Having worked for and with Airborne Rangers, an elite light infantry special operations force of the U.S. Army, Charlie Miceli learned the importance of performing recon before every mission. The motto "Rangers lead the way" became his battle cry.
That credo still guides him today as Vice President of Supply Chain for Fletcher Allen Health Care (FAHC) in Burlington, Vt.
Proactive by nature, Charlie is not one to wait for a savings mandate from the CEO or CFO before he leaps into action. Instead, he and his team build the supply chain goals and objectives for themselves upon four key pillars: customer service, cost management, enhancing business processes and meaningful informatics.
"We are constantly using meaningful informatics tools to monitor spending trends and to establish target opportunities for cost management. We're telling people what we're doing before they can bring it up to us."
We talked to Charlie recently about how this aggressive mentality has served him in the supply chain world at FAHC.
MediClick: As someone who always wants to set the goals rather than have them be set for you, what do you feel is the appropriate role of the supply chain at Fletcher Allen?
Charlie Miceli: Supply chain is resource management more than anything else. Rather than managing just supplies, we provide support in managing the entire spend—whether it's a bandage, capital equipment or business processes.
Fletcher Allen had this infrastructure in place before I got here. As a team we are just taking a good system and making it a great system. The executive support helps because our leaders have given the supply chain the ability to work as a team with departments to find opportunities for resource savings.
That means we need to keep our team multi-dimensional. So we're developing our next tier of leaders within our team. Our director of purchasing, contracting and value analysis is an example. She's a newbie in the supply chain business, but she's already been recognized by ERCI.org for using meaningful informatics to eliminate a pricing error that reduced our costs by over $177,000.
MediClick: What tools do you have that ensure that your supply chain team is being as effective as possible?
Charlie: The key to supply chain management is meaningful informatics: using the right tools to look at supply chain spending so we can identify clear savings opportunities.
I believe you should always have analytics tools that provide meaningful informatics. That's why we have as many tools working in synergy as we can. Even if the tools are sometimes redundant, something always differentiates one from another.
Using MediClick, for example, we have expanded the general ledger in the med-surg world from about seven or eight codes to about 19 or 20 using an UNSPSC-type mythology. The purpose is to get more stratified within the groups.
We used to look at our OR spend, which is almost $3 million a month, and see it broken up among only seven codes—two of them were over a million dollars each with a large number of transactions in them. There was no significance except that it's a considerable amount of money.
Now, we've become more granular, expanding to 19 codes. So we have better detail to start peeling apart layers using MediClick to differentiate what was spent on meshes, sutures, platforms and all types of stuff. So we can see exactly where the high supply chain expenses are.
When we put in MediClick, we ran it as a transactional system, which it does very well. But it's also very intuitive as a strategic tool. I set the strategy with it and then teach the supply chain staff how to break out the data and analyze it—from acquisition to getting money out the door.
MediClick: In the Culture of Savings Series, we're always interested in how supply chain executives leverage the power of the people to find savings opportunities. Have you found any interesting approaches to do this?
Charlie: Every member of the hospital staff can make a difference to the bottom line. I saw this first hand when I worked at Newton-Wellesly Hospital in Newton, Mass. We had a cost management/margin enhancement program that provided recognition bonuses for staff who provided effective cost-saving ideas.
Some members of our front-line staff who worked in linens were on a team that recommended and implemented the in-sourcing of our linen cart makeup. We examined their suggestion, implemented it and reduced our costs by more than $100,000 per year. These team members each received a one thousand dollar check right before Christmas as a reward for their efforts.
When we asked for their help, we let all ideas come in. You have to move fast and grab onto the great opportunities, but you also have to be able to know when to set aside the "parking lot" ideas that may be useful in the future.
That same philosophy holds true here at FAHC. We go out and engage folks as members of our team. We have active value analysis committees that cover the major supply expense areas of the hospital. Our mission is very collaborative. That's the kind of culture we have here.
MediClick: Is it an important part of your strategy to build relationships outside of the hospital staff?
Charlie: We maintain a strong relationship with our distributor because we do a large chunk of business with him. We try to be a good customer who tries to help him meet his goals, too. For example, our distributor has deliveries for us every day. We have given him the option to queue our orders so he can send less than five trucks up here per week. This action gives our supplier an opportunity to reduce costs; that has become as valuable as the transactional nature of the relationship.
If we are engaging a supplier to lower his unit costs, and we are not doing anything to help reduce his operating costs, then that's not fair. But if we can help by changing our operations to remove waste, redundancy in business processes, etc., without increasing our expense, that's reasonable.
We present an advocacy model where we strive to understand and accommodate the business requirements of our supplier so we can mutually take unnecessary costs out of the supply chain like rush deliveries, use of EDI transactions, managing pay terms, quarterly reviews, etc.
As we progress in this model, our goals are to use meaningful informatics and advocacy to maintain aggressive stewardship of our resources and ultimately reduce costs in our supply chain.
MediClick: Thanks Charlie!
Comments