanted at the best price. ASP Global helped Trinity by serving as their direct sourcing partner and producing socks to their exact specifications. ASP Global ensured delivery of the product to Trinity’s central distribution hub.
By direct-sourcing slipper socks through ASP Global, Trinity reduced the number of sock SKUs from 97 to 32 (reflecting 2 colors in each size), developed a size range to fit all the patients in their population, expanded the safety tread on the sole, and achieved significant savings of greater than 20%.
The quality improvement and cost savings achieved by direct sourcing are available to all health systems – big, small, self-distributing, or not. Because Trinity is a large self-distributing system, they reap additional benefits from SKU consolidation – their warehouse saves space, and their internal distribution channels save resources. But every hospital or health system wins when the supply chain is streamlined and improved. We’d be happy to talk to you about your own “slipper sock strategy”, or the ways that direct sourcing can benefit your health system in other supply categories. Contact us to learn more about how we can help your team to identify the biggest savings and quality improvement opportunities for you, your clinicians, and your patients, at email@example.com.