Learn how McKesson Biomedical Solutions™ offers a full range of solutions for medical devices, service and inventory management, so you to focus on patient care, not managing device inventory.
- Steve Pharr, Director, Biomedical Enterprise Solutions, McKesson Medical-Surgical
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Thank you for joining. My name is Steve Pharr. And I'm the director of Enterprise Solutions for McKesson's biomedical division. And today we're going to talk about creating savings and improving efficiencies for infusion device management.
So in the home infusion segment as home infusion providers, there's lines of business and areas of responsibilities we support that provide patient care. So we look at the pharmacy component, the clinical component, the device support, and then of course, the billing component. Now, within those are challenges that everyone has to face just to manage and try to get to a profitable business.
We look at the financial responsibilities of how much do we rent versus how much do we own, losing equipment, and viabilities associated with that, the resource constraints trying to do more with less, just managing our operational resources on the way that best suits the organization, keeping current with accreditation requirements, making sure that what we have is patient ready and that they're not a liability, and then just executing really good patient care.
McKesson, today we're going to discuss how we have a device management program that can really look at improving the profitability and the compliance for providers. We'd like to give you guys some examples of that. So let's talk a little bit about McKesson's biomedical offer. So as we look at how we approach from McKesson supporting our customers which we view as partners, we know when we look at that stocking and servicing, and tracking of devices are critical task, but they're time-consuming and expensive.
And so my McKesson has worked to create a solution that really looks at ways to provide value to our customers to look at cost savings, how we can help improve that, efficiencies. We can try to make this processes more efficient for the organization, for your customers, improve compliance. So we work with our partners to make sure that the compliance needs are where they need to be for accreditation and for liability to make it convenient, and most importantly to make it simple.
Coming together with our partners, we look at trying to put a solution together that captures all of these in a way that helps solve the challenges from home infusion market. Now, McKesson has a really large biomedical distribution team and network, and a large customer base. We currently support 45% of the home infusion market with a full asset management solution.
We've been doing this for greater than 15 years and have a lot of experience with it, but it's a solution that's been tailored in a way that can be presented and supported of providers of any size, a single site or regional. But those large national customers that help us put together are offering in a package that we feel really comfortable that we can scale this to any size provider.
And today I'd like to walk you through a little bit of some of those areas of focus and how we provide value and efficiencies, and savings for our customers. So looking at reducing device management cost and improving profitability, it's going to be at the top of any organization. On average, the unmonitored home infusion customer loses about 15% of their devices. Now, if you're using them in a home, everyone knows what a challenge it is to try to get those devices back.
The average cost of a home infusion device, a pump, $2,000 and so to lose one is a big hit. But as we engage patients across a broad spectrum of locations to lose more than one or multiples becomes very costly. On average, the cost it takes just to manage a pump is about $50 per month. That's just all in, you're looking at supplies and time, and labor, all the things it takes to support that.
But if you annualize that, that's about $300 per pump. So there's a lot of expense and a lost of cost, and a lot of liability for an organization in regards to supporting that. So we really look at areas that we can focus on of three values that we try to bring to our customers, an economic, an operational, and a compliance component. So we look to reduce the spend.
Our solution can help providers minimize the risk for lost devices. We can work to reduce rental cost and that means to deploy what you own first and then rent. And if you don't rent or have a small rental fee, maximizing what you own still create significant value for our customer, to reduce equipment downtime, and then to save money on supplies it takes to support that.
From an operational side, it's really to do more with less, trying to maximize your labor for operational support that can be focused on patient care, but in looking at device management in a way that complements the organization's financial goals. And then lastly, on the clinical component, really allowing home infusion provider to have their clinicians focus on patient care, but making sure that devices are patient-ready, they're compliant, and that reduces legal liability.
And so the solution that McKesson has brought when we support to our customers is really a way to bring all that together and to show a provider how they can improve those efficiencies. So let's talk a little bit about how we accomplish this. So what is the McKesson Asset Management Solution? McKesson has several lines of business that our business unit supports that make up our biomedical team.
Now the first one I'll talk about is a technology solution called OneTrack. OneTrack is a cloud-based technology platform. We have been using OneTrack for our biomedical teams and support of our customers for over 15 years. We manage over a million pieces of equipment and process about 35,000 pumps per month through our distribution centers using OneTrack.
But we also provide it to our customers. And it's a device tracking technology that enables the customer to be able to get location of assets when they're ready, time to pick them up, the real-time inventory assessment, and all of that set of platform that's designated and set up just for device management. So it works in addition to a billing software platform, but it's really tailored in a way to drive efficiency for our provider.
Now, of these service lines that we support, we can provide these as part of an asset management solution or they can be done independently. So our technology offering from OneTrack is available to any of McKesson's customers and something that we would enjoy the opportunity to demo. Once a customer starts working on that technology for a firm, as they work with us on the different areas and service on our biomedical team, it create significant resources and value with cost savings.
So first, I'll talk about the sales and rentals. McKesson has a massive sales and rentals fleet. We have over 70,000 devices and 125 different models. So we provide new equipment sales, we also provide rentals. So we will have customers that will work with us and just do rentals and sales. And so those are segments that we can support and we welcome the opportunity to have a chance to bid for business and show how competitive we can be on the ability to access equipment to support patient care.
In addition to that, McKesson has a large biomedical distribution network. This is one of the things that really makes McKesson unique in this front. We have seven ISO certified distribution centers and their sole focus is just for device support management. Within those, there's 150 biomed certified technicians that support device care.
So we have a really big support network and we can handle the size and scale really with large providers that really provide national coverage. So we have customers that work with us just on the service front. They want to have their preventative maintenance or repairs, or manufacturer warranty support through a support system that McKesson provides, and that can be managed independently as well.
And then we also have inventory management. Inventory management is where we have customers who are large enough to have devices in our large inventory that they can centralize and we call that device "pooling." And we do this currently for our large customers. Within those biomed distribution centers, of those seven locations, we have customers who can centralize their inventory and then from that, what they have the ability to do is share across the network.
Within that inventory management solution, it creates lots of operational efficiencies. Providers can minimize the cost it takes to a store, the labor it takes to support it, the supplies it takes to maintain it. And so as those get tied together, this envision that this could be approached separately. If a customer just wanted to focus with us with one of those components, we'd be happy to support it. But when we come together with those, with the technology to sales, rental, service, that creates what we call an asset management solution.
And I would like to just give you some examples of how when we get connected with the customer, our biomedical team uses OneTrack, the customer uses OneTrack, and we support them. It starts to create some efficiencies that really show cost savings and it's a way to duplicate what we've done for our really large customers that we can do for our customer of any size. So let's take a look at what that looks like.
Here's an example of the asset management solution and how some of the value gets driven. So OneTrack is the technology that ties it together. So we can work with the customer who utilizes our technology offering and our biomedical team uses it at same time, one that national coverage comes in. So with seven distribution centers, we have the ability to cover the entire country in the United States.
Inventory management can be opted in or out for a customer. If they're large and have multiple sites, and a large inventory, it usually makes sense to consider it. If it's a single site or maybe a smaller regional customer, it could be option to where the inventory could stay in its own location with the customer. But either way, it still creates efficiencies. It's just an option that customers can consider to explore cost savings.
But as we connect the technology and our support team, there's two areas of focus that really enable us to start looking at improving the fiscal performance of devices for our customers. The first is utilization improvement. By having that approach of collected support, McKesson's biomedical team and the customer, utilization can be improved which means, what devices you own are on use in patients that additional inventory can be managed in a way that improves the profitability and then reduces rentals.
PAR management gets tied in as we work with our customers to identify inventory that they have on the shelf that they only keeps much as they need. And so surplus inventory can go back to improve the utilization and can reduce the need to buy new equipment.
As those start working together, what it does is it starts to really create an opportunity for savings and efficiencies. And then lastly, our biomedical team has dedicated assigned experts that are assigned to a customer and what they do is they work in that technology platform with the customer to identify when equipment needs to be picked up to look at inventory levels, to make sure that equipment is compliant, and that it's patient-ready.
Having a second set of eyes or a team member that supports their customer through just the device management starts to create a team and a combined approach that creates savings of the customer can really start to exercise on. So let me give you an example of what some of those savings look like it really high level. So the average infusion provider who's to save 15% to 20% of their devices, these are just national averages. We have consistently helped our customers improve just that lost devices by 10% and that's working with the technology, a dedicated team member.
But helping the customer, the home infusion provider really focus on being able to get that equipment back, know where it's at, and tracking. That's the big component of technology piece of OneTrack. As OneTrack and our team works together, we see a cost savings improvement of almost 30%. That's across the board. That's looking at lost equipment, improve compliance, rental reduction.
So we set metrics on our customers to say, "Here's your baseline business, here's how you guys are performing today. Let us work with you to give you some benchmarks of improvement and we can track those together through the technology and through our team." Labor gets picked up. On average, there's about two hours a day per provider of just operational time that supports devices. That's outside of what it takes to support all of the areas of patient care.
We help providers eliminate that labor so that they can be a resource allocated and the areas to help for growth or new patient experience. But not necessarily tied to device support. Overall, we help customers achieve about $180 savings per device. Now if you look at that across large network there's a lot of opportunity for savings. So a customer can really focus on patient care and then shift that focus on working with McKesson and we can document how those savings get tied together.
So let me give you an example of a customer profile of one of our full asset management customers and show you how some of these percentages can translate from a really big provider all the way down to a single site. So here's an example of one of our large national customers. They've been contracted with us for 15 years or more. Very large organization, a big strategic player, have over 70 locations and manage over 50,000.
So it's a really large organization. We were able to work with them and create an annual savings of $1.5 million a year consistently. Now in the beginning of the program there's a lot greater savings, but that's averaged that to about a 1.5 million a year.
Their equipment losses were reduced by about 85%, around 3.5 million over 5 years. Their utilization improved by 30% and the rental reduction went down by 75%, saving about 1.2 million a year. One thing to note is with these savings, the percentages are consistent for a single site or regional, or a really large customer.
But these are ways that we can help use our past experience with big customers and document savings for our customers of any size. And then let me give you an example of some of our customer base. This is an example of a broad mix of customers. There's home infusion providers, some of the large big strategic nationals, there's home medical equipment providers, and there's health system providers. These are customers that use our full asset management solution, but there's also customers that just work with us for technology, for rentals or sales, or for service.
But this really represents an opportunity for McKesson to use the strength of a broad customer base to work with new customers. And so what we really like to do is work with customers of any size now from a single site to a national to improve profitability and compliance. And we will look forward to the opportunity to get a chance to help you realize similar savings.
So McKesson really looks at our customers as partners and we would welcome the opportunity to get a chance to look at your business and see if we could help people get some of these same savings for you. So I'd like to thank you for your time and hope you guys have a great NHI presentation. McKesson values the opportunity to present with you and certainly looks forward to working with you in the future.
Thank you so much.
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