Executive Briefings

Banner Health: Balancing Supply-Chain Cost and Quality

Doug Bowen, vice president supply chain, and Terry Loftus, medical director, surgical services and clinical resources, discuss the initiatives that Banner Health has undertaken in recent years to cut inventory and logistics costs, without affecting the quality of service to doctors and patients.

Banner Health: Balancing Supply-Chain Cost and Quality

Banner Health is one of the nation's largest non-profit health systems. It operates 28 hospitals in seven states, with 45,000 employees. Loftus says Banner strives to deliver products and services at a lower cost, while still improving value for customers. Its Division of Care Management focuses on good clinical practices and patient safety. The challenge, he says, lies in figuring out how to decrease average unit cost without affecting the quality of service.

Two years ago, Banner undertook a value-analysis program, in which it questioned surgeons and other practitioners about the importance of individual items. Other than some previous conversations about heart valves and orthopedic implants, it was the first time that Banner had reached out to surgeons on a systemized, proactive basis, with a specific cost-cutting target in mind.

Bowen oversees Banner’s centralized services operation, under which it operates a vertical supply-chain model, including self-contracting and self-distribution. It offers a variety of services, including a compounding pharmacy, retail pharmacy with mail-order capabilities, and manufacturing of surgical packs. The unit also engages in global sourcing and the importing of shipping containers from Asia.

In the past, Banner relied on distributors for many of those tasks. They were eliminated when it moved to implement a vertical supply-chain strategy. Inventory is now centralized as well, giving Banner the ability to manage it from a single location, and avoid the tendency to store it in the hospitals.

“I won’t say we’re perfect,” says Bowen, “but we’ve made great inroads in getting people to trust that products will always be there.”

Bowen says Banner continues to strive for improvements in its supply chain, with the goal of becoming the industry leader in the period from 2015 to 2020.

To view the video in its entirety, click here

Banner Health is one of the nation's largest non-profit health systems. It operates 28 hospitals in seven states, with 45,000 employees. Loftus says Banner strives to deliver products and services at a lower cost, while still improving value for customers. Its Division of Care Management focuses on good clinical practices and patient safety. The challenge, he says, lies in figuring out how to decrease average unit cost without affecting the quality of service.

Two years ago, Banner undertook a value-analysis program, in which it questioned surgeons and other practitioners about the importance of individual items. Other than some previous conversations about heart valves and orthopedic implants, it was the first time that Banner had reached out to surgeons on a systemized, proactive basis, with a specific cost-cutting target in mind.

Bowen oversees Banner’s centralized services operation, under which it operates a vertical supply-chain model, including self-contracting and self-distribution. It offers a variety of services, including a compounding pharmacy, retail pharmacy with mail-order capabilities, and manufacturing of surgical packs. The unit also engages in global sourcing and the importing of shipping containers from Asia.

In the past, Banner relied on distributors for many of those tasks. They were eliminated when it moved to implement a vertical supply-chain strategy. Inventory is now centralized as well, giving Banner the ability to manage it from a single location, and avoid the tendency to store it in the hospitals.

“I won’t say we’re perfect,” says Bowen, “but we’ve made great inroads in getting people to trust that products will always be there.”

Bowen says Banner continues to strive for improvements in its supply chain, with the goal of becoming the industry leader in the period from 2015 to 2020.

To view the video in its entirety, click here

Banner Health: Balancing Supply-Chain Cost and Quality