2019 annual report · captis annual report 2019 03 this year, we celebrate the evolution of captis...

2019 ANNUAL REPORTAdvancing Healthcare. Together.

02 Captis Annual Report 2019

Captis was founded on the members’ vision to be a distinguished supply network that brings the best economic and clinical value to its members. Captis seeks to increase efficiencies and reduce expenses by aggregating spend and redesigning supply chain processes through collective decision making. To achieve this vision, members agree to the following principles:

› Make decisions collectively based on what is best for the alliance as a whole, rather than individually for their organization

› Hold each other accountable for delivering upon commitments to Captis

› Follow behavioral guidelines that protect the integrity of the Captis brand

› Utilize Mayo Clinic and Vizient’s "go to market" strategy

› Create a single voice throughout supplier negotiations

› Participate in innovation that drives value

Founding principles

03Captis Annual Report 2019

This year, we celebrate the evolution of Captis and our commitment to continuing the journey. Since our inception, we have grown from nine members to 92. We have achieved new heights in the value delivered and are redefining how this value is derived. While we continue to do the core things that have made us an industry leading aggregation model, our dedication to innovation in our contract and program offerings will carry us into the future. With a highly engaged member community, we are well positioned for the forces of change in our industry that are driving evolution in how we do business.

Captis had another record year in 2019. Together we achieved $190 million in savings, or 15.6%. This is $45 million in additional value compared to last year, and a figure that would seem unfathomable to our founding members back in 2008. We added ten new members, launched tier progression strategies, achieved aggregation rebate tier thresholds and completed our first year of the Captis Item Master project; all of which demonstrate how our value story is evolving.

Our strategy also continues to evolve. Members and service provider teams are advancing the Captis strategic plan by providing operational and programming direction in key work stream areas such as sourcing innovation, analytics, member performance and value strategies. This work is both transformational and incremental in approach, and centers on bringing members the best economic and clinical value. This work will expand further as our Board unfolds the new 2020 strategic plan, and we anticipate an evolved focus on three areas 1) member compliance, participation and engagement, 2) recruiting efforts focused on strategic growth and 3) delivering new value through innovation.

Our member and supplier commitment to Captis’ evolution is apparent and inherent to our success. We look forward to writing a new chapter in how we derive value and advance healthcare together.

e·volve

Brenda Peterson, RN, MBA

Captis Service Provider Vice President, Strategic Sourcing Partnerships and Programs Vizient

James R. Francis

Captis Service Provider Division Chair, Supply Chain Management Mayo Clinic

Anthony Guaccio

Captis Board Chair Chief Executive Officer Swedish Covenant Health

/ē'välv

To develop gradually, especially from a simple to a more complex form.

Synonyms: Develop, progress, make progress, advance, move forward, make headway, mature, grow, open out, unfold, unroll, expand, enlarge, spread


Our mission is to drive savings and value for members through aggregated and committed spend. The member driven and owned network has accomplished member objectives by establishing a culture of innovation, accountability and trust. Since the organization was formed, members have established proven processes that generate value by committing to collective decision-making. With 92 members, 300+ contracts in its portfolio and $14 billion in annual member spend potential, Captis has documented $910 million in savings since 2008. Captis is supported by Mayo Clinic Supply Chain and Vizient.

Our mission and focus

Finance committeeBill Munson, CFO, Boulder Community Health

Monitors financial performance, budgets and accounting of savings, fees and distributions.

Clinical committeeMark Matthias, MD, Chair, VPMA, CentraCare

Ensures physician involvement in product evaluation and focus on clinical leading practices and outcomes.

Business development committeeJeff Wicklander, Chair, President, North Memorial Health Care

Develops strategic programs in support of the mission and vision.

Board of managersAnthony Guaccio, Chair, Chief Executive Officer, Swedish Covenant Health

Sets the strategic direction and guides all business activities.

Operations committeeDave Weigel, Chair, Director of Supply Chain, Prairie Lakes Healthcare System

Develops, implements and assesses strategies to enhance the contract portfolio, gains supply chain efficiencies and approves contracts.

Pharmacy councilLoren Carrell, PharmD, BCPS, Chair, Administrative Director, Pharmacy, Gundersen Health System

Provides fiscal, clinical, intellectual and operational value to pharmacy program members.


Governance


Cross-functional work streams are in place to provide operational and programming direction that advances the strategic plan. These teams, along with Captis members, will be further engaged as the Board of Managers finalizes the 2020 strategic plan and approaches to compliance (participation and engagement), strategic growth and innovation.

Our strategy

Sourcing innovationIdentifies enhanced sourcing models that coalesce around a coordinated aggregation strategy to optimize value for members, and seeks ways for members to minimize inflationary pressure when they are unable to move market share.

Top notch analyticsIdentifies opportunities to provide enhanced data and insights in a real time, user-friendly environment (spend, category compliance, market share data, opportunity reporting, price validation and rebate reconciliation).

Service provider rolesImproves coordination among the Mayo Clinic and Vizient teams, evaluating gaps and ensuring that Captis remains relevant in the marketplace while exceeding member expectations.

Member accountability and performanceProvides actionable insights and solutions to improve performance and value, and assists members in achieving peak level performance.

Value strategies (2.0)Oversees the advancement of new value, including 2.0 programs, membership offerings and new business ventures.


Captis by the numbers

$190Msavings achieved in 2019

in rebates paid by Captis suppliers in 2019

$45MILLION

* first-year savings and rebates received since inception ** cumulative savings and rebates achieved year over year for the entire length of the contract or program

14Bmember annual spend potential$ 910M

member savings since inception*$ 1.49B

total contract value since inception**$

of success collaborating in a network environment since August 22, 2008

11YEARS

78% contract compliance in the Medical Device Category in 2019

23.7:1 return in savings for every $1 our members spent on Captis services in 2019

Member savings of $910 million, since inception

$75.5

$124.3

$57.2$71.0

$41.7$33.6$31.0$14.6

$0.9

$123.8$144.8

$190.1

2015 20162014201320122011201020092008 2017 2018 20190

50

100

150

200


Spend performance Membership compliance to spend required in each of the three portfolio categories

A/A-1 Member B Member C Member

Category Spend Required 2019 Compliance Spend Required 2019 Compliance Spend Required 2019 Compliance

Commodity Items 90% 96% 85% 91% 75% 77%

Clinical Preference 80% 107% 75% 92% 65% 71%

Medical Device 25% 84% 20% 74% 15% 84%

Cost recovery The Cost Recovery Ratio illustrates member return for participation in the Captis portfolio

Class Since inception 2018 2019

All Captis Members 13.3:1 16.2:1 23.7:1

Class A Members 32.8:1 N/A* N/A*

Class A1 Members 13.4:1 11.3:1 15.2:1

Class B Members 6.3:1 6.8:1 7.1:1

Class C Members 4.6:1 9.1:1 2.9:1

*Due to no deficit obligation for Class A members

325in the Captis portfolioCONTRACTS

293 hospitals in 27states92MEMBERS

5962ALTERNATE CARE SITES


Our community92 Members 27 States $14B Annual supply spend potential

Class A

› Aspirus

› CentraCare

› Froedtert Health

› Gundersen Health System

› Mayo Clinic

› NCH Healthcare System

› North Memorial Health

› ProHealth Care

› ThedaCare

Class A1

› Baptist Health

› CarolinaEast Health System

› Centra Health

› Cooper University Health Care

› Covenant Health

› Denver Health

› Guthrie

› Inspira Health Network

› INTEGRIS

› Lake Health

› Lakeland Regional Health

› Main Line Health

› Mercy Medical Center (Cedar Rapids)

› NorthShore University HealthSystem

› Palomar Health

› Sparrow Health System

› St. Bernards Healthcare

› The University of Kansas Health System

› Unity Health | White County Medical Center

› University of Arkansas for Medical Sciences (UAMS)

› Washington Regional

› Westchester Medical Center

Class CCP

› Sanford Health

Class B

› Altru Health System

› Arkansas Methodist Medical Center

› Arnot Health

› Bassett Healthcare Network

› Beaver Dam Community Hospitals, Inc.

› Bellin Health Systems

› Beloit Health System

› Boulder Community Health

› Bristol Health

› Butler Health System

› Cayuga Health System

› City of Hope

› Comanche County Memorial Hospital

› Community Memorial Health System

› Duncan Regional Hospital

› Excela Health

› Fayette Regional Health System

› FHN Memorial Hospital

› Great Plains Regional Medical Center

› HaysMed

› Holy Family Memorial

› Holy Redeemer

› Hunterdon Healthcare

› Jackson County Memorial Hospital

› Kingman Regional Medical Center

› Lake Region Healthcare

› Little Company of Mary Hospital and Health Care Centers

› McAlester Regional Health Center

› Norman Regional Health System

› North Kansas City Hospital

› NorthBay Healthcare

› Northeastern Health System

› Northwest Community Healthcare

› Penn Highlands Healthcare

› Phoenix Children’s

› Prairie Lakes Healthcare System

› Ridgeview Medical Center

› Silver Cross Hospital

› St. Clair Hospital

› St. Luke’s

› St. Peter’s Health

› Stillwater Medical Center

› Summit Health

› Swedish Covenant Health

› Tri-City Medical Center

› Trinity Health

› Valleywise Health

› Yampa Valley Medical Center

› Yavapai Regional Medical Center

› Yuma Regional Medical Center

Class C

› Bay Area Medical Center

› Cambridge Health Alliance

› Cape Regional Health System

› Dickinson County Healthcare System

› Elkview General Hospital

› Grady Health System

› LifeCare Medical Center

› Mercy Hospital (Moose Lake)

› Mercy Iowa City

› Oneida Healthcare

› Regional Medical Center

› Signature Healthcare

› Thorek Memorial Hospital

› War Memorial Hospital

Additional Members

Class V

› Vizient

Class S

› Allina Health (Rx)

= New Member in 2018




New members

10 new members joined in 2019

Welcome new members

› Allina Health, Minneapolis, MN (Pharmacy only)

› Bristol Health, Bristol, CT

› City of Hope, Duarte, CA

› FHN Memorial Hospital, Freeport, IL

› Lakeland Regional Health, Lakeland, FL

› Main Line Health, Newton Square, PA

› Oneida Healthcare, Oneida, NY

› Regional Medical Center, Manchester, IA

› War Memorial Hospital, Sault Ste Marie, MI

› Yavapai Regional Medical Center, Prescott, AZ

The Captis relationship has far exceeded our expectations. We knew we had an aligned culture with Captis. The quality of the analytics and processes, the cost savings generated and the proficiency of support staff have all been surprising bonuses beyond what we anticipated.Kevin J. Miller Vice President, Supply Chain Management, Covenant Health, Captis 2019 New Member of the Year


Expanding our value proposition

As part of our concerted effort to optimize value for our members, the service provider team is actively evolving its approaches to sourcing and contracting, business partnerships, implementation support and the development of insights that support decision making.

Aggregate models

The Captis portfolio currently offers aggregate rebates for conversion activity in cardiac rhythm management (CRM), drug eluting stents (DES), endomechanical, suture and trocars. “Our greatest strength in the market is aggregation value,” said Barket Ali, Sr. Director, Medical Device Contracting, Mayo Clinic. “These agreements enable market share movement, and our collective success brings collective value. It is a true partnership in accountability and commitment, and a vehicle for growth. Our members demonstrate their commitments to our supplier partners and they are rewarded for the delivery of market share and volume.” These efforts will result in over $25 million in additional rebates in 2020. As a next step, Captis is partnering with Vizient’s Advisory Solutions team to strategically target members who have an opportunity to convert or optimize agreements. This effort will allow Captis to close in on the remaining volume needed to achieve the next available rebate thresholds.

Tier strategies

Tier promotion offerings are another innovative sourcing strategy developed as part of the group’s Total Joints initiative. This new structure is a leading-edge approach for agreements when supplier consolidation is not an option, and when an all-play approach doesn’t drive value. Members can achieve additional savings by agreeing to unique contract commitments such as reduced service, case balancing, inventory management, case notification or procedure growth.

Outcomes protection programs

Captis continues to pursue outcomes-based agreements that deliver value across three domains: financial, operational and clinical. These risk-based agreements typically focus on utilization and improving patient outcomes.

aptitude

The collaboration between Captis service providers and aptitude delivered $175.2 million in contracted spend, with $21.5 million in contracted savings. This included Mayo Clinic category management, CQVA, Captis analytics and aptitude working across functional teams to drive results. In addition, the revealTM program surpassed over $1 billion in visible spend to subscribing suppliers. The visibility is helping members maximize the value of their Captis agreements, allowing for more proactive discussions with contracted vendors. This program was also recently expanded to aggregation groups outside of Captis, signaling its commercial viability in the market.

Advisory Solutions

Captis and Vizient’s Advisory Solutions have joined forces to provide services to members who need assistance in optimizing Captis contracts and programs. This partnership approach brings together members, Captis service providers (the operations, clinical and medical device teams) and consulting experts to implement clinical supply integration best practices, medical device optimization strategies and supply chain operations consulting to maximize the value available through their Captis membership.

Procedural Analytics

In its pursuit of Clinical Supply Integration (CSI) strategies, Captis members are participating in a pilot focused on gaining insights by connecting procedural supply and clinical data to identify opportunities to reduce supply costs, optimize utilization and improve patient outcomes. The pilot uses Vizient’s Procedural Analytics tool and will identify how Captis and its members can best use the tool’s insights throughout the contracting and conversion process.


2.0 programsCaptis 2.0 programs continue to create substantial incremental value for Captis membership. In 2019 alone, 2.0 programs generated $43 million in savings and $5 million in program revenue.

The Captis founding vision was to increase efficiencies and reduce expenses by aggregating spend and redesigning supply chain processes through collective decision making. In March 2014, the Board of Managers approved a revision to the organization’s strategy, calling for the development of innovative programs that deliver value outside traditional areas of sourcing and contracting. Since 2014, 2.0 programs have generated over $212 million in value for the membership.

This enhanced program strategy is referred to as Captis 2.0 and delivers value by:

› Achieving improvements together that are improbable when systems act alone, but may be attained when systems act collaboratively

› Evaluating product and service consumption

› Creating efficiencies by impacting functions beyond sourcing and contracting

› Unlocking value by operating activities previously performed by suppliers and members

› Pursuing value of all kinds (cost savings, utilization savings, clinical enhancements, growth enablement, capital allocation and funding, revenue enhancement, etc.)


SUPPLY CHAIN INNOVATION | 2.0 PROGRAM FEATURE

Captis Item Master

The Supply Chain Innovation program demonstrates our members’ vision of working together to achieve new operational benefits. This program tests traditional supply chain assumptions and creates a more cohesive supply chain across disparate materials management information systems. At its core, this program establishes a single data management platform, and the first program component—the Captis Item Master—establishes the foundation for future Captis supply chain data initiatives and operational efficiencies.

“As this project progresses and the Captis system advances, members will realize efficiencies beyond the cost-savings realm. This is indicative of Captis’ leadership among aggregation groups and their members’ movement beyond

the domain of commodity group purchasing into sophisticated business arrangements that deliver savings and benefits,” said Steve Downey, group senior vice president, supply chain operations, Vizient.

In this project’s first year, 76 Captis members adopted the DataLYNX data management platform, which is the foundational tool of the Captis Item Master. In addition, members have realized a 40% reduction in duplicative data and the Consolidate feature, which aggregates Captis member data, was launched. A Member Advisory Council and the Item Descriptions Subgroup are positioning the program for further success. Additional components will be explored in 2020 with our business partner, Vizient.

Captis members acknowledge that our success cannot rely solely on the price we pay for products. Having actionable insights and reliable data will unlock new opportunities for our organizations, both individually and collectively, and will set new best practices for the healthcare supply chain industry.Dave Weigel Captis Item Master Member Advisory Council Participant, Operations Committee Chair, Director of Supply Chain, Prairie Lakes Healthcare System


2.0 program perspectives

One of the most positive benefits from participating in the Captis Blood Management Program is the monthly member updates. They give us an opportunity to share ideas and best practices to ultimately improve care for all of our patients.

Ceil Duclon MS, MLS ASCP Executive Director of Laboratory Services, Froedtert & Medical College of Wisconsin

Reveal is an empowering tool for both suppliers and Captis members. It has allowed us to proactively use data to understand what makes sense clinically and financially, without unnecessary time commitments. It has also allowed us to independently identify optimization opportunities to bring forward and generate more productive member conversations.

Dave Newman Director Corporate Sales, Owens & Minor

The Custom Procedure Tray Program with Medline is one of the most innovative 2.0 business partnerships. Captis has efficiently standardized pack products across a diverse membership by leveraging Mayo Clinic’s Clinical Quality Value Analysis [CQVA] process. The formulary has delivered significant value to both members and Medline, and contributes to driving down the overall cost of health care.

Terri Nelson Director Supply Chain Operations CQVA, Mayo Clinic


Product conversions typically lead to donated or wasted items. In the case of our endomechanical and suture conversion, we were able to recover a fair portion of the financial burden through the Excess Inventory Selling program. The program was very easy to use and they were timely in providing a silver lining to an otherwise frustrating situation.

Matt Stacell System Director Supply Chain Services, Naples Community Hospital

The strategic partnership developed between CentraCare, Medline and Captis in Medical Device Reprocessing has led to invaluable outcomes, including stronger program awareness, additional educational opportunities, advanced reporting tools, cost and waste reductions, increased collections, improved contract compliance and heightened engagement. Our collaboration is proof of CentraCare’s commitment to improving community health, enhancing the patient experience, improving clinical outcomes and reducing the cost of care.

Patrick Taufen Contract Portfolio Administrator, CentraCare Health

Our relationship with Captis and the Instrument and Scope Repair program has been one of Northfield Medical’s key growth drivers, allowing us to extend our advanced service, reporting and educational offerings with one of Vizient’s largest and best-in-class aggregation networks. With support from Captis members, we’ve been able to drive savings for hospitals and surgery centers by reducing the overall cost of ownership for medical devices and surgical instruments.

Greg Bright (2019 Program Partner of the Year)Executive Vice President, Northfield Medical


Lab standardization programThe lab standardization program continues to grow in member engagement. Member lab champions provide strategic input on selected lab contracting initiatives, review product categories for formulary opportunities, provide

guidance on clinical quality and service attributes and anticipate formulary strategy adoption challenges. With support from the distributor, each champion leads the formulary conversation within their organization.


Captis Pharmacy program participants and Pharmacy Council members continue to work collectively to address safety and quality, and to reduce cost.

The Captis Pharmacy program includes:

› pharmacy wholesale distribution (traditional and specialty)

› clinical pharmacy and drug utilization

› drug-specific contracting

› innovation programs

› sharing of clinical and operational best practices via peer-to-peer networking

› increased operational efficiencies such as; predictable demand forecasting, reduced sales expense, reduced contracting expense, lowered conversion costs, enhanced visibility and increased market share

› member participation in governance and decision making

2.0 Drug Supply Chain Securities Act (DSCSA) program

The program management office and pharmacy team continue their efforts around member readiness for new laws and regulations. Several members participated in a Member Advisory Council, providing guidance for developing best practices that are outlined in a readiness guide and the preparedness audit process. With program assistance, members will continue their journey toward becoming compliant in 2020.

2.0 Compounding program

With significant regulatory environment changes on the horizon in the 503B Compounding area, the Pharmacy Council decided to extend its partnership with QuVa through the end of 2020. In the year leading up to this expiration, a market analysis will evaluate this category and our current partnership opportunities.

Top successes

› Distribution agreement launched

› Multi-network participation

› Pre-commit process

› DSCSA readiness program

10 New program members

22 Contracts in the portfolio

$32.1M Savings**including utilization, excluding distribution

Pharmacy program

I am proud to have had the opportunity to be the Pharmacy Council chair this year. With Council and service provider support we were able to launch a new Pharmacy Distribution agreement, delivering $38.6 million in savings. Captis began participation in Vizient multi-network pharmacy contracts, including IV iron, LHRH and Bendamustine. This year also marks our first initiative in which we delivered pre-committed volume to garner additional value, marking an exciting start to a more dynamic contracting strategy. Additionally, Gundersen Health System was the first to trial the Captis DSCSA preparedness audit, and this systematic review helped ensure we have a program that is using best practices to stay compliant with the law and associated regulations.

Loren Carrell PharmD, Chair, Pharmacy Council, Administrative Director, Regional Pharmacy, Gundersen Health System


Our members are empowered to improve faster than they could on their own, and to advance visionary innovation to meet providers’ evolving needs. Captis members connect throughout the year to enable learning, improving and building together.

Jan. Feb. March April May June

Board of Managers Jan. 16 Naples

March 26 Atlanta

Business Development Committee

Jan. 15 Naples, FL

Clinical Committee March 25 Atlanta, GA

June 8 Edina, MN

Finance Committee March 25 Atlanta, GA

Item Master Member Advisory Council

Feb. 11 March 10 April 14 May 12 June 9

Operations Committee (2nd Monday)

Feb. 10 Edina, MN

March 9, WebEx

Mar. 31, Las Vegas, NV

May 11 WebEx

June 8 Edina, MN

Pharmacy Council (Last Tuesday)

Jan. 7 (Update) WebEx

Jan. 28 WebEx

Feb. 25 WebEx

March 31 Las Vegas, NV

April 28 WebEx

May 26 WebEx

June 30 WebEx

July Aug. Sept. Oct. Nov. Dec.

Board of Managers July 28 Chicago, IL

Oct. 8 TBD

Business Development Committee

July 14 Edina, MN

Sept. 10 Edina, MN

Nov. 19 Conf. Call (If needed)

Clinical Committee Sept. 14-16 Las Vegas, NV

Finance Committee July 21 WebEx

Oct. 7 TBD

Dec. 3 WebEx

Item Master Member Advisory Council

Aug 11 Sept. 15 Oct. 13 Nov. 10 Dec. 15

Lab Standardization Program

Nov. 1-3 Minneapolis, MN (Captis Conference)

Operations Committee (2nd Monday)

July 13 WebEx

Aug. 10 Edina, MN

Sept. 14 WebEx

Oct. 12 WebEx

Nov. 1-3 Minneapolis, MN (Captis Conference)

Dec. 14 Edina, MN

Pharmacy Council (Last Tuesday)

July 28 WebEx

Aug. 25 WebEx

Sept. 29 WebEx

Nov. 2, Minneapolis, MN (Captis Conference

Nov. 24, WebEx

Dec. 29 WebEx (If needed)

Other Important Dates: Vizient Summit March 30-April 3 and Sept. 14-18 | Captis Conference Nov. 1-3

2020 meeting schedule


Each fall, more than 700 participants from our lab, operations, pharmacy and supplier community come together at the Captis Conference. This two-day event in beautiful downtown Minneapolis provides endless opportunities to learn together and celebrate the partnerships we have formed.


Notes

7601 France Avenue South, Suite 500 Edina, MN 55435 P: 952-837-4700

www.vha.com/networks/csc/uppermidwest

© 2020 Captis. All rights reserved. The reproduction or use of this document in any form or in any information storage and retrieval system is forbidden without the express, written permission of Captis 03/20

2019 annual report · captis annual report 2019 03 this year, we celebrate the evolution of captis...

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