One of South Dakota’s largest healthcare providers continues to improve the way it acquires the supplies and equipment it needs to best serve patients. A snapshot of the Avera Health integrated delivery network (IDN) shows 33 hospitals, 208 clinics, 40 long term care/assisted living facilities, 37 home care and hospice locations and 15 home medical equipment locations. These facilities are located in five states –South Dakota, Minnesota, Iowa, Nebraska, and North Dakota – covering 86 counties for more 72,000 square miles of coverage. Avera Health has been recognized for clinical excellence, been consistently awarded for most wired in information technology, is among national group buying organization Premier’s “Top Performers,” and is gaining recognition for its innovative eCare services, just to name a few of its accolades. 

Avera Health five years ago established a central supply chain team tasked with unifying the sourcing and purchasing practices for its IDN. The current Avera supply chain team is under the direction of Vice President of Supply Chain Steven Huckabaa. “We are building a cohesive supply chain team across Avera to gain efficiencies,” says Ryan Schaefer, manager of materials management information systems for the Sioux Falls, S.D.-based health system.

Schaefer says Avera’s success is largely due to top-down support. The supply chain team has quickly grown and put strategic resources in place to take on important projects to gain system-wide efficiencies and reduce costs.

The supply chain sourcing team, led by Patrick Trim, director of procurement and strategic sourcing, has brought in clinic resource managers and contract managers to help lead and direct all Avera-wide value analysis teams. These teams, along with support from ten service lines, help drive standardization in quality products, services and equipment through competitive and strategic contracts.

Avera Health is putting in a system-wide contract management system for more visibility to pool volumes and gain contracting leverage. Avera Health is now contracting as an integrated delivery network instead of as individual facilities, as Avera had been doing less than a decade ago. The sourcing team also collaborates with Regional Health of Rapid City, S.D. when appropriate, through an LLC the two systems formed around 2009 called Northern Plains Premier Collaborative (NPPC). NPPC allows the two health systems to pool volumes for better contract pricing and services. The sourcing team and NPPC has put a strategic emphasis on capital and worked with the finance department to take advantage of the economies of scale for high dollar purchases. 

The supply chain operations team, led by Sara Henderson, director of supply chain operations, is taking a central role in these improvements as well. Henderson oversees print shop functionality, the Avera distribution center and Materials Management Information System (MMIS) functionality. She is bringing Avera’s printing capabilities in-house where appropriate to capitalize on projects that can be done within Avera instead of outsourcing. Avera’s distribution center is also expanding and providing goods and services across more Avera locations where they can provide value to internal customers. 

Henderson also oversees the Avera health materials management standards team. This team, made up of material directors from across Avera, comes together face-to-face at least monthly to discuss and address issues and concerns that face the supply chain across the organization. The standards team is developing standardized policies and procedures on how Avera will do business as a supply chain today and into the future.

“The biggest project that has come out of the standards team to date is probably our quest for an item master source of truth,” Schaefer says. Schaefer’s small MMIS team, with the help of Avera’s information technology team, is  standardizing data of items purchased and used by each hospital, known as the item master. Two of Avera’s regional hospitals – Avera St. Mary’s Hospital in Pierre, S.D., and Avera McKennan Hospital and University Health Center in Sioux Falls, S.D. – share the same item master. The remaining four regions – Avera St. Luke’s in Aberdeen, S.D.; Avera Marshall Regional Medical Center in Marshall, Minn.; Avera Queen of Peace Hospital in Mitchell, S.D.; and Avera Sacred Heart Hospital in Yankton, S.D. – each has its own separate item master with the other 27 hospitals falling within these five item masters as well.

The five item masters are used within the same version of the Meditech Client Server platform but the individual item masters do not interface with each other. “We want to roll our five item masters into one and standardize policies and procedures in procurement and contracting across all of the Avera facilities. This will not only allow us to simplify data mining and reporting, but will help us standardize on products, contracts, and billing where we are sometimes splintered by location. All of this helps us to provide consistent, economical and efficient care down the line to patients in our continuum of care approach,” Schaefer says.

The item master standardization – which involves reassigning a single number to each item purchased by Avera – is being done in preparation for the health system’s planned upgrade to Meditech’s newest platform. “We’re going into each of our regions and assigning standardized numbers and relabeling every hospital and inventory so when the time comes to upgrade our Meditech platform, we will be ready,” Schaefer adds.

Supply chain is one of the first functions within Avera Health moving toward a centralized approach. Information technology is already centralized as well as centralized business operations. Human resources and marketing functions are also moving from a decentralized to a centralized approach. “From a contract or standardization standpoint, there are huge efficiencies that can be achieved doing this,” Schaefer says. 

Avera Health is working with Meditech to increase the interface between its EMS system and third-party systems as well as collaborating with Meditech to build future enhancements into its products. 

“We are developing a unique relationship with Meditech that has allowed us to give them direct feedback to develop more supply chain related functionality to supplement their current offering,” Schaefer says. Avera Health is also a long-term partner with Premier and Global Healthcare Exchange (GHX). Avera Health has a full suite of GHX products aiding in day-to-day operations. 

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