GE Healthcare Camden Group Insights Blog

New Developments in the 340B Hospital Environment

Posted by Matthew Smith on Nov 3, 2017 3:14:07 PM

GE Healthcare Partners works with hospitals to implement, extend, and optimize participation in the 340B program. As you may have heard, new 340B guidelines were announced yesterday, November 1, 2017. Here is a brief summary of the changes which will be effective January 1, 2018.

On November 1, CMS issued its 2018 Outpatient Prospective Payment System (OPPS) Final Rule, which has finalized the Medicare Part B payment reduction for certain drugs acquired through the 340B Program for Disproportionate Share Hospitals and Rural Referral Centers.

The current rate for Medicare Part B payment is set at Average Sales Price (ASP) plus 6%. Effective January 1, 2018, the new payment rate for these affected 340B participants will be reduced to ASP minus 22.5%, which is nearly a 27% reduction in Medicare Part B reimbursement. It is also very important to note that commercial payer rates are often based on Medicare, so payment from these payers are likely to be reduced as well.

The final rule also establishes two modifiers to identify whether a drug was purchased under the 340B program—one for hospitals that are subject to the payment reduction and another for exempted hospitals that purchase drugs under the 340B program. The goal is to better track what drugs are being purchased under the program. Without that change, hospitals might have received a cut in reimbursement for drugs not purchased under the discount program.

To understand how this new payment rule may affect your organization, as well as to discuss strategies to lessen this negative impact to your outpatient revenue, please contact the GE Healthcare Partners team by clicking the button below. Our 340B experts will follow-up with you.

340B Final Rule

Topics: 340B

Humber River Hospital Opening State-of-the-Art Command Center

Posted by Matthew Smith on Oct 30, 2017 3:40:48 PM

Courtesy of InsideToronto.com

Staff at Humber River Hospital will soon be able to tell when a bed is free, if an area needs cleaning, or there is a delay in patient care.

North America’s first fully digital hospital will open its state-of-the-art, digitally-advanced Command Centre which uses complex algorithms, predictive analytics, and engineering to target improved clinical, operational and patient outcomes, Thursday, Nov. 30.

A first of its kind in a Canadian hospital, the 4,500 square-foot Command Centre, to be situated on the third floor of the Keele Street and Wilson Avenue hospital, will be made up of 26 screens and staffed by a team of 15 from various hospital departments.

Designed and built with GE Healthcare Partners, the site will include a GE Wall of Analytics processing real-time data from multiple source systems across hospital. The system applies advanced and predictive analytics and provides a continuous “read out” alerting staff to everything from delayed patient care activity to unbalanced physician and staff workload. This information provides real-time decision support so staff can prioritize patient care activities and discharges, make short-term staffing decisions, and mitigate potential bottlenecks before they occur.

The Command Centre will be funded through ongoing business investments, private donations, and efficiency savings.

For Barb Collins, the Command Centre has been 12 years in the making.

That’s when Humber River Hospital’s president and CEO met Michael Dell, founder of Dell Technologies, who explained the capability of monitoring computers based around the world.

She likened the hospital’s Command Centre to airport command centres, where flights are monitored in detail.

“We’ll know what’s going on throughout the hospital,” she said. “We’ll be looking at patient flows, what beds are available. Is a patient waiting two hours (for test results)? Why? Right now, there’s no global view of what’s happening. (Staff) have to phone or email each other. With the Command Centre, all they have to do is look at the screens. We are trying to eliminate delays.”

Collins said the hospital had to become fully digital before embarking on the Command Centre because “there was no way we could collect data before electronic hospital records became real. This is a dream come true.”

Topics: Command Center

Q&A: How Predictive Data Analytics And Proactive Recruiting Can Improve Nurse Retention

Posted by Matthew Smith on Oct 19, 2017 5:10:20 PM

With predictive data analytics becoming a hot topic in the healthcare industry, many healthcare organizations are asking how analytics can help them with their staffing needs – beyond traditional productivity analysis. One of the opportunities we see is the use of predictive data analytics to develop a proactive recruiting model, which is a proven method to improve nurse retention. In this article, David Murdock, Vice President, GE Healthcare Camden Group, shares his thoughts on how proactive recruiting can improve nurse retention.

Q: What is the primary benefit of a proactive recruiting model?

The proactive and predictive model of recruiting will allow you to improve the level of decision-making related to the timing of recruiting and hiring processes for which, in turn, will positively impact retention.

Q: What are some of the signs that an organization might benefit from a proactive recruiting model?

Some of the signs include:

  • Higher percentage of early tenured nurses compared to industry average
  • High levels of employee turnover
  • Ratio of less tenured nurses to more tenured nurses
  • High use of premium pay
  • Duration from vacancy to the time the new nurse is on the unit

Let me give you some data behind this. Recent research shows that is takes an average of 82 days to fill a bedside nurse vacancy (average across all specialties). When you add 6 weeks of training time, that means it will take an average of 140 days before the bedside RN would actually be on the unit and fully productive. The predictive analytics allows clients to predict a need, which increases the time to source and onboard “right fit” candidates.

Q: How does proactive recruitment improve retention?

Retention really starts from the application process when you begin to screen the applicants. Even at this early stage, effective recruiters are considering the organizational culture fit for the candidates. The predictive model of recruiting will allow you to be proactive and thus increases the time available for recruiting. This extra time allows recruiters to be more selective with those candidates, which in turn will positively impact retention.

Q: How does a proactive recruitment model work?

First, let me outline the traditional recruiting process that we see at many hospitals. To hold managers fiscally accountable for the positions they are requesting be filled, many organizations wait to initiate the recruiting process when a position becomes vacant or when a new position is created. In other words, the recruiting process begins with the position requisition based on an existing vacancy. Only then do recruiters begin to source, identify and interview candidates. Eventually a candidate is hired; but even after hiring, they still need to complete orientation and training before becoming competent and fully productive. During the “ramp up to competence”, those shifts are often filled with premium pay, overtime and agency staff.

A proactive recruitment model collapses the time from when the need arises to when the need is filled. This model isn’t a one-size-fits-all approach. Rather, it’s a lean-inspired approach customized to each client. Simply stated, we review the recruitment process, zeroing in on opportunities to streamline this process. Through any streamlining though, it is critical to maintain clear lines of accountability for the hiring processes and staffing decisions.

To further elaborate, decreasing the time from the need arising to the need being filled requires a disruptive approach. With the predictive analytical model of the proactive recruiting process, you’re able to predict a need. With that need being predicted, and having confidence in the need based on historical demand (workload) and supply (candidate pool, employee turnover and training needs), the recruiting process begins in anticipation of the need arising. By the time that need actually arises, the need is filled and the timeframe has reduced significantly.

Q: What data do you need to develop a proactive recruitment model?

There are quite a few data requirements that the proactive recruitment model needs, including:

  • Granular historical workload data (e.g., census data points every four hours for nursing units)
  • Operational staffing plans that cover all levels of workload that you have experienced
  • Standardized roles and job titles where organization-specific job titles are mapped to standard job titles (e.g. RN1, RN3N are mapped to RN)
  • Up-to-date position rosters, ideally one position control that is centrally located and maintained for the entire organization and centrally located
  • Data to calculate true FTE turnover, which is different from industry standard calculations
  • Budget by skill mix
  • Recruiting data to include pipeline and time to fill
  • Training requirements for new and experienced staff

Q: What other information do you need?

It’s important to understand any process gaps that would impede having a fully integrated proactive recruiting model. For example, the model will benefit from having a position requisition process flexible enough that allows for the proactive recruiting of those positions. Based on the predictive need, you want to be able to release those positions even though they may not yet be vacant. Some of the leading organizations are actually doing this based on predictive need, and others are building a pipeline based on predictive need but then waiting until the position is closer to being vacant.

It’s also critical to understand the onboarding and training expectations, and to ensure they are standardized and consistent. Of course there is some variability with regards to candidates’ skills and the amount of time it takes them to get up to speed, but being able to assign a timeframe is needed for the predictive model.

Finally, a proactive recruitment model is best supported by a centralized, up-to-date position control process that provides contemporary visibility of what positions are available and what positions are filled. Recently, to help a client fill a process gap of having an up-to-date position control roster, we developed a separate database that takes data from the cloud-based employee roster and produces a position control listing on a biweekly basis that is used in the proactive recruiting model.

Q: How flexible is a proactive recruitment model?

The most recent predictive recruitment model that we developed will predict the need for a 12-month period. There is the ability to override or update certain assumptions in the model as the recruiter performs analysis of various recruiting scenarios. For example, if there are upcoming retirements that haven’t typically occurred in the past, the recruiter and/or department leader can manually input that data in the model. The model enhances the partnership between recruiter and department lead as they collaborate to ensure staffing levels are appropriate.

Q: What are some of the key lessons you’ve learned in designing and implementing predictive recruitment models for hospitals and healthcare systems?

As with many of our staffing related projects, we learned that even the most highly performing organization can have data and process gaps that can impair the implementation of new staffing models. Projects like this will also reinforce the importance of ensuring that key elements are in place prior to initiating the “build” of the actual model. These include:

  • Strong project management coordination
  • Active involvement of HR, recruiters and department leadership
  • Support and partnership from Information Technology
  • Requisite data and clear understanding of any data gaps
  • Position control process and roster
  • Change control process and transition plan

MurdockD_Sq.jpgMr. Murdock is a Vice President with GE Healthcare Camden Group with more than twenty-five years’ of experience leading a variety of successful labor productivity and staffing efficiency projects. He managed analytical efforts for a labor assessment and subsequent implementation project that yielded over $25 million dollars in validated savings for an integrated health system. In addition, he revamped the nursing unit staffing measurement system for a long-term acute care health system with over 20 locations. Mr. Murdock also personally coaches and educates department leaders in all aspects of labor management. He believes knowledge and education are key factors to sustained change. He may be reached at david.murdock1@ge.com.

Topics: Labor Productivity

The Closet of Interesting Ideas: Where Does Innovation Reside in Your Organization?

Posted by Matthew Smith on Oct 18, 2017 2:17:32 PM

Where do innovative ideas reside in your organization? Being driven into market by your passionate innovation teams? Stuck in a “closet of interesting ideas?” Swirling in a whirlwind of activity that goes nowhere? Many healthcare organizations desire to infuse a robust innovation culture into their organizations that can rapidly take their great ideas and turn them into successful new businesses. Unfortunately, many of those innovation processes lead worthy ideas into a black hole resulting in frustrated “creators” and dampened enthusiasm for innovation.

[NOTE: For all images, please click to enlarge.]



Truly disruptive innovation has never been an easy job. Along the journey of bringing a breakthrough to market there are many pitfalls that can quickly strand the new venture, investment and innovation spirit of those leading the project inside the corporate walls. Within Global Innovation, there is no lack of investment. The world’s largest corporations spent $680Bn on R&D in 2016 and that spend has been growing at almost 5 percent a year over the last 11 years[1]. This innovation spend results in the creation and investment in thousands of ideas.

Unfortunately, there is no relationship between R&D budget and corporate performance and many great ideas get stranded inside corporates, never to be experienced by the target consumer.

Some of the reasons for this waste include:

  • Change of corporate strategy
  • Poor communication of the technology benefits and consumer relevance
  • Too disruptive to fit within a corporate’s product portfolio
  • Lack or loss of internal champion
  • Inability to scale the innovation across the organization
  • Change in leadership
  • Inability to exploit the IP within existing business and no incentive to license
  • Shorter term, lower risk projects given higher priority
  • Corporate bureaucracy and/or turf wars
  • Complex innovation processes stalling the opportunity
  • Innovation before its time

The stranded ideas are often market disruptors that do not fit neatly into the current corporate framework, are farther from the core or disruptive to the current product portfolio. To bring these ideas to market, the corporate has to navigate the triple challenge of:

  • Iterating the business models and technologies required for the new venture
  • Simultaneously evolving the capabilities needed in the core business and building the new capabilities required for the venture
  • Successfully balancing ‘What you already have’ with ‘What you will need in the future and how you will get there'

As a result, transformational technologies and early-stage ventures are deserted in what is known as the ‘Valley of Death', a place where great ideas, millions of dollars, hard work and innovation passion languish.

An estimated 1/5 to 1/3 or $140 to $250Bn worth of these investments become stranded. Abandoning investment and moving along has become common and accepted by many organizations as the ‘cost of innovation’.

Not all stranded ideas are worthy of being launched—some are halted for good reason. But many are funded longer than they should be and contribute to wasted spend. Abandoning non-viable ideas earlier in the innovation process can unlock valuable innovation resources and redeploy them towards accelerating viable new ventures to market. On the other side of the coin, if the stranded innovation is truly viable, valuable and financeable, then billions of dollars in revenue are being left in the corporate file cabinet. This is the real opportunity cost of stranded innovation. At an IRR of 20 percent or a multiple of 3X, a staggering $750Bn per year or 2 trillion dollars over a five-year period is locked in the 'Valley of Death'.


A new enterprise discipline, venture management, is required to extract the value from these stranded opportunities. Venture management increases ROI on Innovation investment by transforming stranded assets into revenue-generating vehicles and eliminating ideas that are not viable, valuable and financeable before over-investment.

Venture management is a multi-disciplinary innovation approach that consists of specific compentcies for monetizing, de-risking and accelerating innovation.

5 Core Comptetencies of Venture Management

Venture management organizations:

  1. Originate and Validate: identify and validate the viability of early-stage technology
  2. Generate: monetize stranded assets
  3. Commercialize: develop and execute ‘Go To Market’ plans and new entities for pilot testing innovation prior to full-scale launch
  4. Accelerate: source collaborative partners and co-investment required for undercapitalized products and portfolios to achieve their full potential
  5. Create: build a systematic ‘disciplined entrepreneurialism’ culture of innovation that accelerates value capture from IP, early-stage technology, incubators and start-ups.

GE Healthcare Partners and Pilot Lite Ventures have a specialized toolkit consisting of 7 proprietary capabilities spanning from ‘originate’ to ‘create’ that we utilize to help organizations successfully implement venture management.

Proprietary Capabilities.png

Implementing venture management is not easy. Many aspects of the methodology are a significant departure from traditional innovation approaches and it takes time for the organization to embrace this capability. With patience and persistence, practicing venture management reduces wasted investment, captures latent value in stranded ventures and accelerates the path to market for innovation. Through our venture management process, we boast innovation success rates 2.5 times that of leading investment firms and 10 times better than corporate venture capital.


This leads to the obvious question of what to do next. The right approach for many organizations is to look in the mirror and assess how impactful their innovation agendas and processes has been to the bottom-line. If organizational spend and effort significantly outweigh market results than it is likely you have a lot of stranded or soon to be stranded innovation within your corporate walls. Many of those projects are worthy of another look and have significant market value that can be recaptured and invested into new programs. Other ideas are headed to the ‘Valley of Death’ but can be course corrected to a viable path to market before the innovation becomes deserted. This is a perfect opportunity for a venture management pilot that can help you reset your innovation culture to a systematic ‘disciplined entrepreneurialism’ approach that accelerates value capture and shareholder impact from your innovation investment. Don’t let your innovation desires fall into the closet of interesting ideas. 

[1] 2016 Global Innovation 1000, PWC October 2016. The Global Innovation 1000 represent ~ 40% of Global Innovation R&D spend.
Venture Validation, GE Healthcare Partners

This article underpins a major market presentation given by Dave Behringer, CEO of PilotLite Ventures (PLV) USA at the recent IFT conference in Las Vegas. PLV is a strategic partner of GE Healthcare Partners and with them, we offer the same Venture Management capability to our clients.

Topics: Venture Validation, Pilot Lite Ventures

Reducing Utility Costs: 4 Ways to Gain Buy-In From Your Hospital COO or CFO

Posted by Matthew Smith on Sep 11, 2017 4:38:30 PM

By Camelia Walker, MBA, Senior Consultant, GE Healthcare Camden Group

Hospital facility directors and managers can deliver value to their organizations by implementing energy efficiencies. In addition to the annual recurring savings from reduced utility bills, the organization can benefit by gaining community recognition, improved air quality for patients and staff, and extended equipment life. The process outlined here will increase your chances of obtaining approval to commence an Energy Consumption Reduction Program that will save the organization money and increase budget capacity for other facility needs through annual recurring savings.

1. Benchmark and Assess – Identify Opportunities

Analyzing the hospital’s existing operations by benchmarking its current energy spending is a necessary first step. While benchmarks will not provide all of the answers, they do provide a good starting point to give you some idea of current performance. After completing a high-level benchmark study, a detailed site tour audit with the facilities and operations staff will help identify where specific energy consumption reduction opportunities exist. Contracting with a seasoned energy specialist (also referred to as a certified commissioning provider or retro-commissioning agent) will help identify and categorize the opportunities. An energy specialist can assist in developing a detailed assessment that should, at a minimum, have these component parts:

  • Detailed infrastructure assessment
  • Benchmark detail
  • Energy conservation measures
    • Energy usage
    • Savings opportunities (energy and dollars)
    • Estimation of costs associated with implementing improvements
    • Energy model and validation methodology

An easy way to view the scope of work is to divide the work into three categories of opportunities:


2. Identify Resources and Tools

Once the assessment has been completed and the energy measures have been agreed upon, the scope of work can be tailored to meet the organization’s goals. The next step is needed to capture the opportunity, grouping them into internal and external resources. Engineering Departments that have both the internal talent and the bandwidth can be deployed immediately to implement energy measures. The CFO and COO will be looking to the facility department to get the job done in the most efficient and cost effective manner, and utilizing internal resources is a good way to start. For more complex diagnostics or optimization measures, or for facilities that don’t have the resource bandwidth internally, identify which contractors should be used to complete the work. If possible, look at using the contractors that are most familiar with the facility and systems.

Consider using an energy specialist to guide you through the implementation. Depending on the specific needs and the bandwidth of the facility department, an energy specialist can help manage the project, facilitate the work with contractors and staff, and ultimately expedite the implementation of the energy measures. Additionally, contractors and staff can help build skill sets through knowledge transfer among the organization’s facility staff so that they are able to manage the systems and sustain the gains. Identify what tracking and validation tools you will use to measure success. There are many tools available - some are free while some have fees associated with their use. If you use an energy specialist, ask what tracking tools they use and be sure to inquire about weatheradjusted tracking and whether validation is included. Make sure that results are measured in the same way that the baseline savings targets were designed. Use the same units, nomenclature, and methodology.

3. Build and Sell the Business Case

After the assessment is complete and the resources and tools are identified, a business case should be developed to capture the benefits and risks associated with implementation. What is the return on investment? Be sure to show all upfront costs and how long it will take to recoup the costs before the annual recurring savings occur – the CFO/COO will want to build the upfront costs into the budget.

If time permits, obtain bids or commence the RFP process for the work so that when the business case is presented to the finance department, there is confidence in the budgetary estimates. The CFO/COO will want to know what energy measures are considered operational and which are considered capital items to be depreciated, i.e. what measures will extend the useful life of the equipment. Be sure to also highlight the non-monetary benefits such as patient, staff and visitor comfort, reduced complaints from visitors and staff, reduced mechanical maintenance calls and extended equipment life.


Tip: Create a one-page summary document that highlights:

  1. Total savings
  2. ROI
  3. List of Energy measures
  4. Bids received or other work done to date
  5. Implementation and savings realization timeline
  6. Operational vs. capital expenditures

Note: It is important to limit the summary to one page. Keep it concise and visually appealing with graphics and charts that will keep your audience engaged and fully informed.

4. Showcase the Results

Share your progress with the CFO and COO. Identify the energy measures that have been implemented to date and the bottom line savings for the low cost/no cost energy measures. This will demonstrate to the C-Suite the department’s continued performance in contributing to savings. These energy savings can then be used to fund the Retro-Commissioning or other capital work that requires upfront costs. In conclusion, when asking your CFO and COO for funds and resources to support an Energy Reduction Program, building a convincing and detailed business plan and identifying the right team members will influence a hospital’s leadership decision.

The questions and pointers provided in this article help hospitals start the evaluation and assessment process. GE Healthcare Camden Group's integrated Non-Labor cost-reduction solutions enable clients to extract significant costs from their contracted services, and deliver sustainable savings against their bottom line. For clients, this means significant financial and operational improvements.

Non-Labor Expense Reduction

WalkerC.pngMs. Walker is a senior consultant with GE Healthcare Camden Group and has spent the past several years of her career focused on healthcare—specializing in leading teams of operational professionals who are experts at collaborating with clients to identify and drive efficiency improvements and reduce costs. She consistently provides leadership and direction in areas of planning and development in hospitals across the country, and works collaboratively with hospital executives and staff to ensure quality, positive outcomes are achieved. Ms. Walker has been able to showcase her architectural frame of mind by constructing detailed analyses of current perioperative throughput processes, departmental utilization, and physical space audits. She uses this information as a foundation to work collaboratively with clients to improve their perioperative process workflows and programming statements, and design concept plans. She may be reached at camelia.walker@ge.com.

Topics: Non-Labor Expense Reduction, Utility Costs, Camelia Walker

5 Keys To Getting Value From Your Value Analysis Process

Posted by Matthew Smith on Sep 1, 2017 4:33:51 PM

By Tom Fox, Vice President, GE Healthcare Camden Group

One of the first questions I ask my new clients is about their value analysis review process. Why? Because that’s the rigorous process every hospital and system needs in order to ensure they’re effectively managing supply expenses.

You, like almost every CFO and Supply Chain VP I speak with, are probably nodding your head right now, saying that you have a methodology in place. But I would like to challenge you on that.

  • What is your value analysis (VA) process, really?
  • Who is involved?
  • Do you include reimbursement analysis as part of the evaluation?
  • What tools do you use to track progress and monitor results?
  • How do you tie these results back to the overall impact on your organization’s total supply cost and net operating income?
  • Does the process include reaching identified cost reduction targets?

The ultimate effectiveness of your VA program depends on your answers.

Many VA programs I encounter focus primarily on the introduction of new products and technology. Others are the opposite – primarily centered on cost savings of existing supplies but ineffective at controlling new product entries into the organization. In order to truly exert some level of control over your supply costs, you have to focus not only on the new products and technologies coming into your organization, but also on how well you are managing existing supplies. In other words, it’s great to excel at minimizing the added costs of new technologies – it’s even better to control those costs while also reducing existing costs.

5 Best Practices For A Successful Value Analysis Process

Best practice #1: C-suite engagement
A C-suite level leader needs to chair and oversee your Value Analysis Review Team. Visibility at the highest level of the organization will ensure the team members feel accountable – and accountability is the crux of success. As the organization’s financial steward, your CFO is typically going to be the best person to chair this team. If that’s not possible due to bandwidth or competing priorities, then ask your COO or CNO to lead this team. And by “lead”, I mean truly lead the process and hold others accountable to targets and results while serving as the go-to person for dealing with barriers and resistance to change.

Best practice #2: Appropriate representation
Value analysis is not just a supply chain responsibility. Supply chain alone cannot dictate that clinicians change their practice, judge the impact on clinical effectiveness and quality, or calculate the expected reimbursement for a new supply. The appropriate engagement of other key stakeholders is of vital importance to the VA team’s effectiveness, and those stakeholders include physicians, nursing leaders, finance personnel, and other support departments like infection control, biomed, food and environmental services, and information technology.

Best practice #3: Clarity of purpose and aligned incentives
In the first meeting, the team needs to develop a team charter which will include the team’s mission, goals, and list of participants. Ideally, these goals will tie back to the participants’ annual incentive plans to ensure alignment with the organization’s goals. Ultimately, the purpose of this team is to ensure your clinicians have the products and technology they need while delivering appropriate cost savings and financial stewardship to the organization.

In subsequent meetings, the team needs to:

  1. Review all new products and technology requests: Hardwire a new product and technology assessment process that includes a review of the cost, reimbursement and clinical impact (outcomes); develop item master controls to ensure compliance; and review new spend versus historical spend to identify new products that may have slipped through the cracks
  2. Review strategic sourcing (contracting) opportunities to include contractual compliance monitoring
  3. Review product utilization by commodity to identify standardization and consolidation opportunities

Best practice #4: 100% process adherence
Make it clear that you expect 100% process adherence. Ensure each and every new medical supply, non-medical supply, drug or purchased service entering your organization goes through the same rigorous value analysis review process. No exceptions. And the only way to be successful at doing this is to continuously monitor your item master, Rx formularies, purchasing reports, distributor reports and invoices. This will likely be the most challenging part of revitalizing your VA program as it will require some difficult conversations with department directors and clinicians who have historically found ways to circumvent the process.

Best practice #5: Culture of accountability
Like I mentioned, accountability is the crux of success. Every team member needs to understand the important role they play in your VA review process. Your physician champions need to understand they are there to represent their colleagues and bring forth their expert opinions. They also need to understand they are expected to champion the team’s decisions among their physician peers and ensure their colleagues adhere to the team’s decisions regarding vendors, supplies and preference card items. Your department heads need to understand that they, too, are expected to respect the team’s decisions and not stray from the approved process when procuring new products or services.

This brings us back to the first best practice I mentioned: C-suite engagement. This will help you instill a culture of accountability into the team itself – and across your entire organization.

Non-Labor Expense Reduction

TomFox_headshot.jpgMr. Fox is a Vice President with GE Healthcare Camden Group with more than twenty years of experience developing strategic vision with C-Suite executives, physicians, and department leaders to transform how healthcare organizations utilize their non-labor dollars. Mr. Fox works closely with clients across the country reduce non-labor costs and sustain those savings over the long-term. He works closely with clients to identify savings opportunities, obtain stakeholder support, and educate staff on utilization to maximize and sustain the savings. He may be reached at thomas.fox@ge.com.


Topics: Non-Labor Expense Reduction, Tom Fox, Value Analysis

Physician Preference Cards: An OR Director’s Key To Efficiency

Posted by Matthew Smith on Sep 1, 2017 3:27:57 PM

By Don Martin, Senior Manager, GE Healthcare Camden Group

Efficiency and cost management – the metrics by which OR Directors live and breathe. Data on First Case On Time Starts, cut to close times, room turnover, supply usage help administrators keep a close eye on how efficiently their perioperative suites are running. And among the tools every OR Director should use to ensure they’re running efficiently and profitably: physician preference cards.

Preference cards contain clear and concise procedural instructions that, when combined with an accurate record of needed supplies and equipment, prevent unnecessary delays and procedure interruptions. More importantly, they positively impact patient safety and quality by enabling the surgeon, nurses and technicians to focus exclusively on the patient. Preference cards improve surgeon satisfaction, instrumentation and supply inventory management, as well as staff orientation and training.

Discovering Value In Preference Card Data Mining

Physician preference cards provide another significant benefit. Taken together with supply usage data, preference card information becomes a vital source of data for uncovering valuable supply savings opportunities in the operating room. With surgical costs increasing and reimbursements decreasing, hospitals and physicians need to partner to find ways to contain and reduce costs – and a close-up inspection of supplies may deliver big rewards. The key to this effort begins with information – information that can transform simple data into an effective, actionable tool for driving practice change and cost reductions in the OR.

Costs Of Neglecting Preference Card Management

The majority of hospital surgery departments utilize electronic preference cards generated from their clinical information systems and all feature a catalog of surgical supplies and implants needed during a procedure. Hospital leaders at times make the assumption that those preference cards accurately reflect the supplies the surgeon will use during a case. Our experience tells us otherwise. Often we find supplies – sometimes a few, sometimes several – on each preference card that surgeons rarely if ever use. In fact, when we physically display items on a surgeon’s preference card for their review, many are surprised to find certain supplies were being pulled for their case.

Inaccurate and out-of-date preference cards result in real costs: Hundreds of thousands of dollars in wasted supplies and labor jeopardize already thin contribution margins. Fortunately, corrective measures exist to solve this issue, but they require the combined efforts and commitment of OR Directors and surgeons.

Data Is Key To Improving Preference Cards

Relevant, actionable data enables staff and surgeons to quickly identify and evaluate efficiency and cost-savings opportunities. Unfortunately, we frequently hear surgeons say that throughout their years of practice, they have not received empirical data they can use to drive more efficient and cost-effective supply utilization practices.

Information drawn from physician preference cards and historical supply usage data supports surgeon-specific and comparative supply usage analysis. Let’s look at an example. Table 1 shows a partial list of supplies used by Dr. A in laparoscopic appendectomy cases. The highlighted items include supplies provided for the case but never used, or picked in insufficient quantities and requiring the staff to leave the OR to retrieve them during the case. Both represent opportunities for workflow efficiency and supply cost reduction. OR Directors can show surgeons this data and point out how poor preference card management results in case delays, supply waste, and lost time and effort moving unused supplies between the OR and storeroom. In doing so, they will likely gain allies in refining a more selective and efficient case cart build process.


Here’s another example. Table 2 shows comparative supply usage data across multiple surgeons for a common procedure. A supply analytic tool like this identifies opportunities to convert a surgeon to a clinically equivalent, lower-cost supply that his colleagues use to achieve similar outcomes. It also identifies opportunities to convert an entire group of surgeons to the same supply, enabling the organization to leverage volume purchasing as well as standardize products and reduce inventory variability. OR Directors can partner with their Supply Chain VP to include not only surgeon supply usage statistics, but also the average cost of supply expense per case for each of the surgeons in the analysis. This approach grabs attention and often motivates surgeons to dig deeper into the data to better understand the reasons behind the cost differences.


Our clients have discovered that presenting supply utilization data in this straight-forward and concise fashion invites surgeons to open a dialogue with the OR staff and with each other – leading to a renewed desire to pursue more efficient supply selection and consumption.

Our work with clients has shown us that achieving improved operational and financial results in the OR through effective physician preference cards requires significant effort and focus.

Non-Labor Expense Reduction

MartinD.jpgMr. Martin is a senior manager with GE Healthcare Camden Group with more than 20 years of financial and clinical experience with operational responsibilities for patient care delivery, fiscal management, staff development and government, and regulatory compliance. His collaborative approach guides clients through the complex process of optimizing existing technology to meet healthcare’s Triple Aim: increase operational efficiency, improve the quality of patient care, and decrease the costs of care.


Topics: Perioperative Services, Non-Labor Expense Reduction, Operating Room, Supply Chain, Physician Preference Cars, Don Martin

340B Program Omnibus Guidance: Definition Of A Qualified Patient

Posted by Matthew Smith on Aug 31, 2017 4:30:33 PM

By Scott Drugan, Pharm. D., Senior Manager, GE Healthcare Camden Group

The Health Resources and Services Administration released its 340B Program Omnibus Guidance on August 27, 2015, which was published in the Federal Register on August 28, 2015. This 90-page document contains the most comprehensive set of clarifications that have been proposed since the initiation of the act in 1992. The public comment period will extend for 60 days from the date it was published in the Federal Register, or October 27th, and it is anticipated that there will be a considerable amount of comments, both pro and con, to review and consider prior to the final publication of this guidance. The information that follows is not meant to be a comprehensive review nor a legal interpretation and reflect only some of the highlights as viewed by the author on proposed guidance changes to the qualified patient definition.

Definition of a Qualified Patient

As anticipated, the proposed guidance seeks to clarify the qualified patient definition. Currently, the 1996 guidance is a two-part test to determine if the individual is a patient of the covered entity for enrolled hospital qualified entity types, which states the following:

  1. The covered entity has established a relationship with the individual, such that the covered entity maintains records of the individual’s healthcare
  2. The individual receives healthcare services from a healthcare professional who is either employed by the covered entity or provides healthcare under contractual or other arrangements (e.g., referral for consultation) such that responsibility for the care provided remains with the covered entity

The proposed guidance for defining if an individual is a patient of the covered entity for enrolled hospital qualified entity types would be the following:

  • The individual receives a healthcare service at a facility or clinic site which is registered or the 340B Program and listed on the public 340B database
  • The individual receives a healthcare service provided by a covered entity provider who is either employed by the covered entity or who is an independent contractor for the covered entity, such that the covered entity may bill for services on behalf of the provider
  • An individual receives a drug that is ordered or prescribed by the covered entity provider as a result of the service described in statement above
  • The individual’s drug is ordered or prescribed pursuant to a healthcare service that is classified as outpatient
  • The individual’s patient records are accessible to the covered entity and demonstrate that the covered entity is responsible for care

Proposed New Patient Definition Impact on Hospital 340B Programs

The proposed guidance is very clear that the drug ordered or prescribed must be for a healthcare service that is classified as outpatient. The guidance specifically states, “An individual is considered a patient if his or her healthcare service is billed as outpatient to the patient’s insurance or third party payor.” There is also the expectation that for self-pay or charity care patients the classification of the service will follow the same guidelines as for billing a third party payer. Additionally, the encounter between the provider and the patient that generated the prescription or drug order must have taken place at the covered entity; there are appropriate provisions to allow for telemedicine/telepharmacy. Therefore, the following type of prescriptions that may have qualified to be filled with 340B priced drugs within hospital covered entities will no longer qualify for this discounted pricing:

  • Discharge prescriptions
  • Medication utilized in an outpatient setting for which the healthcare service is billed as an inpatient service, e.g., drugs administered in the emergency room for a patient who is admitted as an inpatient
  • Infusion Center drugs in which prescription or drug order does not originate from the covered entity provider – patient encounter

Discharge Prescriptions

Capturing discharge prescriptions within a hospital based retail pharmacy and being able to purchase these drugs at 340B Program discounted prices is very beneficial for these qualified hospital entities. If this were no longer allowed, based on the new proposed guidance, in most cases these prescriptions would be filled with drugs purchased at Wholesaler Acquisition Cost, since the majority of these same pharmacies are filling 340B priced prescriptions for their outpatient population. This would be a very substantial financial hardship potentially leading to the closure of these outpatient pharmacies which benefit the patient’s transition of care. Additionally, the simple fact that discharge prescriptions cannot be filled utilizing 340B priced drugs may be particularly troubling for hospital covered entities with a large population of medically indigent patients. Many of these institutions were able to supply these necessary stop gap medications prior to an outpatient clinic visit. This additional cost to the hospital for these patients may cause them to limit the supply given to these patients.

Additional Outpatient Billable Healthcare Service Considerations

Most covered entity hospitals administer drugs in both an inpatient and outpatient setting, referred to as a mixed use setting, and have software/technology and/or a 340B administrator partner who assists them to determine the amount of their hospital administered drugs are eligible to be purchased at 340B Program pricing. Most systems work by determining if the drug was administered in a setting that is identified as outpatient in the charge master and then accumulating these units until enough was administered to enable an entire package to be purchased at the 340B Program price. However, the new proposed guidance will make this process a bit more complicated as it will not be as simple to merely accumulate the amount of drugs given in an outpatient setting as qualified due to the fact that the healthcare service which is billed for this patient will determine if the drugs utilized while in the outpatient location will qualify for 340B program pricing. A simple example is the patient who is seen in the emergency room, which is identified as an outpatient setting, where he or she has drugs administered, but is also admitted as an inpatient. Although some of the drugs were administered in an outpatient setting, since the only billable healthcare service will be for inpatient, there will be no drugs qualified for 340B Program purchases. Therefore, this aspect of the proposed guidance will reduce the amount of drugs that qualify for 340B Program pricing and lead to an additional level of complexity to an already challenging process to maintain program compliance in a mixed use hospital care setting. 

Infusion Center

Many hospital infusion centers service the healthcare community as a whole and it is very common for these centers to administer therapy to patients who have been referred to them by outside providers. Many of the outside providers may even have privileges with the covered entity hospitals that contain these infusion centers. However, the proposed guidance seeks to clarify that in order to purchase the drugs through the 340B Program for these patients, the prescriptions or drug orders must have been a result of a provider – patient encounter at the covered entity. This may not be the case with all 340B Program purchased drugs in the hospital covered entity infusion center environment today, which may warrant careful consideration moving forward. The proposed guidance change to the patient definition as well as the above highlighted impact to hospital 340B Programs are only some of the considerations that this 340B Omnibus Guidance contains. 

Non-Labor Expense Reduction

ScottDrugan_headshot.jpgMr. Drugan is a senior manager with GE Healthcare Camden Group with more than 30 years’ experience. He helps clients across the country improve their pharmacy costs, profitability, and operating efficiency. His background in pharmacy leadership enables him to bring deep understanding and subject-matter expertise to every project. Mr. Drugan possesses an outstanding record of accomplishment as a pharmacy leader and healthcare executive. His engaging, collaborative leadership style makes him an ideal partner for clients seeking to improve their pharmacy operations, ensure regulatory compliance, implement a complex 340B program, optimize their employee pharmacy benefits, or establish a retail pharmacy.He may be reached at scott.drugan@ge.com.

Topics: Pharmacy, Non-Labor Expense Reduction, 340B, Scott Drugan

Battling Extreme Drug Price Increases

Posted by Matthew Smith on Aug 31, 2017 4:04:03 PM

By Scott Drugan, Pharm. D., Senior Manager, GE Healthcare Partners

Top of mind for nearly every hospital or health system CFO is the roughly 10% annual increase in the cost of pharmaceuticals. Many of these healthcare executives might be surprised to learn that the main reason isn’t due to new novel therapeutics, but rather to older medicines with extraordinary price increases. These drug manufacturers are not trying to recoup the research and development cost of bringing a drug to market. Instead, as discussed in many news articles including this one by Consumer Reports, they are simply capitalizing on little to no competition for drugs that have an entrenched use in the healthcare environment. Therefore, CFOs and Pharmacy executives must explore every effort to limit the use of these drugs to those cases with no viable alternatives and to compound, dispense and administer in dosage forms developed to minimize the waste.

Limiting the use of these older drugs with the new costly price tags will require the assistance and cooperation of the affected clinical departments. Often the clinicians ordering these agents have no idea that these commonplace drugs are now today’s pharmacy budget-busters. Educating them on this new reality will probably lead to engaged clinical champions. The following two strategies, which we originally shared with Becker’s Hospital Review readers as a Supply Chain Tip of the Week, should significantly lower the overall cost of these expensive medicines:

  1. Develop and implement guidelines that limit the use of these pharmaceuticals to cases in which a less costly alternative is not clinically appropriate.
  2. Develop a means to dispense the optimal amount of drug that minimizes waste upon administration.

Case Study: Multi-Pronged Approach Reduces Drug Costs

These price increases for older injectable drugs with little competition greatly affected one of our clients, a multi-hospital system. This negatively impacted the inpatient pharmacy expense budget more than all the new or novel therapeutic medicines combined. To drive down these costs, we partnered with the Pharmacy Director to identify the fact that many of these drugs had a very high usage rate in the procedural areas, such as the operating suites and EPS Lab.

We worked closely with the key clinical stakeholders in these procedural areas to educate them about these tremendous price increases. This motivated the team to identify less costly therapeutically equivalent alternatives for some of the existing use. Although this did provide savings, the remaining usage still resulted in a substantial expense budget challenge due to the high cost of these drugs.

To continue to drive down savings, the project team reviewed the doses dispensed versus the actual doses administered for these identified drugs. Our goal: to understand if there was an opportunity to reduce the amount of waste. We identified many drug administrations that had a dose substantially less than the dose dispensed, resulting in considerable waste. For example, one drug was dispensed in a 1 mg vial when the dose administered rarely exceeded one-tenth of that dose. This created the opportunity for the pharmacy to compound doses in smaller increments to minimize waste. Importantly, the pharmacy leaders did not try to address these changes in a silo; rather, they partnered with clinical and technical staff to implement the compounding of these drugs in smaller doses, enabling the team to achieve additional savings.

The compounding of these smaller, unique dosages by the pharmacy, while providing savings, started from the same injectable drug with the very high price. Was there a way to produce these same new dosage sizes without using the high-cost injectable drug? The pursuit of this answer ultimately led to the addition of a 503B manufacturer who could produce several of these drugs for a considerably lower cost.

By battling extreme drug price increases in a variety of ways, we helped our client save more than $3.3 million annually. Our client is able to use these very expensive drugs in a cost-effective manner while maintaining exceptional patient care.

ScottDrugan_headshot.jpgMr. Drugan is a senior manager with GE Healthcare Partners with more than 30 years’ experience. He helps clients across the country improve their pharmacy costs, profitability, and operating efficiency. His background in pharmacy leadership enables him to bring deep understanding and subject-matter expertise to every project. Mr. Drugan possesses an outstanding record of accomplishment as a pharmacy leader and healthcare executive. His engaging, collaborative leadership style makes him an ideal partner for clients seeking to improve their pharmacy operations, ensure regulatory compliance, implement a complex 340B program, optimize their employee pharmacy benefits, or establish a retail pharmacy.He may be reached at scott.drugan@ge.com.

Topics: Pharmacy, Non-Labor Expense Reduction, 340B, Scott Drugan

Control and Maintain Costs Through Non-Labor Expense Reduction

Posted by Matthew Smith on Aug 30, 2017 9:11:08 AM

By Tom Fox, Vice President, GE Healthcare Camden Group

Healthcare organizations must constantly keep an eye on Non-Labor expenses, which typically represent approximately 40% of their total operating expenses. This is an ongoing battle with frequent periods of regression and sometimes a lack of focused oversight leading to missed budgets. Most organizations rely on their Group Purchasing Organizations (“GPO”s) to access competitive price points for supplies and services while using departmental leadership and processes, such as value analysis, to manage existing expenses as well as expenses associated with the various new technologies entering the organization daily.

Non-labor expenses are often not managed with the same rigor dedicated to managing labor expenses. Because of this, many “typical” strategies for managing Non-Labor expenses only address bits and pieces of the total Non-Labor cost equation, resulting in a huge opportunity cost associated with overlooking the full picture. The equation for total expense of a supply or service is PRICE x USAGE, and there are several items that should be investigated in each part of that calculation, such as:

  • Is the product or service truly needed in the first place?
  • Is there an equivalent product or service that could be evaluated that might provide efficiencies?
  • Are you using the supply or service in an appropriate manner, and is the way you are using it based on sound evidence, business case analysis, and/or clinical necessity?
  • Are you delivering the product or service in the most efficient way possible?
  • Are you engaging the right people in the decision-making process?
  • How does the price and utilization of the product or service support your reimbursement model, patient care needs and/or the needs or your internal/external customers?
  • Are you getting the best value out of the product or service you selected?

Simply relying on your GPO to manage these challenges is an incomplete solution. The GPO is focused on maximizing purchasing volume to drive better pricing, and they often encourage the use of contracts they have negotiated, when the contract or solution may not be the best available to you. The fact is, GPOs frequently do not manage a significant portion of Non-Labor spend as they are focused mostly on supplies and select contract services, with more of an emphasis on pricing than utilization.

Traditional non-labor expense reduction efforts end up being a temporary fix if sustainable governance models are not employed to create accountability. Any reset or launch of a sustainable Non-Labor expense management process must be supported by the appropriate structures and effective, repeatable methodology and tools, including:

  • A steering committee, led by a C-Suite sponsor, and focused on total Non-Labor expense management
  • Advisory councils for nursing and physician leadership to effectively engage the right stakeholders in the decision-making process
  • Effective project management workplans that highlight progress and barriers along with tracking documents to summarize overall status of efforts
  • Visibility to real-time impact to the bottom line

The GE Healthcare Camden Group Advantage

Our experience working alongside our clients proves we can generate a reduction of approximately 5-7% on total Non-Labor expenses, and sometimes as much as 8-10%--even with clients actively working with their GPO partners.

Non-Labor Expense Reduction from GE Healthcare Camden Group offers the advantages of:

  • Appropriate oversight of the full non-labor expense management process
  • Proven methodology supported by boots-on-the-ground subject matter experts who promote sustainable process changes that become embedded into your culture and daily work activities
  • Accelerated financial impact that delivers significantly more value than currently experienced with current GPO relationships and existing internal processes

Health System Case Study

The blue button, below, offers an immediate link to a 1-page case study that highlights our recent work with a Southeastern health system which resulted in the identification of more than 150 savings initiatives and $35 million in Non-Labor savings. Please take a moment to review the case study, visit the Non-Labor Expense Reduction area on our website, and contact us to determine the next steps we can take to start you on your expense-saving path.

Non-Labor Expense Reduction


Mr. Fox is a Vice President with GE Healthcare Camden Group with more than twenty years of experience developing strategic vision with C-Suite executives, physicians, and department leaders to transform how healthcare organizations utilize their non-labor dollars. Mr. Fox works closely with clients across the country reduce non-labor costs and sustain those savings over the long-term. He works closely with clients to identify savings opportunities, obtain stakeholder support, and educate staff on utilization to maximize and sustain the savings. He may be reached at thomas.fox@ge.com.


Topics: Non-Labor Expense Reduction, Tom Fox

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