Case Studies

Seattle Children’s Hospital, Research, Foundation


Since 1907, Seattle Children’s Hospital has been dedicated to providing top-quality care to every child in the region who needs it, regardless of the family’s ability to pay. Seattle Children’s Hospital is consistently ranked among the nation’s best children’s hospitals by U.S. News & World Report magazine.

Through the collaboration of physicians in nearly 60 pediatric subspecialties, Seattle Children’s Hospital provides inpatient, outpatient, diagnostic, surgical, rehabilitative, behavioral, emergency and outreach services. Seattle Children’s Hospital is also the primary teaching, clinical and research site for the Department of Pediatrics at the University of Washington School of Medicine, which is ranked as one of the top 10 pediatrics programs in the country by U.S. News & World Report.

In recent years, Seattle Children’s Hospital embarked on the development of a strategic plan with the goals of promoting hospital growth, increasing research opportunities, reducing costs and improving the quality of patient care throughout the hospital. In order to achieve these goals, Seattle Children’s Hospital embraced a “continuous performance improvement” (C.P.I.) process, which involved the application to the health care industry of the leading “lean” production methodologies made famous in the automotive industry by Toyota. A key piece of the plan was to improve the supply chain at the hospital by developing a better materials management system.


The previous system involved traditional materials management methods, such as locked cabinets, supply carts and par-level systems. It also meant heavy involvement from clinicians in the sourcing of and accounting for supplies. This inefficient system meant clinicians spent significant amounts of time searching for supplies. Items used regularly were often stashed in closets and drawers to be sure they were available when needed, but this practice led to increased waste with expired items and unreliable supply levels since a true accounting of supplies was nearly impossible.

“We knew we needed to do something,” said Patrick Hagan, MHSA, who was president and chief operating officer at Seattle Children’s Hospital during this time. “We had to get our people on the front line out of the materials business. It was a tremendous waste. It kept nurses and doctors away from the bedside when they had to try to figure out where the supplies were.”

The hospital was routinely receiving poor results on staff surveys when it came to the availability of necessary supplies. Hagan added that all the search time and frustration resulting from the old system diminished both the quality of the clinicians’ experience in their jobs and the quality of the patient experience at the hospital.


To make their supply chain vision a reality, Seattle Children’s Hospital brought in Charles Hodge, vice president and chief procurement officer, who was a Six Sigma expert in strategic sourcing. Hodge took his precise understanding of how a supply chain works and married it with the hospital’s strategic plan to develop a solution.

To get started, Hodge and his team analyzed data for all of the supplies used over the course of a year to see where peaks and valleys in usage occurred. This allowed them to better determine the optimal levels to be stocked in supply bins.

Next, they worked with their distributors to develop an ordering method that would allow them to order only what is needed – factoring in lead times required – versus ordering in bulk.

The final piece was to develop an analytics program and dashboard that would allow the hospital to access and make use of vast amounts of supply usage data. The dashboard would allow the hospital to monitor actual usage levels and make immediate adjustments to match the often-changing needs of the hospital. Expert programmers were brought on board, and the team embarked on a six-month development cycle to come up with the right solution. The end result was a new, lean supply replenishment solution, now known as BlueBin.

To make sure the solution was ready for application in the real world, it was first rolled out to the most challenging department in the hospital – the ICU – to quickly highlight where adjustments were needed. The deployment included a mock set-up where nurses were brought in to provide feedback on how the bins were laid out and labeled, allowing them to have direct input early in the process (a practice which became part of all new deployments).


BlueBin is a two-bin supply replenishment solution that is based on the Kanban method originally developed in the automotive manufacturing industry to streamline the flow of supplies based on usage patterns. There are two bins of each item; when one bin is empty, it is placed on a designated shelf and the second bin is pulled forward. Empty bins are collected and sent to the central supply office where the bar codes are scanned to initiate a new order.

What makes BlueBin unique is the simple two-bin front end that is intuitive for clinicians to use, combined with robust technology on the back end for managing replenishment and vendor relationships.

Analytics software, and a dashboard for easily accessing the data, enables the hospital to clearly see how and when supplies are being used, pinpoint problems, and then adjust orders as needed to ensure supplies stay at optimum levels.

A key efficiency of the BlueBin dashboard is the ability to quickly and easily highlight the small number of bins – out of the roughly 60,000 bins that are in use throughout Seattle Children’s Hospital – that might need immediate attention at any given time. BlueBin ensures that the right supplies are always there when needed and that clinicians no longer waste valuable time searching for and managing supplies.

“BlueBin enabled the implementation of our vision,” Hagan said. “It got people on the front line away from materials management. It was a tremendous boon for clinicians.”

The BlueBin dashboard also allows the hospital to track the performance of suppliers in areas such as order lead times, on-time delivery performance and cost variance, as well as track order anomalies and other components required for efficient control of the hospital’s revamped materials management system. This precise knowledge and control of the supply chain leads to increased efficiency and performance, and reduced costs for the hospital.

“The BlueBin dashboard gives the hospital eyes into every piece of the supply chain,” Hodge said. “Not just internally, but externally as well, so they can drive accountability through performance metrics up and down the supply chain.”


Following the great success Seattle Children’s Hospital was having with its new, lean materials replenishment solution, many health care leaders began to call the hospital for advice. Hodge then realized that the BlueBin solution could be scaled to other hospitals to duplicate their success.

In 2011, BlueBin Inc. was officially formed under the direction of Hodge and Dr. Howard Jeffries, who was the medical director of C.P.I. at Seattle Children’s Hospital when the BlueBin solution was being developed. Today, BlueBin Inc. is a privately held company with headquarters in Seattle. Hodge serves in the capacity of founder and board member at BlueBin Inc. Jeffries serves as chief financial officer and board member at BlueBin, while also continuing his medical practice as a pediatric cardiac intensivist at Seattle Children’s Hospital.


Following the rollout of the BlueBin solution in 2009, Seattle Children’s Hospital saved $2.5 million in inventory reduction. For the next three years, the joint commission surveys found zero expired items – the first time this had ever happened in Hagan’s career. In addition, urgent calls to the central supply office were greatly reduced. BlueBin had exceeded their expectations.

“It is the bane of clinicians, having to call central supply urgently searching for some specific supply and having to describe what you are looking for over the phone,” Hagan said. “With BlueBin, these calls from nurses and doctors have plummeted to near zero.”

In addition to saving clinicians time, which could then be redirected to patient care, the BlueBin solution increased morale among staff and gave clinicians at the hospital far more confidence in the materials managers. Hagan believes this increased confidence has improved the relationship between the users and providers of supplies, which in turn created a level of trust that has led to collaboration and improved patient care.

“When I saw BlueBin in action at the hospital for the first time, I thought it was almost too good to be true,” Hagan said. “I don’t know that there’s anything out there that comes close to what this system provides and the paradigm shift it represents.”


Seattle Children’s Hospital’s use of the BlueBin solution is still growing today. The initial deployment focused solely on patient care, but now covers the laboratory, environmental sciences and pharmacy departments. And BlueBin, well into its fourth year of deployment, continues to influence and improve the operations of Seattle Children’s Hospital. In 2009, prior to using BlueBin, Seattle Children’s Hospital asked nurses to take a satisfaction survey. One question asked nurses to rate on a scale of 1-5 whether they had the right tools to do their job. In 2010, just a year into using BlueBin’s system, nurses’ response to this question was 20 percent higher and has sustained at that level through 2012, when the last survey was given. In addition to achieving a new level of nurse satisfaction, reported search time for supplies reduced by 50 percent. “This dramatic improvement and sustained success highlights just how effective the BlueBin solution is,” said Greg Beach, CBET, senior director of supply chain at Seattle Children’s Hospital. “Honestly, we wouldn’t have believed on day one that we would see this kind of lasting impact.” Supporting nurse morale and satisfaction is incredibly important at Seattle Children’s Hospital. The hospital is proud of their Magnet Recognition Program® designation, which is awarded to only three percent of all hospitals in the country. The Magnet Recognition Program recognizes health care organizations for quality patient care, nursing excellence and innovations in professional nursing practice. As a result, Magnet hospitals draw the best nurses in the country. The supply chain is a part of the Magnet review process, which gauges how involved nurses are in improvement, and BlueBin has helped foster a connection between nurses and the supply chain that continues to influence operations today.