Children’s Hospital of Philadelphia


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Children’s Hospital of Philadelphia shifted its supply chain from a cost-first mindset to focus more on the patient experience.

One of the biggest challenges in managing a supply chain for a children’s hospital is the varying size of the patients. Some are nearly full grown adults while others can be held in the palm of a hand. Products that an adult hospital can get from a single supplier require sourcing from multiple suppliers for pediatric hospitals. Simply managing the dose of medication accurately requires automation for precision and can result in tremendous waste due to supplier packaging.

Children’s Hospital of Philadelphia (CHOP) is one of the leading children’s hospitals in the United States and around the world. CHOP operates a 535-bed hospital in Philadelphia and has an outpatient network that has grown to more than 50 locations spanning across southeastern Pennsylvania and New Jersey. Additionally, CHOP manages many pediatric services in community hospitals in the Philadelphia region and suburbs. CHOP has treated international patients from over 90 different countries around the globe.

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Supply chain plays an integral part in the hospital’s operation, procuring everything from capital equipment to basic commodities, from expensive drugs to needles and syringes. It contracts for services that cover routine maintenance on equipment to patient transport (think helicopters and ambulances) to language and landscaping services. The supply chain team is responsible for more than $380 million in annual spend, not counting capital purchases, Rittler says.

Patients First

Like many people in the Philadelphia area, Rittler had family members who received care at CHOP. When her niece was treated for cancer at the hospital 10 years ago, Rittler witnessed first hand the compassionate, quality care that CHOP’s clinical teams deliver every day. Rittler, who worked for another healthcare organization at the time, was so impressed by the clinical care at CHOP that she told her boss she couldn’t ever do her job the same way again. From that day forward, she wanted to assure that supply chain never lost sight of the patient and the impact their work has on the patient.

Rittler brought those ideas with her when she joined CHOP in 2010. At the time, the hospital’s supply chain organization was focused on getting the best price. With the help of other departments, Rittler began engaging the rest of the hospital’s operations and guided her team to look beyond the bottom line numbers to supply chain’s role in the quality of care CHOP delivers. “We really have shifted our internal culture in supply chain where we strive to be proactive, to anticipate needs before they are a crisis,” she says.

Six years ago, most days in the supply chain were spent putting out fires to resolve the many supply issues that arose. Nursing would need to notify supply chain that the hospital was on short supplies and completely out of others. The team spent countless hours scrambling to refill supply bins. It took a few years of implementing progressive changes, but days are now far more structured and less hectic.

The 185-person supply chain team begins its day on a series of morning safety huddles. During these huddles key metrics are reviewed such as stock outs, fill rates, inventory accuracy, backorders, etc. Also, operational issues that could impact supply chain’s ability to provide support for patient care are reviewed, for example, staffing levels and technology failures. The team leaves these huddles with directives for addressing the problems or potential problems before they become emergencies. All relevant information is shared hospital-wide at the CHOP safety huddle or bed management meetings. The paradigm has shifted so supply chain has become strategic partners, providing information and updates that support the care teams.

Several initiatives have contributed to creating more efficient supply chain processes. Manually counting the stock on hand each day was a time-consuming and many times inaccurate process. Peter Schemm, director of supply chain process and technology, found a better way. He evaluated and implemented technology from PAR Excellence Systems to track inventory in the patient care areas.

Items are now stored in more than 2000 bins that sit on scales so that when a product – even something as light as an adhesive bandage – is removed, the system notes the weight difference and updates the inventory. The system automatically generates orders twice daily to ensure the hospital is never left short on supplies. Additionally the system captures any charges for billing the patient, which improves nursing efficiency. “The PAR system tracks inventory in real-time for us. If we are short in one area, we can pull supplies from other areas to meet clinical needs,” Schemm says.

Additional efficiencies were gained when the Fast Pic5, pick-to-light system, was implemented in 2011. Imagine a dry cleaner type of technology that brings the supplies to you as opposed to having to walk up and down aisles to pick products. More than 1000 items are stored and managed in this system. The Fast Pic5 technology is interfaced to the ERP system to receive requests for supplies. The orders are consolidated so up to eight orders can be picked at one time. Schemm states: “The pick-to-light technology has also improved inventory accuracy, so we have fewer stock outs”.

Data from the operations systems are fed into CHOP’s central data warehouse. Schemm developed dashboards and analytical tools using business intelligence software. The dashboards are designed to be actionable with colored light indicators to facilitate the workflow. Schemm has begun to incorporate external data into the BI tool. CHOP receives daily feeds from its primary distributor, Medline Industries Inc., which shows the distributor’s inventory levels and ordering information. Schemm also receives feeds the BI tool with package tracking information from UPS. Having data readily available not only simplifies the supply chain work, many internal departments use the tool to plan and reconcile budgets.

Safety First

CHOP serves patients from before birth, through fetal programs, to age 24, and sometimes beyond. Many of its families are at their most vulnerable point in their life. CHOP strives to create a safe, kid-friendly environment that allows all kids to thrive. Hallways feature bright lights and vibrant colors and every floor includes a play area with age-appropriate toys and activities. Each holiday brings with it a number of fun events for patients and the hospital even runs a summer camp and a prom. There is a TV and radio station in the main atrium that hosts regular visits from local celebrities and musicians. Many times, patients are the stars as they share their journeys dealing with various illnesses and diseases.

Rittler says it all plays into CHOP’s belief in providing its young patients with a true childhood experience so they can heal holistically, as well as medically. “We do a lot of things to let them be kids despite being in difficult situations,” she says.

The supply chain team supports CHOP’s safety efforts in several ways. CHOP’s safety culture is centered around the patient, but its tentacles touch staff, families and suppliers. Supply chain assures that the hospital has safe, effective supplies and equipment through the CHOPtimize program. This program is CHOP’s version of a value analysis program where supply chain partners with clinical and operation leaders to evaluate any new products, services or equipment. According to Matthew Rutberg, manager of the CHOPtimize program, “At any given time we have 90-100 new products in our queue.” Each product is fully vetted to understand safety considerations, clinical outcomes, training and maintenance or storage requirements before they are introduced to the “sharp end” of patient care.

The CHOPtimize program consists of five different multidisciplinary teams chaired by nursing or clinical leaders. Each year supply chain facilitates discussions to plan the work for the coming year, developing playbooks for each strategy identified. Throughout the year, supply chain oversees the execution of the playbooks, achieving shared goals of driving value to the patient. The value equation considers safety, quality and cost; it helps to align supply chain and clinical care.

CHOP’s suppliers play a key part in CHOP’s safety journey.  Brian Rounsavill leads supply chain’s contracting and procurement teams at CHOP. Rounsavill’s team leverages CHOP’s spend and identifies opportunities to develop strategic supplier relationships, including monitoring supplier compliance to policies. These policies require suppliers to get vaccinations and background checks before engaging with clinicians and potentially patients. The procurement and contracting team also works to ensure suppliers can meet CHOP’s data security requirements, which requires a tight partnership with the information systems department.

Over the past year, CHOP has worked to develop strategic alliances with key suppliers. “Our strategic partners share our mission and align with us to meet both CHOP’s clinical and operational needs,” Rounsavill states. For example, the strategic partnership with Medline has enabled CHOP to improve supply availability and visibility, reduce costs and increase ordering accuracy. Most recently Medline have partnered with CHOP on new product development.

“We are evaluating our top 10 to 15 suppliers to see how we can create strategic partnerships,” Rittler says, adding that suppliers appear interested in this concept. “I think they realize the world is changing and we all must work to improve the healthcare system.” Historically suppliers would market to physicians, particularly for specialty items, such as implants. She continues with; “They [suppliers] can’t just market to physicians. They must involve supply chain.”


Children’s Hospital of Philadelphia