UVM Health Network: Building an Industry-Leading Supply Chain

The University of Vermont (UVM) Health Network has been a model supply chain organization for nearly a decade, with diverse analytics technology assets comprising more than a dozen platforms and services and a dedicated team of 10 analysts led by Charlie Miceli, network vice president and chief supply chain officer.

Named to the Healthcare Purchasing News “Supply Chain Operations Worth Watching” list in both 2011 and 2018, UVM distinguishes itself on many dimensions. In a 2018 article, Rick Dana Barlow writes:

First, [UVM Heath’s supply chain leaders] concentrate on meaningful informatics with detailed category benchmarking to drive clinical contracting, standardization and value analysis programs as well as a clean item master. . . Second, they enhance business practices by cultivating talent that includes business, clinical and legal minds but also extends outside of health care. Supply Chain’s critical thinkers have created a ‘culture of constant improvement and education, with an obsession over savings and cost-avoidance measurement.’ In fact, the team achieved nearly $14 million in cost reduction and cost avoidance in fiscal 2018, and during the last seven fiscal years their efforts resulted in nearly $65 million in savings. Third, they emphasize and focus on the concept of ‘one supply chain,’ communicating consistently with one another and collaborating together to serve their clinical customers who ultimately serve the patients.” ^a

Miceli states: “The ultimate target is to establish, manage, and sustain the optimum ‘total cost of care,’ which could also be stated as total cost of ownership [TCO]. TCO considers much more than the cost of a product. We want to combine technology, data and analytics, and machine learning to enhance physician, clinical, and administration engagement, to reduce cost at sourcing (and at other opportunity points that the business presents to the supply chain), and to enable more rigorous decision-making.”

The huge volume of item, cost, volume, and utilization data that UVM generates are augmented and enriched with data via its analytics partnerships. The health system is particularly interested in tracking acquisition cost “change from current and/or budget.” Analytics focus on benchmarking unit pricing against multiple cohorts, and discerning utilization trends over time, across settings, among providers, and through retrospective initiatives.

“We look at current costs against a volume-adjusted benchmark tool,” says Miceli. “We look at clinical utilization and buying trends at the department level to better understand if we are using what we purchased and to better target the exact products that we are negotiating. We look at reimbursement data to make certain that the cost of supplies is within a satisfactory percentage level of the reimbursement so that we can also ensure that we are improving our margins at the negotiated cost levels the vendors are offering.” UVM pursues this effort continuously, based on the premise that there is no end to opportunity areas to exploit.

Miceli regards physician engagement and trustworthy data as paramount to the health system’s success. “However just saying that is not enough,” he says. “The data that we traditionally use is not enough. Most hospital sourcing teams use historical purchase order data in an aggregated fashion and then create contracts at a cost, hopefully lower than the previous year. To effect the kind of savings we are after, and that are necessary to be a high-performing supply chain team, you need financial and clinical utilization information integrated at the supply chain level and you need tools that allow you to manage the items post implementation—pushing the envelope all the way back to the point of decision.”

UVM’s supply chain data monetization strategies are deliberate, creative, and evergreen. Miceli’s team is always looking to push its practices via partnerships and collaborations that border on near-direct monetization models. The health system’s next frontier includes robotic analysis, predictive analytics with high correlation, and artificial intelligence on contract terms and conditions.

Footnotes

a. Barlow, R.D., “Supply Chain’s Newest Elite Weaving Through Consolidations, Standardizations,” Healthcare Purchasing News, Nov. 19, 2018.