Unity and Savings for All

NPC stays focused on value and outcomes.

For Northeast Purchasing Coalition, LLC, it’s very much about balance. “We utilize a healthcare value equation in our clinical discussions to ensure we consider both the financial information and clinical input,” says Pamela L. Scagliarini, vice president, supply chain management, Yale New Haven Health System, who is responsible for the service provider contract with Northeast Purchasing Coalition (NPC). The equation? “Health care value = Health outcome/cost.”

The coalition was formed in January 2011, with the mission to “leverage the power of clinical networking and integrate evidence-based practice with strategic sourcing to deliver the best overall value,” says Scagliarini. “We have recently added Fletcher Allen Partners to NPC and are now 29 members strong. We represent 78 hospitals across the region. As is the case with most organizations, it is important to ensure that growth of the NPC advances [its] overall mission and adds value to the member owners of the coalition. It is also critical that potential new membership aligns closely with our desire to have high levels of clinical engagement, which ultimately supports our collective ability to deliver on our commitments to the market.”

Solidarity and savings
For NPC members, the advantages of joining a purchasing coalition are clear. “The savings are higher than expected and the collaboration and unity of the members is more solid than I would have expected in the short time we have been together,” says Scagliarini. “I attribute this to the quick savings we were able to attain and the agreement on the fact that we must deliver on our commitments to the market. In addition, we embrace each initiative as a learning process.

As each initiative unfolds, it represents a new set of challenges that we openly discuss, and we agree on both member expectations as well as our expectation of the supplier community. We have become a stronger unit as a result of our first-year challenges.”

Indeed, the coalition’s strong unity and ability to remain focused on its goals has enabled it to consider a broad range of products early on. “Our top three initiatives from a savings perspective have been office supplies, prefilled syringes and trocars,” says Scagliarini. “As you can see, these represent a variety of product categories: a non-clinical commodity driven through our supply chain leaders; a clinical preference product line that has required both nursing and pharmacy input; and a product [that has required] our physicians [to] provide the clinical recommendations. The majority of our first-year initiatives [have been] in the clinical preference category.”

In the first year alone, the coalition has netted over $14.7 million in savings, which is far ahead of its $9 million target, she points out. “This savings represents a 12 percent savings over 27 initiatives. Our targets for 2012 are more aggressive from a savings perspective, as well as the number and type of initiatives. We have a contract plan spanning commodity, clinical preference, physician preference, capital and purchased services.

“Our process is clear,” she continues. “We go to the market together with commitment. If an organization within the NPC cannot participate in an initiative, that decision is made early in the process. Our members, inclusive of the clinicians, have [had] more clarity on their roles and responsibilities and how they interact with the decision-making process as the year has progressed. We were developing the process as we began operations in early 2011 and, therefore, we were all learning as we went. The leadership of NCP’s executive director, Kathy Galullo, has been critical in facilitating us through difficult issues, which ultimately has strengthened the coalition.”

The process
NPC’s operations committee, a group of supply chain executives, meet monthly in person to make decisions on initiative analysis, contract strategy and contract award, according to Scagliarini. The operations committee meetings provide an opportunity to obtain clinical updates from the NPC clinical director, Paula Jurewicz, RN, and the NPC physician advisor, Maxwell Laurans, MD, she explains. “Paula facilitates the clinical advisory committee and its subcommittees, and Dr. Maxwell Laurans facilitates the physician advisory group and M.D. subject matter expert groups. These updates and recommendations are carefully considered in our voting process. We are fortunate to have a set of supply chain leaders who consider the short-term benefits of each of our strategy decisions, the longer-term effect of our actions on the overall market and our strength as a coalition, and most importantly, [their] effect on clinical care.” The contracting effort is facilitated by VHA and Novation, with support from Yale New Haven Health System (YNHHS), she adds. YNHHS also facilitates the clinical and physician effort.

Although NPC typically includes its GPO in the process, “this is not a limitation,” notes Scagliarini, who points out that the NPC membership decides which suppliers will be considered in a competitive review, based on market information, service-level experience, and product breadth and depth. “There is efficiency associated with enhancing an existing base GPO agreement, which needs to be carefully weighed with the market dynamics, product quality and breadth attributes of all suppliers in making this decision,” she says. “As an owner of the NPC, it is our responsibility to spend the resources of both the dedicated staff and the member organizations’ clinicians wisely.”

Best interests
Through strong communication, NPC ensures the interests of its member facilities are considered, and that their needs are met. The coalition’s engagement process includes supply chain, physicians, clinical subject matter experts and hospital executives. “We have established a set of advisory committees, subject matter expert committees and liaisons that provide clinical input regarding engagement strategy, product evaluation type, subject matter expert feedback and formal clinical recommendations,” says Scagliarini. “It is the responsibility of the NPC staff to broadly communicate within the structure of committees and liaisons, and the responsibility of the supply chain leaders to further deliver the message and solicit feedback within the organization.”

Regardless of the coalition’s smooth operation, it is not immune to the challenges of obtaining physician and staff buy-in. “The difficulty ranges based upon the product type and how advanced each organization is in driving change,” Scagliarini explains. “If an organization has a robust value analysis process, the NPC initiatives slot into the current process more easily. If not, then the NPC process has served, in many organizations, as the base for the development or improvement of a value analysis process surrounding the initiatives. In addition to physicians and staff, the level of executive buy-in and involvement at each organization can significantly affect our ability as a group to commit. The NPC actively communicates to the executive sponsors regarding initiative updates, barriers and overall progress to goals to seek their support. Organizations with more active executives have higher levels of staff and physician involvement, leading to better buy-in.”

That said, through collective leverage and commitment as a group, NPC “has seen benefits to the overall cost of healthcare and specifically our organizations,” she continues. “Both the awarded supplier and the coalition members drive cost out and/or improve their revenue stream.”

“Personally, there is great satisfaction in bringing an idea from concept to realization,” she says. “This type of development initiative requires you to pull upon different skills sets that are required in running your own internal operation. Refining these skills is personally rewarding [and provides] benefits to Yale New Haven Health System.”

Looking ahead
As good as it is for NPC, it can always get better, notes Scagliarini. “There are always areas of improvement, which is what drives us to be better at what we do,” she says. For one, the NPC staff is focused on improving how the clinical engagement process can interact more fluidly with the supply chain decision making process, she points out. This will require the coalition “to seek as much evidence as available to support our initiatives,” she says. “Improvement on this front will allow us to move more quickly in the realization of bottom line savings and ensure we are delivering high-quality products and services to our organization.

“I envision that we will expand our scope [over the next several years] to include other areas of spend more deeply, as well as provide guidance regarding utilization of products. In the near term, we are assessing the viability of pharmaceuticals, purchased services and capital. I also envision that each of [the] hospitals and health systems will continue to improve their own value analysis process as a by-product of the work that is coordinated through the NPC.”
Pam Scagliarini is the vice president, supply chain management at Yale New Haven Health System (YNHHS). Supply chain management includes strategic sourcing (contracting and procurement operations), corporate supply chain analytics, the system-wide value analysis committee structure, and the site-specific operations of materials management, linen and forms. She is also responsible for the management of supply chain operations at the YNHHS network member facilities, as well as the service provider contract for the Northeast Purchasing Coalition, LLC, and contracting and regional clinical engagement for VHA, inclusive of physician preference products.