Hitting a $5 Billion Jackpot in Cost...

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2014

A Practitioner’s View on Reducing

Inefficiencies in the Healthcare

Supply Chain

Hitting a $5 Billion Jackpot

in Cost Savings:

GHX

Richard HankePresident, Global Customer Support Operations

Firstsource Solutions

Tarak GhoshSenior Vice President, Business Development & Client

Relationships, Healthcare Payer Business, North America

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2014

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Hitting a $5 Billion Jackpot in Cost Savings: A Practitioner’s View on Reducing Inefficiencies in the Healthcare Supply ChainPresented by

GHX

Rich Hanke- Vice President, Global Customer Support Operations

Co-Presenter

Firstsource

Tarak Ghosh- Senior Vice President, Business Development & Client Relationships, Healthcare

Payer Business, North America

October 15th

© Firstsource 2013 | Confidential | 11-Oct-14 | 4

Agenda

GHX Overview

Firstsource Overview

Objective

GHX Vision

Getting things right for achieving transformational vision

Governance Structure for operationalizing transformational program

Role of Outsourcing Service Provider: Automation, Efficiency and Quality Improvements (Case studies)

Business Benefits delivered for healthcare supply chain partners (Case studies)

Best practices & Key Learning

Q & A


About GHX

Founded • March 2000, by GE, Johnson & Johnson, Abbott, Baxter and Medtronic

Major Shareholders • Owned by Thoma Bravo

Business Areas

Operations • GHX has operations in the United States, Canada and seven European countries

GHX Global Network • 18,000 acute and non-acute care providers organizations

• 10,000 medical-surgical suppliers

Worldwide Headquarters

• Louisville, Colo.

Employee Strength • More than 700 globally

GHX enables better patient care and billions in savings for the healthcare community by maximizing automation, efficiency and accuracy of business processes

Mission

• Automation of supply chain processes

• Visibility to supply spend

• Automation of procurement, content and contract management

• Creating better business intelligence

• Enablement of global data standards and synchronization


Firstsource Overview

Founded • December 2001

Major Shareholders • Spen Liq Private Limited (56.86%)

• Public and Others (43.14%)

Business Model • Provide multichannel customer lifecycle management services for customers in - Telecom & Media (43.8%), Healthcare (34.7%), Banking & Financial Services and Insurance (21.4%) and Others (0.1%)

• Full range of services delivered through Customer Management, Transaction Processing and Collections

Clients• Over 100 global clients including 21 Fortune 500 and 9 FTSE 100 companies

• 730 Hospitals in the US across 35 states

Revenue • FY 13 – 14 revenue is INR 31,059 million / USD 514 million / £ 323 million

• Q1 FY15 revenue is INR 7,556 million / USD 126.3 million / £ 75.1 million

Client RevenueContribution

• Largest client – 24.0%, top 5 clients – 46.0%

Employee Strength • 27,600+

Right-shore delivery model | Domain experts and globally trained resources | Operational Excellence

Innovative solutions and partnerships | Engaged leadership

Best in Class Delivery

Promoter • RP-Sanjiv Goenka Group | Revenue FY 14 : USD 2.5 billion

• 6 Business Sectors, 15+ Companies, 55,000+ Employees, 3,00,000+ Shareholders


Objective

Global Healthcare Exchange (GHX) – a global Healthcare supply chain management organizationhad set out for the five year transformational vision of reducing Healthcare Costs by $5bn from2010 to 2015. To achieve this vision, GHX has built their own Global Network, the largest businesscommunity in healthcare, connecting supply chain, finance and clinical professionals with theirsuppliers and partners. In this session, presenters will discuss how the global organization alongwith its strategic partner helped achieving the transformational goal by implementing robustgovernance, operational excellence and process automation initiatives across digitized supply chainmodules.

What Can You Expect To Learn Today?

1.Best practices in client and strategic service provider operationalizing to meet client'stransformational vision

‒ Creation of strong back end of accounts payables, accounts receivables and catalogueinformation for efficient and effective supply chain management

‒ Role of operational excellence and process automation in removing inefficiencies andbottlenecks in supply chain management

2.Case Studies


Transformational Vision: Value You Can Measure..

On January 1, 2010, we started the clock on our “5 in 5” pledge to take $5 billion out of the cost of healthcare in five years.

Source: GHX website


Polling Question

• According to you, what are the different levers of transformation?

- Cost to serve reduction

- Improving Customer experience

- Increasing the Top line

- Any other factor


Getting Things Right: Identifying Factors for "Cost-to-Serve"

Lack of process standardization in the healthcare supply chain & the duplication of processes as two factors that drive up costs for providers and suppliers

The practice of placing multiple, redundant orders increases costs for suppliers and providers

Clinicians often order and store excess inventory in fear they will run out. inventory sat in a closet for over a month without being used and in such cases trading partners lose money when products expire and must be discarded.

Many products are unnecessarily shipped in expensive ways(e.g. overnight, via air). In some cases, the freight charges end up being more expensive than the products themselves

Process Standardization

OrderFrequency

InventoryLevels

FreightCharges

Higher Cost to Serve

12

3

4


Polling Question

• How many of you run the programs with stringent SLAs in terms of quick turnaround time?


Firstsource: Transformational Partner in Meeting GHX's Reducing "Cost-to-Serve" Vision

People Process Technology

•Able leadership to drive complex operations•Key skill sets:

content cleansing, Life science graduates, HCPCS certified coders

•Process standardization•Process

automation•OCR to reduce

training timelines

•Proprietary workflow•Relevant

technology interventions

• Managing scale of operations: Processed 3.16 million purchase orders in FY14

• Meeting Stringent SLAs: Meeting 30 minute deadline of PO availability in supplier system

• Driving business growth: Providing multi-lingual capability for PO processing across 7 languages

• Operational Excellence: Consistently delivering quality level of 99.5%

Firstsource bringing “OPERATIONAL TRANSFORMATION”

GHX Approach for Reducing “COST-TO-SERVE”

Automation of Supply Chain

Process

Visibility of Supply Spend

Automation of Procurement,

Content & Contract Management

Creating Better Business

Intelligence

Enablement of Global Data Standards &

Synchronization


GHX – Firstsource Engagement

2008

G-Fax™ Purchase Order EDI 850

(US)

AprDecNovSepJunFebOctSepAugMay Dec Jan

AllSource® Content Services

2010

G-Fax™ Purchase Order EDI 850 (EU)

GHX Connect Plus™

On Demand APSM EDI 810conversion

2011

GHX Belgium

GHX Market Inteligence

2012 2014

-Tier 1 Customer Support - HCPCS

2008 2010 20112008 2010 201220112008 2010

Registration Services


GHX – Firstsource Governance Structure

Leadership EVP – BD &Client Relationship

Global Operations SVP – BD & Client Relationship

Support Group – all Based Onshore

Head of HR

Head of Training

Head of WFM

Head of Service Quality

Head of Technology

Operational Management Group

Change Management

President & CEO – Healthcare

Vice President - Operations

SVP – Healthcare Payer

General Manager - Operations

GFAXEU

On Demand APRegistrations

Tier 1

Onsite Support

Content Operations

Market Intelligence

HCPCS

GFAX US

Operations Group

Support Teams

HR TrainingForecasting

and Planning

Service Quality

Technology


Case Study 1: EDI Conversion of 3.16 million of Multilingual Purchase Orders Meeting Stringent Timelines

Business Requirements Solution Key Benefits

• EDI Conversion for better order tracking and reporting: Convert purchase orders (PO) dealing with medical equipment's, surgical products etc., to EDI format

• Multilingual Capability : multilingual PO’s including, German, French, Spanish, Catalan, Italian, Dutch & English

• Speed Order Processing time: PO’s to be converted within 30 to 60 minutes from receipt

• High level of accuracy

• Improve customer satisfaction

• Deployed proprietary workflow solution for handling data conversion integrated with optical scanning technology

• Configured separate work Q’s to handle specialized processing

• Engaged language consultants to create mapping table to interpret non-English PO

• Identified key words and created mapping table to translate text in English

• Created look up tables & automated rules to select medical items based on unique item # ,reducing keying effort / errors

• Enabled creation of single EDI output that integrates with supplier’s ERP system

• Deployed customized automated reporting solution to feed real time order tracking & reporting

• Processed about 3.16 million POs annually in the EDI format, adhering to stringent turnaround time of 30 minutes; improving order tracking and reporting for members

• Supported POs in 7 different languages

• Speed up order processing time by ensuring more than 95% of the purchase orders are delivered within 30 minutes and expediting time to invoice

• Reduce data entry errors and inaccuracies. Error rate reduced from 0.05% to 0.02%

• Improve customer satisfaction

0.09 M

0.68 M

1.04 M

1.87 M

2.44 M

3.16 M

3.60 M

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

Growth % 100% 722% 154% 179% 131% 130% 114%

Total 93,468 675,149 1,040,427 1,865,378 2,435,973 3,163,627 3,600,000

Apr08 -

Mar09

Apr09 -

Mar10

Apr10 -

Mar11

Apr11 -

Mar12

Apr12 -

Mar13

Apr13 -

Mar14

Apr14 -

Mar15

(Projected)


Case Study 2: GHX GFAX – Purchase Order Processing Ship to Process


• For the EDI conversion of the purchase orders received from hospitals, the Shipping/Billing Account and Address available on the fax image had to be searched based on specifications.

• The entire process was very complex due to its sheer volume of 100,000 records.

• It required thorough specification training for associates

• The process was not fool proof and prone to errors affecting the quality scores

• Entity level specifications were inbuilt within the system thereby eliminating specification training for the associates.

• Inputs fed into the system for bringing the matching records was standardized.

• Pop-up alerts and Tool-tip messages are shown at every stage of the process to aid the associates.

• Minimizing instructions to the associates reduced the overall training time from 4 weeks to 2 weeks in spite of growth of suppliers and geographies across EU and US

• System inbuilt specification resulted in quicker processing improving the productivity of associates there by end to end Cycle time got reduced to an extent of 10%

• Improved the quality metrics consistently from 99.5% to 99.8%

GFAX - Quality - Y on Y trend

99.5%

99.7%99.8% 99.8%

Quality SLA, 99.3%

99.0%

99.2%

99.4%

99.6%

99.8%

100.0%

Year 1 Year 2 Year 3 Year 4

Quality % Quality SLA



• Reduce “Touch-less” rates to support business growth

• Improve “Pass through” rates of orders so that POs getting delivered to suppliers’ ERP systems rather than getting stuck at GHX’s GFax system

• Improve quality of service and overall supplier satisfaction

• Analysis of major reject reasons: Account issues, Missing UOM, Missing Quantity, Keyword rejects (Contribution of 79%)

• Process standardization for some crucial steps of the overall process.

• Standardization of instruction for agents and technical solutions deployed for handling market specific requirements.

• Robust governance to review reject reasons

Contribution to the GHX:

•Increased confidence level of suppliers

•GFax solution is implemented in new markets (Italy) and some of the suppliers deployed it in their new divisions (Spain)

•New suppliers were added to the list with good reference from the shareholders (BBraun)

Contribution to GHX Stakeholders:

•Improved pass through rates from 42% to 65%

•Decrease in operational cost

•Healthier relationship with suppliers

Case Study 3: Improvement in Pass Through Rates

30%

40%

50%

60%

70%

Q1'Y12 Q2'Y12 Q3'Y12 Q4'Y12 Q1'Y13 Q2'Y13 Q3'Y13 Q4'Y13 Q1'Y14 Q2'Y14 Q3'Y14

GFAX - PTR

Project Baseline - Kickoff


Case Study 4: GHX Content Operations – Improvement on Quality and T’put


Accurate item master data:

• Reduce billing and product coding errors

• Quickly and conveniently send item master and purchase order history

Consistent product descriptions:

• Achieve significant savings from reduced errors

• Lower costs from better contract alignment

• Use of accurate, up-to-date data in your materials system.

Reduce time required for managing product changes:

• Identify data errors and reimbursable products

Built an interface audit tool to :

• Automate business validations & trigger exceptions for easy resolution

• In-built standard document to guide user on mandatory attributes needed based on noun and commodity of a product

• 100 + conditions validated to check accuracy of data

• Auto-populate attributes from interface tool to PDM

• Dissect item description based on GOLD / Completed items from VLI

• All business validation grouped as “Standards” & “Noun specific” inbuilt in audit tool

• Minimizing instructions to the associates reduced the overall training time – Production Throughput increased by 20%

• System inbuilt specification resulted in quicker processing improving the productivity of associates

• Improved the quality metrics consistently

• Data consistency improved with reduced rework

21%19%

9%

6%8% 8%

6%

0%

5%

10%

15%

20%

25%

Sep'13 Oct'13 Nov'13 Dec'13 Jan'14 Feb'14 Mar'14

DEMOTE TREND% of Demote

Month


Key Learning

• Joint ownership to achieve transformational vision

• Structured daily, weekly, monthly and quarterly touch points

• Robust reporting framework and Service level monitoring

• Regular onsite visits by both GHX and FS

• Subject matter experts to deliver complex business operations

• Proprietary technology solutions enabling shorter turn around time

• 100% redundancy built in to ensure business continuity

• Effective change management process

• Well established and effective training and quality methodologies

• Inculcate continuous improvement culture delivering tangible benefits governed by Process Excellence framework

Governance & Engagement

People & Technology

Operational & Process Excellence


Contact Us

Tarak GhoshSVP- BD & CRM

Healthcare Payer Business, North [email protected]

Rich HankeVP

Global Customer Support [email protected]

mailto:[email protected]

mailto:[email protected]


THANK YOU

Firstsource (NSE: FSL, BSE: 532809, Reuters: FISO.BO, Bloomberg: FSOL@IN) is a global provider of customised BPO (Business Process Outsourcing) services to

the Banking & Financial Services, Insurance, Telecom, Media & Publishing and Healthcare sectors. Its clients include FTSE 100, Fortune 500 and Nifty 50 companies.

Firstsource has a “rightshore” delivery model with operations in India, Ireland, US, UK, Philippines and Sri Lanka. (www.firstsource.com)

Stay Connected

http://www.firstsource.com/

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SU MMIT

2014

Session #17

Hitting a $5 Billion Jackpot in Cost Savings:

A Practitioner’s View on Reducing Inefficiencies in the

Healthcare Supply Chain

Rich Hanke

[email protected]

Tarak Ghosh

[email protected]

Speakers:

Hitting a $5 Billion Jackpot in Cost...

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