A Different Plan of Attack

Rick Foelsch has crafted a unique approach to getting SIH hospitals on the same page.

Rick Foelsch is neither misguided nor misinformed. In fact, he is of sound mind and has more years of experience in multihospital settings than most of his peers. Why, then, does he say things like, “People spend way too much time on this physician preference thing.”

Foelsch is corporate director of materiel management for Southern Illinois Healthcare, a three-hospital system based in Carbondale, Ill., one to two hours southeast of St. Louis, Mo. He doesn’t discount the need to address physician-preference items from a contracting perspective. It’s just that he thinks the issue has been blown out of proportion, particularly for an IDN such as his.

Born and raised in St. Louis, Foelsch graduated from Northeast Missouri State College in Kirksville (now Truman State), was drafted in April 1970, received training as an army medic, and served in Vietnam. When he returned in November 1971, he worked in the OR at DePaul Hospital in St. Louis, where he was responsible for ordering supplies as well as helping out in the operating rooms. Two years later, he joined Christian Hospital Northeast-Northwest as manager of central supply; then was promoted to director of purchasing and ultimately, corporate director of material management. He stayed at Christian for 22 years until it merged with Barnes-Jewish Hospital in the early 1990s to create BJC HealthCare. At BJC, he was responsible for laundry/linen, printing, copy machines and all of the 15 BJC affiliate hospitals.

Seeking efficiencies
Seeking more of a strictly materials-management role, Foelsch joined Southern Illinois Healthcare in 1998. He had his work cut out for him. “Even though they were a system, they did not perform as one in the supply chain area,” he says. Each facility did its own purchasing and each had its own storerooms. “There was very little communication between them about supply chain issues. That is why I was hired — to set up a central warehouse and get SIH performing as a system.”

By consolidating three warehouses into one offsite facility, SIH could free up needed space in each of its facilities, and reduce systemwide inventory and FTEs, says Foelsch. Centralizing purchasing, inventory and distribution would also make it easier to standardize on products as an IDN. “All of these things proved to be true,” he says. “We created all the efficiencies, and freed up a lot of valuable space.”

The building SIH selected as its central warehouse was an old indoor soccer stadium, located about two miles from its flagship facility, Memorial Hospital of Carbondale, 15 miles west of Herrin Hospital and 12 miles east of St. Joseph Memorial Hospital. SIH converted the structure into a 15,000-square-foot warehouse — 10,000 square feet for supply storage, and 5,000 for office space. By consolidating inventory and purchasing, Foelsch was able to reduce the number of FTEs in materials from 27 to 12, mostly through attrition. “And we reduced our overall inventory throughout our hospitals by a few hundred thousand dollars.” Today, the warehouse stores about 2,500 products. The three hospitals place their orders electronically, and SIH’s supply truck delivers them by 11 a.m.

In addition to building the central warehouse, Foelsch has worked on standardizing as many products as possible at Southern Illinois Healthcare. Consolidating products into the warehouse and centralizing purchasing made the job easier, he says. So did the Lawson materials management information system that SIH implemented about a year and a half ago. The IDN now uses Lawson for finance, materials management, payroll and human resources.

“We can get much more information on our supply usage than we could with our old system, and that helps us make better-informed decisions,” says Foelsch. “It’s easy for us to put together reports on utilization; and supply cost by department, facility or system. We can pretty much do whatever we want.” The departments also have easy access to reports, so they can monitor their own activities.

But the warehouse and new information system didn’t alleviate the need for the blocking-and-tackling necessary for product standardization. That has called for regular meetings of personnel from materials, nursing, infection control and other departments — a process that is ongoing. “We have a nice big conference room in the warehouse, where we get together,” says Foelsch.

SIH predominantly uses Novation contracts, but belongs to Amerinet as well. The IDN is also a member of a regional VHA group based in Springfield, Ill., comprising hospitals and hospital systems in central and southern Illinois. Occasionally, SIH signs contracts on its own. It recently signed one for pacemakers, and it is pursuing a contract for cardiac stents and leads. “Sometimes you can do a lot better on your own,” says Foelsch.

SIH has standardized on many high-usage clinical items, including IV solutions, needles and syringes, and urologicals, and recently switched vendors of packs and gowns. But standardizing on high-dollar, physician-preference items is another thing.

“It’s not that we don’t want to standardize,” says Foelsch, who knows that if physicians join together behind one product or brand, they increase their leverage with suppliers. “But I’ve been around for 35 years, and there’s too much emphasis on trying to standardize physician items,” he says. “The results you get are not worth all the pain and suffering, from a financial point of view.

“Would we like to be standardized on everything? Yes, but I doubt it will ever happen.” And that’s probably OK, he says. “Keep one thing in mind: When you go to your doctor, wouldn’t you want him to use what he feels is best for you, [rather than] his decision being based solely on cost or because administration said he had to use it? My approach is to get the best possible cost for what the doctor wants, and not to worry too much about what he is using.”

Yes, Foelsch hopes that the SIH physicians can standardize on orthopedic and cardiac implants. “But we’re more concerned about making sure that what we’re paying for a product is a fair and good price, than we are about who uses what.” And the fact is, doctors are much more cost-conscious than ever before. “You still have your mavericks. But for the most part, a lot of doctors are very interested in the products they use and in what they cost.”