Reducing costs, improving performance
Edition: April 2014 - Vol 22 Number 04
For VHA’s West Coast members, the regional purchasing coalition model worked well. But, on July 1, 2012, when two coalitions – WPC and Westpac – formally merged, becoming the second largest VHA network with facilities in California, Arizona, Washington, Oregon and Hawaii, it became clear that bigger was definitely better. The result was West Coast Purchasing Coalition, an 18-hospital network that has since added two more members and has an annual spend of $2.1 billion. Not only that, the coalition has quickly learned how to engage its physicians and executives so as to move initiatives forward with speed and ease that often elude even stand-alone hospitals.
Recently, Repertoire: spoke with Peggy Jenkins, senior director of supply networks, PhD, RN, VHA, and Bob Hemker, CFO, Palomar Health, about West Coast Purchasing Coalition – its goals, accomplishments and direction.
Repertoire: What was West Coast Purchasing Coalition’s mission when it was formed in 2012?
Peggy Jenkins and Bob Hemker: West Coast Purchasing Coalition’s mission was to reduce supply costs through aggregating volume of purchases and improve operational performance through sharing of leading practices.
Repertoire: Have you found that the coalition is providing members with more advantages than originally expected?
Jenkins and Hemker: The coalition is finding that its larger volume in the marketplace is getting results. In 2012, the coalition realized $9 million in savings, and for 2013, it anticipates over $15 million in savings.
Repertoire: What has been the top initiative West Coast Purchasing Coalition has pursued in the last 12 months?
Jenkins and Hemker: Its top initiative focused on coronary interventional stents and achieved $5 million in savings in four months. Typically, [an initiative such as this one] takes 12 to 18 months to engage physicians and supply chain executives. However, the coalition put a committee in place, which was led by an executive champion from Scottsdale Healthcare and an operations champion from Cedar Sinai. They involved cath lab leaders and worked internally to engage physicians and get their buy-in.
Repertoire: What other initiatives has the coalition recently pursued?
Jenkins and Hemker: West Coast Purchasing Coalition has worked on four pharmacy initiatives and has achieved a savings of $2.5 million in four months. A VHA pharmacy staff leader worked with top directors of pharmacy at each of the hospitals in the coalition, gaining support from internal P & T committees and physicians. The coalition has also pursued an endo-mechanical initiative, which has achieved $2 million in savings. Currently, it is working on an IT management initiative and in 2014 it will target cardiac rhythm management, which will be a larger initiative, as well as other smaller initiatives. Coalition executives are working with the six largest members to understand their goals. (This will help determine future initiatives.)
Repertoire: In spite of the coalition’s success at engaging physicians and executives, has it been difficult to get their buy-in to new contracts?
Jenkins and Hemker: Certainly the coalition has faced challenges getting physician buy-in. The CFOs and CEOs from each of the hospitals have been very much informed on [the different] initiatives. They have been supplied with talking points, which they can share with physicians and staff at their hospital. This was [especially so] for the coronary intervention stent initiative. For this initiative, VHA’s subject matter expert, who has years of experience working with cath labs, helped provide key information, which the CFOs and CEOs could offer to cath lab directors.
Repertoire: Can you explain the process whereby your supply chain executives meet and make their decisions?
Jenkins and Hemker: In 2013, the coalition moved to a new structure. Its six largest members meet monthly and drive the decision-making process. The 14 other members join bi-monthly phone meetings. So, the big six determine the contracting strategy, which then goes to a vote by the whole membership. They have found this process works more efficiently. The coalition has worked on putting a communication process in place, [as well as] a share point or collaboration site to keep everyone informed.
Repertoire: How does the coalition co-exist with VHA/Novation?
Jenkins and Hemker: The coalition partners with Novation [and largely relies on] its resources, including the VHA Supply Network director, VHA analytics and a clearly defined supply network process. More than 95 percent of the time, the coalition contracts with Novation contract suppliers. But, when the value is not great enough from these contracts, the coalition can extend an invitation to [non-Novation suppliers]. However, this doesn’t happen very often.
Repertoire: If the coalition could change one thing about the way it works, what would that be?
Jenkins and Hemker: Speed to value. [The questions is], how do you continue to improve structural processes and communication to get members the value faster?
Repertoire: How do you envision West Coast Purchasing Coalition in five years?
Jenkins and Hemker: The coalition is open to growth, but in a very thoughtful manner. It is looking for members who are a good fit with its culture and want to work within its [guidelines]. West Coast Purchasing Coalition is also talking about expanding into other service areas. And, there’s opportunity for it to work with other VHA members across the country. The coalition’s structure really is for commitment to working in solidarity to drive value.
“The West Coast Purchasing Coalition (WCPC) has proven to be an effective and cohesive organization for its members in achieving additional value in resource management. Key to success has been alignment of focus by the Executive Oversight Committee members, as well as the Operations Committee members, with an emphasis on speed to market and quantifiable savings. WCPC has a business model that works, but it also relies on flexibility to adapt to changing market conditions. Commitment, communications and accountability have been key to its success.”
Bob Hemker, CFO, Palomar Health