John Pritchard, publisher of The Journal of Healthcare Contracting and president of ANAE, recently interviewed Eric Tritch, director of strategic sourcing and supply chain for University of Chicago Medicine. Tritch has been with University of Chicago for four years, and has a background in the manufacturing industry. During the discussion, Tritch shared some insight into the processes and strategies used by University of Chicago Medicine’s supply chain team.
University of Chicago Medicine is an academic medical center located in historic Hyde Park on the south side of Chicago. The medical campus includes the Center for Care and Discovery, Comer Children’s Hospital, Bernard A. Mitchell Hospital, and the Duchossois Center for Advanced Medicine. In total, the medical center has just over 600 beds, with an area of care focused on south Chicago and northern Indiana region. Annually, University of Chicago records about 200,000 OR visits, 400,000 outpatient visits, and 74,000 emergency department visits. Its supply chain has about 60,000 SKUs and roughly 70,000 stocking locations.
Strategic priorities
“The good ol’ days of being able to pass costs through have gone away,” Tritch said.
The medical center’s supply chain has been undergoing a transformation for about three and a half years, said Tritch. The change started heavily in the clinical products areas and as that matured, they recently built out some of their sourcing and contracting efforts and value analysis efforts around some of the non-clinical and purchased services areas. “We’re in the early stages there, because our system is co-located for the most part. We don’t have too many disparate contracts in purchased services. But, we are starting to spend more time looking at those opportunities – things like utilities and staffing agreements – to centralize and have a better process there,” said Tritch. “It’s a huge dollar impact, but a little more difficult to tackle.”
As has been the case with the majority of the supply chain executives who have talked with ANAE, Tritch said one of the system’s top priorities continues to be finding ways to pull costs out. “We look at ways to focus on improving the quality outcomes and how we can do that at a lower cost in the face of healthcare reform,” said Tritch. “But we also look at building more robust systems and ways to collect data.”
Effects of the Affordable Care Act
Tritch said that one effect of reform’s focus on the supply chain is that it has caused the c-suite to be more aware of and prioritize the supply chain’s needs. “More leadership, and more clinical leadership, [see] the need for more robust supply chain processes… It’s helped us get a chance to really take the forefront within our organizations and drive supply chain impact,” said Tritch. “For us and for folks with supply chain expertise, it’s sort of what we do and what we are used to. So, getting a chance to shine and develop strategies and be more integrated with the senior leadership – I think has really been a good thing for us.”
The role of distributors
Although there has been a lot of industry and media buzz about the many IDNs that are switching to self-distribution models, University of Chicago Medicine is very entrenched with its distribution partner, Cardinal Health, which serves both the system’s acute care locations and physician offices. “While we are a mid- to large-sized academic medical center, we’re not a gigantic system and so we don’t think that the capital needed to develop self-distribution is justified for just us,” said Tritch.
Tritch said the medical center relies heavily on Cardinal and works with it to build out and try some best-practice processes within its supply chain. “The way we look at it is that Cardinal has a lot more resources and can do it cheaper than we can, so we’re going to work with them to improve and help them improve their processes and focus on what we are good at.”
Group purchasing and regional aggregation
The medical center uses UHC/Novation LLC as its primary GPO and, in some cases, uses Amerinet Inc as a secondary GPO. Tritch said he believes that GPOs have a role to play in the non-value-added aspects of contracting, in order to allow the supply chain team to focus on the higher-value contracts. “We believe that Novation is a good partner for us, but [we] focus them on core competencies – looking at how they improve their contracting cycle, how they take some of the non-value-added work out of contracting – so we can realize that value and enhance GPO contracts where it make sense for us, rather than owning all steps of the contracting cycle.”
University of Chicago Medicine is not currently a part of a regional purchasing group, but it is strongly considering the idea. The system wasn’t able to find a good fit with any of the existing regional groups, which didn’t have room for the academic medical center’s robust supply chain and contracting team.
“In the face of healthcare reform and driving costs out we have to try new things,” said Tritch. “And if it’s aggregating and driving volume with a few systems rather than a GPO… we are interested in trying it.”
Relationships with suppliers
Tritch summed up what he and his team consider to be supplier best practices:
– Suppliers who listen to the system’s feedback and follow up on it.
– Suppliers who aren’t just focused on the next sale or the next piece of business they can get.
– Being proactive, straightforward, and timely in taking care of any product issues – from product recalls to helping with troubleshooting.
– Making sure the supply chain team is aware of the supplier’s pipeline so they can plan their business around what’s coming next.
– Being integrated with GHX (for order management and contract management).
– Using and being familiar with Vendormate for onsite credentialing.
“We do really try to align with suppliers that meet quality, cost, delivery, technology, and service expectations,” said Tritch. “And if they are hitting those things, working with them to say, ‘How can we pull costs out? We want to keep the business with you, but you have to help us achieve our goals of pulling costs out. And if that means moving into utilization and wastes of products and looking at those areas to say, ‘We will continue to do business with you, but help us be more efficient in how we spend it so you have a bigger chunk of a smaller pie,’ then that’s the kind of work we want to get into.” He said the supply chain makes a concerted effort to not leverage costs by simply switching from supplier to supplier and product to product.
“At the core of our values we want to drive better outcomes for our patients but we need to be able to measure it and that is difficult… We are interested in engaging discussions where suppliers can show and prove how we can measure and test things to say ‘This new thing will improve this infection rate or readmission rate, or length of stay,’ we will measure and track it.”
“I think that for us, that’s the right direction,” said Tritch. “We don’t need individual reps for every product – we need people who can help manage the business with us and bring in technical specialists as necessary.”