Seattle Children’s Hospital, Research, Foundation

Case Study

Seattle Children's Hospital

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, ranked as one of the top 10 pediatrics programs in the country by U.S. News & World Report.

We had to get our people on the front line out of the materials business…It kept nurses and doctors away from the bedside when they had to try to figure out where the supplies were.

In recent years, Seattle Children’s Hospital embarked on developing a strategic plan to promote hospital growth, increase research opportunities, reduce costs, and improve the quality of patient care throughout the hospital. To achieve these goals, Seattle Children’s Hospital embraced a continuous performance improvement (CPI) process, which involved applying to healthcare the leading lean production methodologies made famous in the automotive industry by Toyota. A vital piece of the plan was to improve the supply chain at the hospital by developing a better materials management system.

Understanding the Problem

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 and accounting for supplies. This inefficient system meant clinicians spent significant amounts of time searching for supplies they needed. Clinicians often stashed regularly used items in closets and drawers to ensure they were available when needed. Still, this practice increased waste with expired items and unreliable supply levels since an accurate 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 the quality of the clinicians’ experience in their jobs and the quality of the patient experience at the hospital.

Designing a Better System

Seattle Children’s Hospital brought in Charles Hodge, Vice President and Chief Procurement Officer, a Six Sigma expert in strategic sourcing, to make their supply chain vision a reality. 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 the data for all supplies used throughout the year. They aimed to see where peaks and valleys in usage occurred. Allowed them to determine better the optimal levels to stock in supply bins.

Next, they worked with their distributors to develop an ordering method that would allow them only to order 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 use 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. Hodge brought expert programmers on board, and the team embarked on a six-month development cycle to produce the right solution. The result was a new, lean supply replenishment solution, now known as BlueBin.

To ensure the solution was ready for application in the real world, they rolled it 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 involving nurses to provide feedback on how the bins were laid out and labeled, allowing them to have direct input early in the process (a practice that became part of all new deployments).

Two Blue Bins, One Robust Solution

BlueBin has a two-bin supply replenishment solution based on the Kanban method initially developed in the automotive manufacturing industry to streamline the supplies based on usage patterns. There are two bins for each item; when one bin is empty, users place it on a designated shelf, and the second bin is pulled forward. Empty bins are collected and sent to the central supply office, where scanned bar codes 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.

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

One critical feature of the BlueBin dashboard efficiency 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 BlueQ Analytics dashboard gives the hospital eyes into every piece of the supply chain.

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 command of the supply chain leads to increased efficiency and performance and reduced costs for the hospital.

“The BlueQ Analytics 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.”

Forming BlueBin Inc.

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 he could scale the BlueBin solution to other hospitals to duplicate their success.

In 2011, Hodge officially formed BlueBin Inc. Under the direction of Hodge and Dr. Howard Jeffries, the medical director of CPI at Seattle Children’s Hospital, when the BlueBin solution was developed.

When I saw BlueBin in action at the hospital for the first time, I thought it was almost too good to be true.

Today, BlueBin Inc. is a privately held company with headquarters in Seattle. Hodge serves as Founder and Board Member at BlueBin Inc. Jeffries serves as Chief Financial Officer and Board Member while also continuing his medical practice as a Pediatric Cardiac Intensivist at Seattle Children’s Hospital.

Seeing Results

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

“It is the bane of clinicians, having to call central supply urgently searching for some specific product 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, it 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 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 if there’s anything out there that comes close to what this system provides and the paradigm shift it represents.”

A Lasting Impact

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 continues to influence and improve the operations of Seattle Children’s Hospital. In 2009, before 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 they gave the last survey.

Honestly, we wouldn’t have believed on day one that we would see this kind of lasting impact.

In addition to achieving a new nurse satisfaction level, the system reduced search time for supplies by 50 percent. “This dramatic improvement and sustained success highlight 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 its Magnet Recognition Program® designation, 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 part of the Magnet review process, which gauges nurses’ involvement in improvement. BlueBin has helped foster a connection between nurses and the supply chain that continues to influence operations today.

Ready To Get Started?

Contact us today to discuss your our 2-Bin Kanban systems and supply chain analytics for healthcare!