Medical Miracles, Material Miracles

For Rush University Medical, good information and good relations are critical in maintaining care standards.

In academic medical centers, medical miracles take place every day. But behind those miracles lie some complicated logistical and contracting issues.

Rush University Medical Center on Chicago’s Near West Side is no exception. It encompasses a 613-bed hospital, a 61-bed geriatric hospital and Rush University, home to one of the first medical colleges in the Midwest as well as a nursing college. The IDN’s total operating revenues exceed $1 billion. It spends $143 million annually on medical supplies. Its annual capital budget is approximately $100 million.

In such an environment, a couple of things are critical – good information and good relations between administration and the clinical staff. Assistant VP of Hospital Operations Mike Mulroe is working to ensure that both exist at Rush.

Line of public servants
Mulroe grew up in nearby Gary, Ind. A graduate of the University of Indiana, he always had an interest in healthcare. His sister is a nurse and former ICU director. He also comes from a long line of public servants; his father was a firefighter and his mother a grass-roots politician. “I’ve always felt that healthcare was a good field for me in terms of using my business skills and, in a roundabout way, serving the community,” he says. Indeed, he may have found a suitable home at Rush, which sponsors several community outreach programs, including the Science and Math Excellence Network, a public-private partnership designed to improve the science and math skills of inner-city kids.

But Mulroe didn’t begin his career in healthcare. Rather, he was a buyer for Marshall Field’s (now Macy’s), an upscale Chicago department store chain. While there, he gained valuable P&L experience, as well as experience negotiating contracts, managing inventory and working with advertising. Ultimately, he moved into a systems role for the company. “That gave me an appreciation of how systems can support end users,” he says. While at Marshall Field’s, he earned a master’s degree in business administration from Indiana University.

After earning his MBA, he began his healthcare career as a buyer at Methodist Hospitals in Northwest Indiana. Two years later, he moved north to Northwestern Memorial Hospital in Chicago, first as manager of inventory management, then purchasing manager, and finally, as director of materials. He spent seven years at Northwestern, the last five as director.

In 2002, Mulroe left Northwestern and spent a year consulting for Capgemini. One of his clients was Rush. He left the company to become Rush’s director of purchasing in the fall of 2003. Recently, he picked up responsibility for pharmacy and clinical engineering.

As associate VP of operations, Mulroe has responsibility for the Medical Center, Bowman geriatric hospital, several clinics, the University and its research arm.

Seeking information
Three years ago, when Mulroe joined Rush, the Medical Center was finalizing a crucial decision to sign an agreement with MedAssets for group purchasing and other services. The key factors that led Rush executives to choose Alpharetta, Ga.-based MedAssets were 1) its technology offerings, and 2) Aspen Healthcare Metrics, a national clinical-service-line consulting and benchmark data provider.

Rush has lacked an enterprise resource planning (ERP) system, making it difficult for materials and contracting executives to get their arms around solid spending data, explains Mulroe. MedAssets offered “strategic information tools,” allowing Mulroe and his staff to collect system-wide data, aggregate it and examine it in a “rational format,” he says. “We can pull spend information and use it to prepare RFPs fairly quickly, so we’re not using our time and [information-processing] resources to pull this information together.”

The technology also allows Mulroe to compare contract prices to invoice prices, “to make sure we’re actually paying the prices we should be, based on our contracts.” His department can also compare prices for the same or similar items across all of Rush’s facilities, to ensure that all are paying the same price.

Aspen, meanwhile, gives Mulroe access to a national database of pricing on physician-preference items, with which he can benchmark his own IDN’s performance. “It has really helped us target our price points,” he says.

Another MedAssets offering – Avega Health Systems – offers Rush administrators the ability to examine profitability by service line. “From a supply chain perspective, it will allow us to track costs, and it will help us understand on a physician-by-physician, case-by-case basis where there are opportunities to look at supply utilization,” says Mulroe.

In addition to its portfolio of standard contracts, MedAssets offers Rush flexible custom contracts. “If we feel there’s an opportunity, we’ll create a custom agreement in partnership with MedAssets,” he says.

As at any academic medical center, “it can be a bit of a challenge to pull together the right people or to get in front of them relative to the contracting process,” says Mulroe. This is especially true for physician-preference items, such as spinal implants. But by creating an OR value analysis committee, he and his team are working to improve the process.

The committee is co-chaired by one of the materials department directors and a general surgeon. Four physicians participate. “We ask that any new products introduced into the OR come through this committee,” says Mulroe. “It used to be that things would just show up,” he says.

“We have asked the surgeons to partner with us to negotiate with suppliers, and in just about every case, they have been willing to do this,” he says. “The process has given us visibility as to what’s coming in the door. It has given us the opportunity to negotiate and to ask questions about logistics and reimbursement.

“Our physicians have been fantastic to work with. People here have a lot of affinity for Rush. They want to help [the medical center] and do the right thing.”

Looking ahead In the year ahead, Mulroe is looking forward to streamlining logistics at Rush. The IDN is considering retiring its aging offsite warehouse and contracting with a supplier or suppliers for low-unit-of-measure distribution. A revamping is needed, given that Rush is embarking on an $800 million capital building program, which will bring to Chicago’s West Side a new orthopedics and ambulatory care facility, and a new patient care tower.

“We’re really looking to partner with somebody and create an end-to-end solution related to logistics,” says Mulroe. Presumably, that solution would encompass med/surg, pharmacy and lab. Although it would appear that Cardinal Health might be the only company capable of offering such an “end-to-end” solution (following McKesson Medical-Surgical’s sale of its acute-care business to Owens & Minor), Mulroe says Rush will entertain offers from multiple companies that have agreed to work together to provide a seamless offering to the IDN.

“Our philosophy is to reduce the number of touch points and the amount of inventory we own, then automate [the process] and get out of the way.”