Working with Suppliers 10th June 2014

Introduction to healthAlliance — where we are now

We exist to provide:

• efficient and effective delivery of transactional activities

• lower costs

• improved quality and sustainability of service

• elimination of inefficiencies

• integrated and seamless processes

• centres of excellence, expertise and staff development

• regional alignment and standardisation of activities within customer DHBs, resulting in the release of funding for frontline services.

• Over 600 employees support our partner DHBs provide health services to 36% of New Zealanders from Pukekohe to Kaitaia.

• Jointly owned by four northern region district health boards: Northland, Waitemata, Auckland, Counties Manukau Health, and the national shared services agency Health Benefits Ltd.

• healthAlliance is working with HBL as a key partner to provide a range of shared services with all 20 DHBs in the areas of finance, procurement and supply chain. It also involves working with PHARMAC and the Ministry of Business, Innovation and Employment (MBIE).

• This will bring significant growth to healthAlliance, resulting in an increase in size to over 1000 employees, based all around New Zealand.

• The programme is expected to deliver benefits of more than $500 million over 10 years.

Introduction to healthAlliance — a phase of growth

Service Objectives of National Procurement

• healthAlliance is currently developing a procurement service transformation programme to implement a national integrated operating model.

• This operating model was created and agreed in consultation with all 20 DHBs

• On July 1st 2014, this service will be available to all DHBs with three clear service objectives:

Delivering a strong customer

experience supported by

strong relationships and

processes.

Managing procurement risk

through policy, probity and best

practice procurement;

Delivering financial benefit to the 20 DHB’s from collective procurement of

goods and services

• July 1 is the start of the national procurement community. The service model will mature over time.

• Our people will be based across multiple centres, delivering to local needs.

• healthAlliance will be the agent working on behalf of the DHB’s contract.

• Your relationships with DHB’s continue in a different capacity.

• Contact the category manager in the first instance.

• Price changes & procurement activity are centralised through hA.

What will change for suppliers from July 1?

healthAlliance’s role in delivering Procurement Services

MBIE healthAlliance

PHARMAC DHB

DELINEATION OF SERVICES

HBL HEADLINE CATEGORIES

• Non-Clinical

• Labs

• Imaging

• Wards

• Ambulatory

• Medical

• Surgical

Sourcing strategy development

Internal client relations Strategic, proactive role of Procurement

Partnership with clinical community n planning, demand control, standardisation & specification management

Total cost modelling & reference costing as management decision tools

Partnership with DHB

Supplier management

Processes & best practices Alignment of internal end-to-end processes per

category across suppliers and across DHB’(via process manuals)

Establishment of consistent processes to ensure compliance and savings delivery

Harmonisation of supplier facing processes

Consistent eCommerce approach (eSourcing, B2B supplier integration)

KPI & reporting standards/ processes

Performance monitoring/ tracking

Scope of Procurement Activities

Procurement Team Vision

A professional procurement function delivering value to NZ

health sector

Implementation in first half 2015 Implementation in second half 2015

Processes in place by end FY 2014 Processes in place by end FY 2016

National market research and category insight development

Thorough category segmentation Clearly defined material category strategies Deep understanding of supplier economics and

strategies Single/multiple vendor roadmaps In-sourcing/ outsourcing strategies Drive commoditisation or balanced sourcing

strategy Push for innovation

Clear differentiation of supplier relationships (segmentation)

Leverage of supplier capabilities

Supplier assessment and selection standards

Supplier performance and quality management

National contract management

healthAlliance Procurement— Operating Model

Design Principles of the National Procurement model

A series of design principles guided the development of the National Procurement service delivery model:

1. Procurement must ensure clinical/patient outcomes under-pin all decisions.

2. Total cost (price, scope, quality, patient/clinical outcomes, time) need to be factored.

3. Engagement with DHB key stakeholders, such as CFO and the clinical community is

essential to ensure right outcomes are achieved.

4. National Procurement does not suppose an end to local procurement.

5. Transparency and accountability between hA and DHB is essential.

6. National procurement based on 20 DHBs, four regions and one country.

7. A structured approach to clinical engagement in order to standardise and consolidate

spend.

8. DHB (finance and clinical) to be central to all procurement initiatives/decisions.

National Procurement Service Delivery

• National Procurement service delivery starts within the DHB.

• The DHB engagement model is fundamental to how procurement services will delivered.

• The business process that supports National Procurement cuts across hA procurement, Supply Chain and Finance and must be co-ordinated end to end.

• Suppliers are a key part of model. Serv

ice

De

live

ry M

od

el

DHBs

healthAlliance

Suppliers

An Overview of National Procurement Organisation

National Procurement

Category

Category Management

Category Managers

Procurement Professionals

Local

Four regional hubs

Relationship Managers

Enablers

Supplier Relationship Management

Business Performance Management

Strategy

Legal Support

Change

Capability Build

Service Delivery >>

Procurement Pillars >>

Capability >>

Key Roles >>

Working at a local, regional and national level

1 National Opportunities

Where 11 or more DHB’s have a common opportunity, based on

20 Annual Operating Plans

4 Regional Opportunities

Where 2 or more DHB’s have a common opportunity, based on

20 Annual Operating Plans

20 DHB Annual Operating Plans

Created locally using various inputs such as Contracts, DAP’s,

Capital Plans and New Opportunities U

nd

er

10

0k

(Ca

pit

al O

nly

)

Imag

ing

(Car

dio

logy

an

d R

adio

logy

)

Lab

ora

tori

es

Surg

ical

Me

dic

al

War

ds

and

Ge

ne

ral A

mb

ula

tory

No

n C

linic

al S

erv

ice

s

Foo

d /

Lin

en

/ L

aun

dry

(N

ort

her

n R

egio

n o

nly

)

Info

rmat

ion

Se

rvic

es

(No

rth

ern

Reg

ion

on

ly)

In Scope Categories

Agg

rega

ted

Op

po

rtu

nit

ies

Off Catalogue Procurement: Scenario 1

Through the annual planning process, an aggregated need has identified that more than 11 DHBs have the

same procurement need. Therefore National Procurement have identified the aggregated need and a

National Procurement led initiative is underway

Identified needs aggregated to a National Procurement led

initiative

Initiative

• Key Stakeholders identified • Assembled into a National/ Regional/

Local Procurement Council • Purpose is to provide governance &

decision making

Decision Gate 1

Proceed?

Need?

Assess?

• Project Team assembled Clinical Engineering Clinicians Clinical Product Co-ords Procurement (Supply Chain)

• Requirements defined (Considering Patient Care) Features Technical Scope Quality Volume Support

Sourcing Activity

Decision Gate 2

Decision?

Recommendation?

Options?

Recommended Solution

Conclude commercials and handover to Implementation teams (incl. Supply Chain)

Requirements Ratified

Off Catalogue Procurement: Scenario 2

Throughout the year, a procurement need has been identified within the DHB through the natural course

of patient care delivery. This is a new need that has not been previously identified in the annual planning

process. Therefore National Procurement have been engaged to facilitate a locally identified initiative

Identified new need in the delivery of patient care

Initiative

• Project team identified • Requirements defined

(Considering Patient Care) Features Technical Scope Quality Volume Support

Advise National Procurement team

• Key Stakeholders identified • Assembled into a National/ Regional/

Local Procurement Council • Purpose is to provide governance &

decision making

Decision Gate 1

Proceed?

Need?

Assess?

Sourcing Activity

Recommended Solution

Decision Gate 2

Decision?

Recommendation?

Options?

Recommendation Ratified

Requirements and activity Ratified

Conclude commercials and handover to Implementation teams (incl. Supply Chain)

Off Catalogue Procurement: Scenario 3

Throughout the year, a procurement need has been identified within the DHB through the natural course

of patient care delivery. This is a new need for Operational Spend that is less than $100,000. This need

falls within local DHB procurement delivery. National Procurement have been engaged to support a locally

led initiative

Identified new need in the delivery of patient care

Initiative

• Key Stakeholders identified • Requirements defined

(Considering Patient Care) Features Technical Scope Quality Volume Support

Advise National Procurement team

• Activity undertaken

locally • National Procurement

provide support throughout the Procurement process

Sourcing Activity

Recommended Solution

Decision Gate 1

Decision?

Recommendation?

Options?

Recommendation Ratified Locally

Conclude commercials and handover to local Implementation teams (incl. Supply Chain)

How to connect into the National Procurement Service

• Contact the healthAlliance Managed Service Centre (MSC): Telephone 0800 426 727

Email - cherwell.FPSC@healthalliance.co.nz If you receive an email from the above email address, ensure the conversation ID is included in your reply. • In time, you will develop a direct relationship with the relevant category manager .

• Continue to manage your local operational relationship with the DHB.

• Check our supplier portal on the healthAlliance website www.healthAlliance.co.nz for

information on the national procurement plan, forms , in scope products and FAQs.

Q&A