Get with the program
Master Sergeant Chris Rhoney, superintendent of medical operations from the 353rd Special Operations Group (SOG), adjusts the exterior ropes on an air transportable treatment unit. Members of the 353rd SOG built a series of tents to provide a light and highly mobile medical facility for special operation units throughout the Pacific.
The U.S. Department of Defense used key program skills to rethink its medical logistics system, resulting in lasting return on investment.
PHOTOS COURTESY OF NAVAL MEDIA CENTER AND AIR FORCE LINK
In the early 1990s, following the Desert Storm operation, the U.S. Department of Defense's (DoD's) three major service branches—Air Force, Army and Navy—set out to re-engineer the medical logistics support function. After-action reports determined that as much as half of the material stored in military depots was unusable when received: Stored items were no longer preferred for standard of care, or the process’ long delivery times had rendered dated items unusable.
Complex and antiquated medical logistics systems took too much time and resources. The status-quo operation consumed more than 40 percent of the typical medical treatment facility's (MTFs) operating budget. Lead times of 30 to 60 days for product procurement and delivery were common. On-hand inventories equaled six months of stock for a typical MTF.
In an environment of shrinking military budgets, escalating costs and inefficiencies in distribution, the military health care community needed a fundamental change. An integrated automated information system was required to research medical/surgical item availability through the requisitioning, receipt, distribution and disposal of an item. By transitioning from a “just-in-case” to a “just-in-time” mentality, the DoD would be able to share risk for high-volume, emergent material with the direct commercial supply source.
Stand and Deliver
To re-engineer functions, the DoD created the Defense Medical Logistics Standard Support (DMLSS) program, which emphasizes contemporary, responsive and flexible business practices in the medical logistics function. Figure 1 links capabilities to DMLSS component release data.
The program, which resides within the Assistant Secretary of Defense Health Affairs TRICARE Management Activity, includes the Joint Medical Asset Repository project and the Patient Movement Items initiative, in addition to other preplanned product improvements. Software development efforts were performed by the Joint Medical Logistics Functional Development Center, Ft. Detrick, Md., USA, on the retail level and at the Defense Supply Center, Philadelphia, Pa., USA, on the wholesale level.
This Military Health Service program has a life-cycle cost of close to $1 billion with annual costs of $35 million. For perspective, the scope of this undertaking includes all military medical treatment facilities (MTFs), or approximately 220 hospitals and clinics, and the much broader Defense Logistics Agency, which manages all classes of material the DoD purchases.
As with most large government programs, DMLSS stresses senior-level leadership support and diversity. As the program launched, leadership endorsement came from two positions within the DoD: an assistant secretary of defense (Health Affairs) and a deputy undersecretary of defense (Logistics and Material Readiness). Dual sponsorship proved invaluable—program success required influencing behavior, process and policy in both the Health Affairs and Logistics operational environments. This support also afforded access to two funding streams, which proved immensely beneficial in austere times.
The program was governed through a board of directors comprised of senior medical logistics leaders from the U.S. Air Force, Army and Navy. The board contributes action-level oversight and guidance, approving major requirements. In this capacity, the representatives serve as a voice for the “customer,” ensuring branch-specific interests are properly attended to within the context of achieving a joint logistics system.
The board of directors easily inserts itself to resolve issues with functional requirements, overseeing program interests and direction, serving as an arbiter to approve and prioritize competing interests, and addressing funding challenges for the program. Issues run the gamut of requirement definition and capability to deployment and sustainability of provided capability—all which can bog down a program and distract it from satisfying its mission.
For example, as the team prepared for review and approval of the program's operational requirements document (ORD) by the Joint Requirements Oversight Committee (comprised of four-star generals), the board was involved heavily in screening functional requirements. Acting as a clearing-house, the board determined which input had “joint” value and that the items had priority—normally a role that can be contentious at best. The group facilitated the process and ensured joint acceptance of the ORD's functional requirements.
Business Process Re-engineering
No automated information system should be developed without first re-engineering existing business practices, beginning with clear definition of the desired outcome. DMLSS spent more than a year re-examining the logistics business practice before considering the value of automation.
This effort, TRI-SERVICE, involving all three military branches, began with identifying necessary outcomes for DoD medical logistics through the year 2012, including one medical system for peace and war or timely (within 48 hours) delivery of medical items. Once goals were identified and defined, existing “business” practices were critiqued for continued relevancy (if no longer relevant, then replacements were developed), and new practices necessary to realize stated goals were developed. This level of integration presented enormous challenges; the re-engineering process had to be driven by goals, not service-unique interests. The overriding goal was the creation of a joint medical logistics system. Once this high-level goal was approved, consensus and collaboration followed.
The initial business re-engineering effort, formally known as the Medical Logistics Functional Process Improvement Program (MLFPIP), aimed to reduce the delivered cost and improve the delivery of materiel and services, as well as to improve the medical logistics readiness capability for war and contingency operations. The MLF-PIP identified functional process improvements that became the framework for a DMLSS mission needs statement (MNS). In addition to detailing extant medical logistics deficiencies, the MNS also established performance measures, including:
- ■ Reduce the number of stocked items at the Defense Logistics Agency between 50 percent and 81 percent
- ■ Lower wholesale medical inventory by 66.7 percent
- ■ Decrease MTF inventory stock on hand by 50 percent
- ■ Achieve a five percent price reduction on 50 percent of items purchased
- ■ Diminish time spent by MTF clinical staff on ordering and receiving supplies and equipment, as well as accounting for property
- ■ Enhance medical readiness capability for wartime/contingency operations with seamless transition from peacetime operation.
Generally, DoD medical logistics practices required re-engineering because they didn't serve the required outcome: efficient distribution. Automating the existing practice would not have solved the underlying problems. Only after functional requirements and goals were understood and processes and new business practices were defined, did the team consider the added value of automation.
Although automation seemed the best solution, commercial best practices continue to be essential to the DMLSS program. The program also identifies gaps in commercial health care practices and introduces a new benchmark for the commercial sector. One example is the championing of the universal product number (UPN) identifier. Each manufacturer and distributor of medical/surgical items assigns a unique identifier number to each product, making product and price comparison cumbersome and expensive.
The UPN concept for medical/surgical items mirrors the National Drug Code (NDC) for pharmaceuticals. Instead of assigning its own identifier, each distributor uses the single manufacturer's number. This practice supports more efficient and less expensive procurement of the DoD's medical/surgical items.
Customers often generate new ideas and requirements, impacting project development. To manage change effectively, the program needed repeatable processes. All new requirements or changes flowed through a process that involved deliberate screening for relevance, value and cost. A committee screened requirements for value and determined priority. The requirements were vetted before all customers, which provided immediate credibility for external funding. These requirements also allowed the program team to craft out-year funding or out-of-cycle funding requests.
Major programs lacking an engaged governance structure will experience more direct pressure from the customer. Beginning a major program without a completed business process re-engineering effort means starting with a less-than-complete understanding of the current state. Programs lacking change management control processes in the fabric of the program's management will lack the means to filter external influences and manage risk.
DMLSS is in a mixed state of evolution today, as efforts continue to sustain two major previous software iterations, to complete worldwide deployment of its third and final release, and to continue the development of preplanned product improvements. However, the DoD already predicts that it will realize dramatic bottom-line benefits, including a one-time savings from reduced on-hand stock at depots and MTFs and large-volume purchase discounts. A 2002 economic analysis (EA) estimated total benefits of more than $3.61 billion from fiscal 2002 to fiscal 2012. This latest EA predicts a return on investment of 493 percent and a benefit-to-cost ratio of 5.98:1. PM
Colonel Stephen M. Wolfe, director of operations and re-engineering for the DMLSS program, TRICARE Management Activity, Health Affairs, has 20 years of Air Force Medical Service experience. He has worked at various health service administration positions at the facility, regional and enterprise levels.
PM NETWORK | MARCH 2003 | www.pmi.org
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