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ONTARIOBUYS: OR SC Pilot Funding Guidelines 2007-08

Table of Contents

Background
Pilot Program Description
Project Eligibility
Application Procedure
Review and Approval Process
Appendix A: 2007-08 OR SC Pilot Project Types
Appendix B: Project Overview Template

The Ontario Ministry of Finance (MOF) announced the OntarioBuys program in 2004 and established the BPS Supply Chain Secretariat in 2005.  The goal of the OntarioBuys program is to facilitate and accelerate the adoption of integrated supply chain and back office leading practices in Ontario's broader public sector (BPS).

The Secretariat's approach is to work collaboratively with broader public sector organizations - initially hospitals, school boards, colleges & universities - to support leading practice implementation effectively, so that they in turn can provide better, more cost-effective service to Ontarians.

The Secretariat's role is to:

• Facilitate transformation collaboration
• Champion leading practices
• Support development of standards and common practices
• Fund transformation projects
• Measure and report on performance against benchmarks
• Support and align with Ontario Public Sector Ministry priorities

The Ontario Hospital Association (OHA) is a voluntary organization representing approximately 158 public hospital corporations across 225 sites in Ontario. Founded in 1924 as an independent, non-profit organization, its members include all the public hospitals in Ontario as well as the province's psychiatric hospitals.  As the voice of Ontario's hospitals, the OHA is shaping the health care system by fostering leadership, supporting innovation and building linkages between hospitals and their communities.  The OHA is sponsoring the Operating Room Supply Chain Pilot Program as part of the Patient Safety Support Service.

In October 2004, the Ministry of Health and Long-Term Care (MOHLTC) established the Surgical Process Analysis and Improvement Expert Panel to recommend a plan to improve surgical efficiencies in Ontario's hospitals.  Within the report, the Panel identified eight best practice supply chain targets:

• Sufficient instrumentation and supplies to support the operating room schedule;
• Separate physical supports for clean and soiled instrumentation and supplies;
• Management of instrumentation, and cleaning and sterilization processes;
• Management of an inventory supply replenishment process;
• The use of a limited but sufficient range of instrumentation and vendors to enable good choice and minimize inefficiencies and confusion;
• Access management policies for vendors;
• Standardization of custom packs, case carts and pick lists by procedure or program rather than by individual physician; and
• A value analysis of new peri-operative technologies.

The Panel also recommended that hospitals review their supply chain best practice targets as part of their annual operating plan process, assess progress and identify steps for improvement; and expected Local Health Integration Networks (LHINs) to bring a network perspective to supply chain targets through such initiatives as bulk purchasing, instrument sharing and joint inventory management, where appropriate. 

The BPS Supply Chain Secretariat and the OHA are working together to launch the Operating Room Supply Chain (OR SC) pilot program. Limited funding is being offered for the 2007-08 fiscal year to individual hospitals that are interested in targeting improvements in their operating room supply chain.  The objective of this program is to assist hospitals to achieve benefits that can be garnered through select improvements:

• Sufficient instrumentation and supplies to support the Operating Room schedule
• Separate physical supports for clean and soiled instrumentation and supplies
• Supply Management
• Standardization of instrumentation and supplies
• Standardization of vendors
• Access management policies for vendors
• Standardization of packaging

Each of these process enhancements addresses specific leading practices as identified in the Surgical Process Analysis and Improvement Expert Panel Report and OntarioBuys' A Leading Practices Compendium.  For a complete list of project types and descriptions, please see Appendix A. 

Applicants are required to meet the Operating Room Supply Chain project eligibility criteria as described below.

Eligible Applicants

To be eligible for funding, hospitals must:

• Be participating in a regional OntarioBuys project or have participated in a MOHLTC Peri-Operative Improvement Coaching Team site visit; and
• Have the ability to start and complete the project by April 2009.

Eligible Projects

Funding is available for projects that:

• Implement one or more of the identified process enhancements (refer to Appendix A); and
• Yield significant demonstrable benefits - Cash, Capacity and Qualitative benefits after implementation.
  • “Cash” benefits reduce institution operating costs, freeing up budget for other activities.
  • “Capacity” benefits free up resources (e.g. staff time, space) in ways that can be quantified but do not free up budget.
  • “Qualitative” benefits improve effectiveness, responsiveness and/or risk management in ways that are beneficial but not easily quantified.

	Project Stage	Output	Secretariat's Cost Share	Participating Institution Cost Share	Deadline
1.	Needs Identification	Project Overview Identify which process enhancement(s) will be implemented	0%	100%	Submit by November 7, 2007 (Feedback will be provided by November 14, 2007)
2.	Business Case Development	Detailed project analysis and work plan completed, including all costs and benefits Pre-implementation review by external expert Key output:  viable project plan ready to implement Business case proposal CEO commitment letter	Up to 100% ($25,000 max.)	0%	December 14, 2007
3.	Implementation	Project implementation completed Hospital portion of project funding arranged/secured	Up to 75% ($500,000 max.)	At least 25% (min 10% cash)	By April 2009
4.	Post-Implementation	Project evaluated Adjustments made as required Future recommendations/lessons learned	50% ($25,000 max)	50%	Within 12 months of implementation

All projects submitted will include an external consultant review.  The consultant will conduct an on-site assessment of your hospitals' OR supply chain opportunities.  The recommendations resulting from the external review will then be considered for implementation. 

Hospitals who are interested in submitting applications for the OR SC pilot program must first submit a project overview to the Ontario Health Association (OHA) by November 7, 2007.  A detailed business case must then be received by the BPS Supply Chain Secretariat by December 14, 2007. All applications to the OR SC pilot program must follow the process below; no steps in the process may be skipped. 

Needs Identification:

1. Consult Appendix A to ensure your proposed project aligns with the project types listed.

2. Review and complete the OR SC pilot program project overview template (Appendix B) available on the following websites: www.fin.gov.on.ca/ontariobuys; www.ontariowaittimes.com;  www.oha.com/ORSupplyChain.

3. Contact Andrea Gabber at the OHA (416-205-1303) by November 7, 2007 to express your interest in participating in the OR SC pilot program and to submit the project overview.

4. Project overviews can be sent via e-mail to agabber@oha.com  or by mail to:

Ontario Hospital Association
200 Front Street West, Suite 2800
Toronto ON M5V 3L1
Attention: Andrea Gabber, Senior Health Economist

If an application is unlikely to be selected, applicants will be told by November 14, 2007.

Business Case Development:

1. Once the project overview is approved, you will select a consultant from a pre-qualified list provided by the OHA who will a) conduct a validation of the OR SC project type categories selected by your hospital and b) conduct an assessment of the supply chain opportunities in your hospital's OR (based on the project types listed in Appendix A).

2. Complete the OR SC pilot program business case template based on the recommendations from the consultant's on-site assessment of your hospital. Templates are available on the following websites: www.fin.gov.on.ca/ontariobuys; www.ontariowaittimes.com; www.oha.com/ORSupplyChain.

3. Each project must obtain CEO commitment indicating the hospital's commitment to implement the enhancements as well as the hospital's financial contributions.

4. The completed project business case with a CEO commitment letter must be submitted to the BPS Supply Chain Secretariat for consideration by December 14, 2007.  Applications can be sent via e-mail to Lynda.Allair@ontario.ca or by mail to:

BPS Supply Chain Secretariat
Ministry of Finance
Treasury Board Office
8th Floor, 777 Bay Street
Toronto ON M5G 2C8
Attention:  Lynda Allair, CPPO, Project Lead

A Review Committee will evaluate and determine projects or parts thereof to be funded.

Once approved, a transfer payment agreement will be entered into with the Ministry of Finance whereby the funding schedule and project deliverables will be established.

The BPS Supply Chain Secretariat works closely with prospective funding applicants and MOHLTC.  Organizations are encouraged to share drafts of the application while the project is still in the formative stages so that the Secretariat can provide comments on the project and address gaps or points of clarification relative to funding requirements.

All proposals received will undergo a rigorous review process.

• An internal review of proposals will be completed by the Secretariat to ensure that all eligibility requirements have been met.
• If the proposal meets all requirements, it will then be reviewed by the OR SC pilot program Review Committee. The Review Committee will consist of Ministry of Finance and Ministry of Health and Long Term Care officials, the OHA, as well as experts from the field.

The Review Committee will evaluate proposals on such factors as:

• Extent to which the proposed project aligns with the objectives of the OR SC pilot program and is sustainable beyond the project's timeframe
• Strength and reasonability of proposed measurement methodology to capture quantitative and qualitative benefits
• Ability of the project members to implement the project results within the timeline
• Strength of project feasibility and financial analysis
• Financial commitment of the hospital
• Communication opportunities for the hospital and the Province

Funding for OntarioBuys projects is typically provided at multiple phases corresponding to a set of detailed deliverables.   The Review Committee will recommend projects for funding by the end of January 2008.

Surgical Process Analysis Supply Chain Best Practices	iSCM Leading Practices Compendium	Project Types
Sufficient instrumentation and supplies to support the operating room schedule	Demand Management	Point of Use (POU) inventory cart optimization
Separate physical supports for clean and soiled instrumentation and supplies		Improvement and redesign of supply delivery (breakdown) processes
Supply Management - Hospitals will link supply consumption to surgical activity by actively managing the inventory supply replenishment process using automated systems and material management support	Logistics process automation Commodity specialization Fully functional iSCM systems	POU inventory/cart optimization Integration of OR systems with supply chain Conversion of duties from clinical to operations staff
Standardization of Instrumentation (and Supplies) - The use of a limited but sufficient range of instrumentation (and supplies) to enable good choice and minimize inefficiencies and confusion	Comprehensive understanding of spend data Identification of product standardization opportunities Strategic sourcing Contract Centre of Excellence	Product standardization Value Analysis Team (VAT) OR supplies contract consolidation across LHIN
Standardization of Vendors (as above)	Strategic sourcing – rationalization of supplier base	Product standardization
Access management policies for vendors for prevention of unauthorized access of vendor representatives into the OR	Supplier relationship management Performance measurement	Supplier management program Implementation Performance measurement
Standardization of custom packs, case carts and pick lists by procedure or program rather than by individual physician	Standardization	Process and product standardization

Project Components	Benefits/Savings	Metrics
Multi-system data synchronization Direct and stock supply replenishment process review POU inventory review, optimization plan and implementation Conversion of manual requisitions to Par ordering	Reduced clinical labour for order placement and expediting Increased order cycle time, reduced inventory on-hand and obsolescence (5 – 10%) Improved customer service levels – reduced stock-outs & reduced OR suite delays Supportive of standardization efforts	# Nursing hours spent on supplies replenishment On-hand inventory value OR product standardization savings # of OR delays due to supplies issues Value of obsolete and expired supplies writeoff Proportion of rush orders Fill rates to end users Stock outs at the cart level Inventory turn-over
Process mapping Redesign Implementation	Enhanced patient and staff safety Improved labour efficiencies	# Nursing hours spent on supplies replenishment Stock outs at the cart level
(POU see #1) Data synchronization across clinical and business systems	(POU see #1) Reduced labour required for ongoing data cleansing and problem resolution	(POU see #1) IT support costs for OR Proportion of rush orders Fill rates to end users Stock outs at the cart level Inventory turn-over Reduce obsolete and expired supplies
Spend analysis Strategic sourcing Data cleanse Development of ongoing VAT team structure and policies Regional (LHIN) contract consolidation	Reduced supply costs: 5 – 10% of targeted commodity spend or 2 – 3% of total OR supplies costs Reduced inventory carrying costs 10 – 15% official and unofficial inventory reduction Improved service levels Enhanced supplier relationships via demand planning and commitment contracting	Supply cost/case On-hand inventory value % on contract spend Value of obsolete and expired supplies write-off Proportion of active items under contact Inventory turns Reduces obsolete and expires supplies Fill rates to end users Supplier performance
Spend analysis Strategic sourcing Data cleanse Regional contract consolidation	Reduced supply costs: 5 – 10% of targeted commodity spend or 2 – 3% of total OR supplies costs Reduced inventory carrying costs 10 – 15% official and unofficial inventory reduction Improved service levels Enhanced supplier relationships	Supply cost/case On-hand inventory value % on contract spend Value of obsolete and expired supplies write-off Inventory turns On-hand inventory value Fill rates to end users
Metrics, policies and procedures development and implementation including access, donations, gifts, sponsorships and hospitality	Evaluate and improve supplier performance Improved service levels Improved contract terms and compliance Reduced order cycle time, reduced inventory	Supply cost/case % on contract spend Supplier performance measurement
Physician preference analysis Custom packs rationalization and standardization	Reduced supply costs: 10 - 20% of OR packs spend Reduced inventory carrying costs 10 – 15% official and unofficial inventory reduction Reduced SKUs 20 – 50% Improved service levels	Supply cost/case On-hand inventory value % on contract spend Value of obsolete and expired supplies write-off Proportion of items inactivated from the item master file Inventory Turnover Fill rate to end users

Appendix B: OR SC Pilot Program Project Overview Template

OR SC Pilot Program Project Overview

General Information:

(Hospital Name)
(Address)
(City)
(Postal Code)

Contact Information:

(Project Contact Name)
(Title)
(Telephone Number)
(E-mail Address)

Project Information:

(Project Start Date)
(Project Completion Date)

Summary of Proposed Project

(Project Summary)

• What the implementation would accomplish.

Current State

(Current State)

• This section describes the history and current state of affairs giving rise to or relating to the general business problem or opportunity that is the subject of the future business case.

Proposed Project Type(s)

(Project Type(s))

• Proposed project types should align with the project types found in Appendix A of the OR SC Funding Application Guidelines.
• Hospitals should indicate in this section which project types they propose to implement.  An external consultant will validate the project types selected.

Project Outcome/Future State

(Project Outcome)

• Envisioned future state and business objectives (which should be consistent with the iSCM Leading Practices Compendium and the best practices identified by the Surgical Process Analysis and Improvement Expert Panel report).
  • A copy of the iSCM Leading Practices Compendium can be found at: http://www.fin.gov.on.ca/ontariobuys
  • A copy of the Surgical Process Analysis and Improvement Expert Panel report at: http://www.health.gov.on.ca/transformation/wait_times/providers/system/coaching/pc_pdf/surgical_expert_report.pdf

Cost/Benefit Analysis

(Cost/Benefit)

• Service Related Benefits:
  • “Other Cash” benefits free up resources (e.g. staff time, space) in ways that can be quantified but do not free up budget.
  • “Qualitative” benefits improve effectiveness, responsiveness and/or risk management in ways that are beneficial but not easily quantified.
• Cost Related Benefits:
  • “Hard Cash” benefits reduce institution operating costs, freeing up budget for other activities.
• Additional/Other Benefits (Where Applicable).
• Estimate of expected costs and assumptions.

Project Governance & Accountability

(Governance & Accountability)

• Project governance structure:
  • Project Sponsor
  • Change Champion
  • Project Manager
  • Steering Committee
• Core project team.

Project Sponsors

(Sponsors)

• List of executive sponsors and project sponsors (names and titles), including nature of commitment if variable.