Increase your span of effectiveness through strategic resource planning

Healthcare Purchasing News, Jan, 2005 by Tony A. Hall

Historically our industry has functioned--often by design--to separate physicians from hospital supply chain programs. A Healthcare Industry Representative's artful dodging of a typical hospital's access management program usually serves to place the average Materials department at a disadvantage. In many instances, this serves as a negative impact to the bottom line.

With the supply chain typically accounting for about a third of hospital expenses, it is imperative that we work to become the 'resource' that entered our vernacular in the 90's. Many well-armed Materials Resource Directors have introduced Clinical Resource programs. Establishing this clinical component effectively affords you the resources necessary to evolve the more traditional value analysis process.

Why should we care?

Well, if you get it right, it will have effectively increased your department's span of effectiveness (SOE). Blurring traditional barriers historically imposed on Materials departments can be advantageous, and results may serve as best practice templates for the future. The goal is to provide the foundation for evolving our profession into the better-suited Strategic Resource and Planning Department role.

When one compares diminishing reimbursements with the desire of hospitals to be technology and quality leaders, and then consider shrinking margins--there is conflict. For some hospitals, financial survival is now an organization-wide mission that provides opportunities to excel. Take advantage of the opportunity to impact the bottom-line through effective program development.

Our responsibilities have broadened. Traditional value analysis programs in the past are no longer adequate for many organizations. Vendor access, rogue purchasing, contract management and value analysis programs are all high priorities and program development no longer requires one to follow a consultant's template.

While managing product introduction has always been important, it is now imperative that traditional value analysis programs evolve. The introduction of Clinical Resources is serving to more quickly move this issue to the forefront. If you are going to play the game you better have the right equipment. Serious front end analysis of all new procedures has shifted from being inconsequential to having mission critical status.

Some organizations actively analyze service lines and analyze products regularly. However, Materials Management as a profession has never seriously broached controlling the introduction of procedures. Jupiter Medical Center in Jupiter, FL, offers two programs that deal with product and procedure introduction. Its Clinical Assessment Team (CAT) looks at medical products that typically impact existing procedures. Building on traditional analysis methods, this team reviews new and existing products. However, if the product is used for a procedure never performed at JMC (regardless of procedure genesis), it then moves to our Procedure Evaluation Team (PET) and becomes a new procedure proposal.

The PET is designed to apply some forward thinking about how to approach the introduction of new procedures in a manner that most likely differentiates it from traditional value analysis programs. The PET addresses the full impact of new procedures such as patient safety, risk, FDA documentation, financial proforma, and physician technique/ credentialing. The PET takes the organization one step further to include inter-department and committee communications. The PET doesn't provide a "yes" or "no", it provides objective data and offers a recommendation. The final approval includes the capital approval process medical executive committee and the board. Beyond the clinical professionals, the PET offers an advanced level of business expertise including healthcare administrators, a government reimbursement analyst, managed care analyst, accountant, and an educator.

Providing a complete picture of the projected impact of a new procedure on the front-side is important for many reasons. Procedures introduced without aggressive analysis can lead to a financial disaster if they are not evaluated upfront. The realities of supply expense and reimbursement 'post' program introduction can destroy the projected contribution margins for any particular procedure.

With any one procedure within a service line capable of making the difference between success and failure, this goal becomes dynamic. In an era where corporate compliance is an issue even within our own profession, we must work harder.

Your role in helping to take this to the next level is instrumental in building credibility through effective management of our clinical value programs.

Next month, Part II of this article will outline the impact of developing a Procedure Evaluation Team in detail.

Tony Hall has been in Materials for 25 years and currently serves as the Materials Resource Director at Jupiter Medical Center in Jupiter, FL. He has also served in other healthcare roles including serving as an Information Systems Director, a Marketing & Public Relations Director, and as a Healthcare Consultant. Hall has been a member of AHRMM since 1983 and presented topics at three AHRMM national meetings. Published on numerous occasions, he's also active in his community as a volunteer in the local school system. Hall has received many awards for his efforts both personally and professionally.