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CENTRAL ONTARIO HEALTHCARE PROCUREMENT ALLIANCE QUESTIONS AND ANSWERS

1. How will compliance with the new purchasing programs be managed? What programs will be instituted to gain compliance from clinical practitioners with standard supplies e.g. cardiac, ortho? Answer: The SSO will be staffed with professional Purchasing staff who will utilize the IT infrastructure to monitor compliance with regional contracts. Individual hospital savings, compliance and any missed opportunities arising from local clinical preferences will be reported to the members and the Board. Clinical and Supply Chain staff will be expected to participate in product evaluation committees to develop selection criteria and make product decisions in support of clinical leading practices: exact terms of reference for these committees are being developed

2. What evidence is there of existing compliance with purchasing standards within an individual hospital? Answer: hospitals within the group all participate in selected HealthPRO contracts at present: compliance rates vary from 60-80%. The new information systems and centralized processes will enable up-to-date tracking of transactions to identify opportunities for increased compliance and resulting savings for members 3. How will spend savings from any individual hospital be "captured" and re-directed to pay for the SSO? Answer: As contracts are renewed, the savings will be tracked by the SSO and reported to the hospitals. The hospitals will use the spend savings to support the fees charged by the SSO for the services. In essence the spend savings will be redirected from the hospitals to the SSO through fees that will be paid to support the activities and the services of the SSO. Hospitals will also advance funds to the SSO to enable COHPA as agent to procure their goods and pay supplier invoices.

4. The SSO vision is to eventually handle several more activities than supply chain. The business case shows that spend savings will be used to pay for the supply chain infrastructure and associated SSO staff. Where will savings come from to pay for the remainder of the SSO vision?

Answer: As a free-standing NFP corporation, the COHPA SSO through its governing Board and operating committees will establish fees for future additional services as required to defray one time costs and any additional operating expenses related to new customers or additional services.

5. What in-hospital management approaches will be deployed to manage the purchasing process? Answer: COHPA will work with member hospitals to ensure executive level commitment and engagement to facilitate the adoption (or modification as required) of the leading practices presently in use within other established regional supply chain organizations. The information systems will provide management with the required performance metrics, and the governance mechanisms will drive accountability through the management structure. 6. It is unclear what the role of SourceMedical vs. Healthpro and other vendors will be. Are they not being "sourced" like any other vendor? Answer: COHPA member hospitals all belong to the HealthPRO Group Purchasing Organization. National contracts through HealthPRO account for approximately 25% of in-scope spend and the purchasing practices for those items will remain in ­ place. Source Medical/Cardinal Health is a distributor of medical and surgical supplies who also offers "just in time" services for delivery of those supplies to hospitals. Three of the six COHPA members presently use these services, and the business case provides funds for conversion of the remaining three hospitals to this way of operating. Prior to entering into long term commitments with this supplier, COHPA may determine that conducting a group RFP for these services would be beneficial. 7. Some spend commodities are not included such as pharmacy and food? Why? Answer: COHPA will be established for a defined scope of products and services to allow focus on selected commodities during the startup phase. Additional opportunities to bring Supply Chain management to other categories will be investigated beginning in year 3. 8. How will savings from capital expenditures be calculated and captured? Answer: ongoing Capital purchases for the member hospitals (excluding special redevelopment capital projects) will be managed by the Shared Services Organization. The operational plan includes use of appropriate GPO's like the St

Joseph's group for this purpose. The business case does not depend on any capital savings at this time, but this will represent a potential opportunity to bring added benefits to members and customers.

9. The one-year timeframe for the IT aspects of the project seem ambitious. Is there precedent to support this? Is there historical evidence of other IT projects within this group of hospitals with respect to on time and on budget performance as well as enduser satisfaction? Answer: The expected implementation timeframe for the COHPA technology platform is 18 months as shown in Appendix I Re-applying key learnings from other projects, dedicated IT project management resources will be recruited to support/complement/work with hospital IT staff to plan and implement the IT platform in all hospitals in a phased approach over the 18 month timeframe. At Ross Memorial Hospital in 2007, this approach of planning and implementing a Meditech Pharmacy Information System using external project management resources to work with internal hospital IT and Pharmacy staff led to a successful 9-month implementation.

10. Has SSHA been consulted regarding their capacity to provide WAN services? Risks of their inability to participate in this initiative have been identified on page 35 of the business case. Answer: while SSHA may represent a low cost solution, initial inquiries by the COHPA project uncovered a concern about the capacity of SSHA to handle the instantaneous data requirements for this application. Funds are included to obtain the services at higher commercial cost if necessary. This issue will be thoroughly investigated using appropriate competitive processes after receipt of project funding

11. What is the contingency plan for the timing and finances associated with the project? Answer: the project has approx $600K contingency within the $7.0 million IT budget. The balance of the one-time costs are based on list prices and expected to be reduced 5-10% at time of purchase through normal tendering and negotiation processes. Additionally, the purchasing savings estimates arising from group contracts are conservative relative to actual performance of other regional supply chain organizations.

12. What due diligence has been undertaken by OntarioBuys regarding the review of the business case? Details please. Answer: The OntarioBuys program under the Ministry of Finance has an extensive due diligence process for reviewing and approving a business case which culminates in a transfer payment agreement between the government and the recipient. The ministry has made available a business case template that identifies all the components for submitting an application to the OntarioBuys program. This can be found on the Ministry's website http://www.fin.gov.on.ca/english/ontariobuys/documents/businesscase.html Staff at the ministry compares the business case with a check list and scoring as to the completeness of each business case element, items missing and additional information required. It is an iterative process. The program is currently sharing about 30 questions with the project which requires a response before the ministry provides funding. The questions relate to the framework of the proposed shared service organization covering commitment, legal, governance, leadership, the seven categories in OntarioBuys' supply chain framework including plan, source & procure, move, pay, structure & staffing, tools & technology including IT and organizational alignment, project budget, ROI, shared service financial model, benefits, metrics, human resources, risk management and communications. Since the proposal is more than $1 million, the government engages: a) the service of its internal audit division, b) its internal legal branch and c) external 3rd party consultants. The internal audit division reviews the business case to ensure that adequate accountability controls exist. This includes a review and evaluation of

reasonableness, risk identification, project governance framework and compliance with the OntarioBuys mandate, review external consultant's reports for completeness and followed-up corrective action, review the transfer payment agreement and compliance with government directives and review due diligence process for the project both within the program and compliance with business and government best practices. With regard to its internal legal branch, the proposal is reviewed for any legal issues and for the drafting of the transfer payment agreement. With regard to external consultants, they are engaged to review the supply chain solution, identify any gaps and to make recommendations. Their review is high level over a 10 to 15 day period. The business case is shared with the Ministry of Health and Long Term Care for their endorsement and the Ministry of Finance has acted to facilitate LHIN endorsement by providing every LHIN CEO an overview of the activity in their LHIN and answer any questions that may arise.

13. What will be the role of OntarioBuys in this project over the next five years? Answer: The OntarioBuys program under the Ministry of Finance writes a transfer payment agreement between the government and the shared service organization. Over the next 18 months, the government provides funding based on the completion of stated deliverables identified in the business case. Throughout the project, the program provides advice and guidance in executing the transfer payment agreement. OntarioBuys will also provide ongoing advice and guidance through its work on leading practices and performance metrics.

14. With the SSO being staffed primarily with former staff of the member agencies, how will COHPA mitigate the risk of staff centralizing the same policies and procedures that have been used by the member agencies? Answer: the project Implementation plan provides funds for a formal program of Change Management based on the new Vision, Values and Guiding principles shown on page 21 of the business case. In addition, the new organization will a) capitalize on the current knowledge and expertise of existing hospital supply chain leaders and staff, b) recruit an experienced GM and senior directors, c) work with OntarioBuys and established regional healthcare supply organizations in Ontario, and, d) review and incorporate

Leading Practices Compendium and Performance Measurement for integrated supply chain management literature.

15. What precedence is there in the Province of Ontario for this integrated system; how have those learnings been incorporated; have the expected outcomes been achieved? Answer: the COHPA project team has traveled and studied the operations of HMMS in the South West LHIN, Plexxus, Shared Services West ( LHIN's 5 and 6) and directly applied recent learnings from the FOHSCI project in LHIN's 3 and 4. The General Manager will participate in an ongoing network with his/her counterparts from the other 8 regional supply chain organizations to share best practices and key learnings.

16. Have the unions been informed? What are the results of those discussions? Will bringing this project to a public Board meeting of the LHIN be a breach of the terms of the collective agreement? Answer: each hospital has maintained an ongoing process of communication including forums for questions and answers with their employees during the 12 months leading up to assembly of the Dec 21 2007 draft business case. Upon completion of the final document and approval of the project by the hospital Boards, the LHINs and the Ministry of Finance, formal communications with the bargaining units as required by the collective agreements will occur. During public discussions of the document and the recent motions by hospital Boards, the business case is described (as labeled) as a "Final Draft" document

17. Has there been any community engagement with community agencies (including long-term care and CCAC) regarding their potential involvement in this initiative in the future?

Answer: Until the project is funded, discussion has been limited to hospitals within the named LHINs, particularly those that have expressed an interest in being customers for the shared services. Engagement beyond the hospital sector will be planned once the SSO and the IT infrastructure are in place and the requirements of other agencies have been defined.

Jan 31, 2008 Brad Sinclair 416-505-3542 (on behalf of COHPA Steering Committee)

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CENTRAL ONTARIO HEALTHCARE PROCUREMENT ALLIANCE

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