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Supply Chain Management

Care Providers — Hospitals

Mastering your supply spend

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As providers struggle to control costs through value analysis and standardization, they turn to their item master as the baseline source of data. Unfortunately, this “source of truth” is not always truthful — in fact, an Association for Healthcare Resource & Materials Management (AHRMM) study estimates that an item master is only 70% accurate.1 Further, hospital networks with disparate systems cannot keep up with the ongoing churn of item master information to maintain accuracy. Through our market analysis including over $1billion in supply spend, we’ve discovered the following challenges:

15% of the time, different prices are paid for the same product

12% overpayments are made on costly PPI items

24% of supply chain staff time is spent on fixing errors

8.7% of nurses’ time is spent on searching for supplies2

Organizations need normalized and rationalized supply spend data with industry data to create a single source of truth.

The McKesson Strategic Supply Sourcing™ solution helps you drive data accuracy and promote

new savings through the first preemptive formulary-managed procurement suite with your own perpetually cleansed item master to help find desired items through the ease of online shopping. Providers can now create an accurate “source of truth” through employee empowerment with guided procurement using three key steps: find, compare, control.

Find, Compare, ControlOrganizations can use guided procurement and organizational formulary rules to find items in the item master to meet the specific need, compare functionality and pricing, and to control choices at the point of requisition.

PURCHASEHISTORY

ITEMMASTER

FIND CONTROL

COMPARE

CONTRACTS

Find – On average, 44% of items cannot be found at the point of requisition and are purchased outside the item master.3 Our integrated virtual item master (VIM) helps identify items through pictures, aliases and unlimited attribution, giving requisitioners access to the e-commerce marketplace.

The e-commerce marketplace powered by Amazon Web Services™ provides full e-commerce services to hundreds of vendors. It contains more than 1.1 million items, including photos and full-length product descriptions. Users can easily find items and related contract information, including expiration dates.

Compare – Without an effective process to drive standardization, your organization is exposed to diluting spend power and excess/obsolete inventory. Our industry-first, patented artificial intelligence (AI) engine displays functional equivalency, normalizes data and recommends lower cost alternatives at the point of requisition.

McKesson Strategic Supply Sourcing™

Gain comprehensive supply management while supporting value analysis initiatives

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The healthcare system virtual item master (VIM) exchanges information with an e-commerce marketplace, an artificial intelligence (AI) engine that contains the industry data set.

To successfully achieve comparison, we normalize data to a single source of truth. Integrated with all contracts, users can compare items to help make the right decision to control spend.

The AI engine combines internal and external supply chain data including GPO contracts, vendor catalogs, self-contracted items and off-site locations such as physician specialty practices. Information rolls up into a central VIM, yet lets each facility retain its own naming conventions.

To help standardize critical, high-impact physician preference items (PPI), functionally-similar and functionally-equivalent items can be more easily identified.

Control – When requisitioners are not presented with pertinent information, including the last price paid, the correct contract price and a less expensive alternative, your economic advantage through contracting and standardization is at risk.

This industry-first preemptive formulary enforcement helps give you unprecedented control to find the desired product at the point of requisition, and it includes an anywhere access

mobile option. Other Procure-to-Pay (P2P) approaches focus on only automating existing processes, while the point of control remains after spend occurs. Further underlying problems remain unaddressed with P2P: proliferation of products and vendors, lack of access to pertinent external data like available contracts and lack of needed information at the point of requisition.

Our preemptive formulary control helps empower your users to support the financial health of your formulary while enabling visible insight in managing your spend. Any non-contract item request prompts an alert to require approval routing, including delegations feature when approvers plan to be out of the office. At-a-glance analytics direct decision makers quickly to highest savings opportunities and provide organization-wide visibility to help manage department spend.

Expand resources to drive sustainable savingsMcKesson Supply Chain Advisory Services™ provides the additional resources and knowledge you need to supplement your team. Our advisors will help you attain the full benefits from using McKesson Strategic Supply Sourcing — not just the easy-to- identify savings.

Contact usLet McKesson Strategic Supply Sourcing support your formulary and provide the comprehensive data you need to better manage PPIs and drive new savings. For more information, please contact your account executive.

The healthcare system’s virtual item master (VIM) exchanges information with an e-commerce marketplace, an artificial intelligence (AI) engine that contains the industry data set.

Internal & external data

Normalized descriptions

Manufacturer data

Functional equivalent identification

GPO

Value analysis

Hospitals

Physician practices

Clinics

Long-term care facilities

MarketplaceCloud-based

AI Procurement Engine

Inputs & Outputs

Outside VendorsProviders’

data

VIM

Providers’data

VIM

Providers’data

VIM

Providers’data

VIM

The

photos descriptions transactions

1 “Global Data Synchronization Network,” accessed December 12, 2013, AHRMM Website; http://www.ahrmm.org/ahrmm/ext/standards/gdsn.html.

2 McKesson/Meperia healthcare marketplace data.

3 McKesson/Meperia healthcare marketplace data.

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McKesson Provider Technologies5995 Windward Parkway Alpharetta, GA 30005

www.mckesson.com

Copyright © 2014 McKesson Corporation and/or one of its subsidiaries. All rights reserved. McKesson Strategic Supply Sourcing and McKesson Supply Chain Advisory Services are trademarks of McKesson Corporation and/or one of its subsidiaries. Amazon Web Services is a trademark of Amazon.com, Inc. All other product or company names mentioned may be trademarks, services marks or registered trademarks of their respective companies.

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