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July 07 Businessexcellence 45 Twenty three minutes later, on average, 24 hours a day, seven days a week, the item is delivered to their room. We do that because we want to differentiate ourselves from our competition, which is the most basic viewpoint that any industry has.” And then there’s the supply chain. You don’t have to be a manufacturer to have one. “Our supply chain is no different from anybody else’s supply chain,” says Fosdick. “We need the right things available at the right time, and we need them provided at the least cost.” So The Nebraska Medical Center looked at what Wal-Mart was doing, thought it would translate well to a hospital environment, and changed its supply chain model to vendor managed inventory. “In Wal-Mart,” says Fosdick, “when you pick up a tube of toothpaste and take it to the cash register, it’s not Wal-Mart’s toothpaste until you pay for it. Until then it’s Procter & Gamble’s toothpaste. We said ‘why can’t we do that’? So we talked to our supplier that we had done business with for 20 years and said we wanted to do something different, but they didn’t seem to have the ability to do it.” So The Nebraska Medical Center approached Cardinal Health who did not have a program like Wal-Mart’s either, but was interested in trying it. “They bought our entire inventory of med/surg supplies for about $5 million,” says Fosdick. Cardinal also installed its Pyxis hospital automation system for controlling medicines and supplies, at its own expense. “They guaranteed us $5.2 million worth of savings over the fi rst fi ve years, and we said that’s not good enough, anything else you can save us you keep 30 percent of. Last year we gave them a check for $600,000. We saved $3 million on our med/surg supply costs altogether. It’s the easiest $3 million I’ve ever saved, because we didn’t cut anything. It’s not our inventory, it’s Cardinal’s inventory, and their logistical expertise far surpasses that of the average hospital. We also picked up about three quarters of a million dollars in net revenue from charges that we didn’t get before, because things were taken out of supplies that were not charged properly. So it’s been an extraordinarily successful venture for us.” As in any industry, hospitals have a number of different priorities, including cost reduction and customer service. Quality of healthcare, however, is of paramount importance here. The important thing, which many fi nd diffi cult to achieve, is to balance priorities. “I see many organizations that go by the fl avor of the month,” says Fosdick. “This month they’re going to cut costs, next month they’ll try to increase revenue. After that they’re going to improve quality. So I said, ‘let’s agree on what’s important and let’s stick to it’.” Four priorities were identifi ed: to become the most attractive place to practice medicine; the most attractive place to be employed; to continue to improve customer service, and to continue to improve clinical quality and patient safety. “When we fi nished I said, ‘these are our priorities, and none of them has anything to do with fi nance. But if we do these four things, our fi nancial performance will improve.’” Fosdick was right about that. The year before he arrived the business made $5.7 million, with a budget of over $11 million. “Last year we had a budget of $25 million and we made over $50 million,” he says. “We increased the bottom line ten times in fi ve years. The fi rst year I was here we spent $12 million on capital. Last year we spent $72 million on capital. We’ve made some progress.” A fi fth priority was added a couple of years ago; to develop a culture of fi scal, operational and clinical accountability. “After defi ning our priorities we spent a great deal of time and effort to get people to accept them,” says Fosdick. “So now we’re going to hold them accountable. We think that’s a basic important way of doing business. In most hospitals, people don’t know what’s most important, but if you look at great Nebraska Medical Center Sodexho USA is the leading provider of food and facilities management in the US, with $6 billion in revenue and 120,000 employees. Sodexho offers innovative outsourcing solutions in food service, housekeeping, grounds keeping, plant operations and maintenance, asset management, and laundry services to over 6,000 corporations, healthcare, long-term care and retirement centers, schools, college campuses, military and remote sites in the US. Sodexho USA Lowering the cost of providing healthcare. 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