Connecting the Dots

Nancy LeMaster and her team have helped BJC build a comprehensive supply chain organization. This means working together with the IDN as a whole to achieve everyone’s objectives.

It’s no small task to transform the material services or procurement function of one of the largest healthcare organizations in the United States into a comprehensive supply chain system. But Nancy LeMaster and her team have done just that at BJC HealthCare in St. Louis, Mo. In addition to 13 hospitals, the health system encompasses two long-term-care facilities and about 60 health facilities, including medical office buildings, behavioral health clinics, diagnostic imaging, mobile imaging, occupational health, physical/occupational therapy and rehabilitation, sleep centers and surgical centers. The health system boasts 27,000 employees and reached a total purchasing volume of $826.4 million in 2011.

In short, nothing is small about BJC – certainly not the job of uniting its many supply chain components. Watching Nancy LeMaster do her job, however, one would think it’s a breeze. In working toward transforming material services into a comprehensive supply chain system, she and her team have intensified their focus on “utilization management and the linkages between the components of the supply chain,” she says. “We have been looking at how we bring value to the organization and link our capabilities with our hospitals and non-acute businesses to help them achieve their strategic objectives. This has required me to spend more time with our various leadership teams, understanding their objectives and connecting the dots on how we can work together to achieve success.”

At the same time, LeMaster has been overseeing a number of initiatives, one of which included taking finance, human resources and supply chain modules of PeopleSoft live last January. “This was the culmination of 18 strenuous months of design work related to people, process and technology,” she explains. “It was much more than an IT implementation. Rather, it was an opportunity to redefine how we do business. As I tell our teams, go-live is just a milestone. Now the real work begins!”

A second major initiative involves an organizational commitment to drastically change the slope of the cost curve related to supply cost and purchased services. “We want to take $212 million out of our run rate by 2015,” says LeMaster. “This will require us to offset a 2 percent volume growth, all inflation and all new technology costs.” Which is why BJC’s supply chain team is so focused on utilization management, she points out. “We can’t make this type of dramatic change without behavior changes.”

Indeed, behavioral changes are most likely to come about through the dissemination of accurate and timely information, LeMaster notes. As such, she and her team will continue to optimize their enterprise resourcing planning (ERP), as well as their strategies for utilizing data warehouses to combine clinical and business information in a physician/clinician-friendly format. “Bending the supply cost curve is a journey – not a project,” she points out. “We need to continue to excel at the basics of supply chain management, while becoming experts in utilization management. We have identified data analytics, communication, change management and project management as the key enablers to achieving our supply chain goals.”

Down the road, LeMaster anticipates working with BJC’s distribution partner to implement a new process designed to consolidate the management of current projects throughout the organization’s 13 hospitals. “In conjunction with the PeopleSoft implementation, we will transition inventory management from individual departments to supply chain, in procedural areas such as cath lab and O.R.,” she says. “BJC is committed to clinical quality, operational excellence and financial stability. Supply chain enables the organization to succeed on all of these fronts. Our data-driven, team-based approach to product and service selection ensures these products and services produce high quality outcomes. Our focus on applying LEAN concepts to our operations assists with achieving our goal of operational efficiency. The collaboration between physicians, clinicians, finance and supply chain drives down the cost of care.”

If her work at BJC has taught her one thing, it’s that for change to occur at any level a team effort is needed. “It’s about the team, not me,” says LeMaster. “

Everyone brings value to the process, and it’s important to understand different perspectives.” Just as important is integrity and trust, she notes. “Trust and relationship building is really the key to making any type of change. At the end of the day what we have is our reputation and so I’d probably rank integrity and trust at the very top. If I were to add one thing it would be the importance of persistence and finesse. Many of the things we are implementing today are ideas the team had years ago, but the organization wasn’t ready or the idea needed to be repackaged. It is important to know when to let something go and come back to it later.”

Total cost
Today, LeMaster sees greater transparency than ever in the industry – a trend she expects will continue to grow. “Health care providers are reporting outcomes data and increasing their transparency, and we will expect the same from our manufacturer partners,” she says. “[Years ago], I envisioned a move from the focus on price to the focus on value. That doesn’t mean price is no longer important, but that we look at the total delivered cost, including things like service and reliability. I think we still have a long way to go to make this a reality, but we are making progress. Many organizations, including ours, are starting to evaluate their vendors on more than price, and including such things as their ability to transact electronically, their back-order rates and on-time delivery as factors in making product decisions.

“The industry as a whole has had difficulty articulating value,” she continues. “In part, this is because of unusual circumstances, where the people judging the quality/service of a product don’t pay the price. In a normal value equation, the decision maker bears the consequences of all aspects of the decision. Going forward, we will have to do a better job of engaging all parties in the discussion and focusing on the ‘and’ – not the ‘or.’ Manufacturers are going to be challenged to provide high quality products and lower the cost of care. This means working together to reduce waste and inefficiency across the entire supply chain. It also means redefining ‘new and improved.’ To do this will take physicians, clinicians, supply chain executives and manufacturers [coming together] at the same table.”

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